At what point must a life insurance applicant be informed of their rights that fall under the Fair Credit Reporting Act? - ANSWER Upon completion of the application
Who elects the governing body of a mutual insurance company? - ANSWER policyholders
An insurance applicant MUST be informed of a...
Texas Life and Health Insurance Exam (question and answers) 2022/2023
At what point must a life insurance applicant be informed of their rights that fall under the Fair Credit Reporting Act? - ANSWER Upon completion of the application
Who elects the governing body of a mutual insurance company? - ANSWER policyholders
An insurance applicant MUST be informed of an investigation regarding his/her reputation and character according to the - ANSWER Fair Credit Reporting Act
What type of reinsurance contract involves two companies automatically sharing their risk exposure? - ANSWER Treaty
The stated amount or percent of liquid assets that an insurer must have on hand that will satisfy future obligations to its policyholders is called - ANSWER reserves
Which of the following requires insurers to disclose when an applicant's consumer or credit history is being investigated - ANSWER 1970 - Fair Credit Reporting Act
What is the consideration given by an insurer in the Consideration clause of a life policy? - ANSWER Promise to pay a death benefit
When third-party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have - ANSWER insurable interest in the proposed insured
Statements made on an insurance application that are believed to be true to the best of the applicant's knowledge are called - ANSWER representations
The part of a life insurance policy guaranteed to be true is called a(n) - ANSWER warranty
Which of these is NOT a type of agent authority? Express Implied Principal Apparent - ANSWER Principal
The Consideration clause of an insurance contract includes - ANSWER the schedule and amount of premium payments E and F are business partners. Each takes out a $500,000 life insurance policy on the other, naming himself as primary beneficiary. E and F eventually terminate their business, and four months later E dies. Although E was married with three children at the time of death, the primary beneficiary is still F. However, an insurable interest no longer exists. Where will the proceeds from E's life insurance policy be directed to? - ANSWER In this situation, the proceeds from E's life insurance policy will go to F.
Which of the following terms defines the legally enforceable promise in an insurance contract by the insurer? - ANSWER Unilateral
When must insurable interest exist for a life insurance contract to be valid? - ANSWER Inception of the contract
Insurance contracts are known as ____ because certain future conditions or acts must occur before any claims can be paid. - ANSWER conditional
Which of these require an offer, acceptance, and consideration? - ANSWER Contract
Which of these arrangements allows one to bypass insurable interest laws? - ANSWER Investor-Originated Life Insurance
Investor-originated life insurance (or IOLI), sometimes called stranger-originated life insurance (or STOLI) is used to circumvent state insurable interest statutes. This is done when an investor (or stranger) persuades an individual to take out life insurance specifically for the purpose of selling the policy to the investor. The investor compensates the insured and makes the premiums, then collects the death benefit when the insured dies.
Which of these is NOT considered to be an element of an insurance contract? the offer acceptance negotiating consideration - ANSWER negotiating
An agent is an individual that represents whom? - ANSWER Insurer
Insurable interest must exist at what time? - ANSWER at the time of application
Which policy requires an agent to register with the National Association of Securities Dealers (NASD) before selling? - ANSWER Variable Life
Which of the following actions require a policy owner to provide proof of insurability in an Adjustable Life policy? - ANSWER increase face amount
When a policy owner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply? - ANSWER Conversion provision What type of life insurance are credit policies issued as? - ANSWER Term
How long does the coverage normally remain on a limited-pay life policy? - ANSWER age 100
All of these statements about Equity Indexed Life Insurance are correct EXCEPT Cash value has a minimum rate of accumulation If the gain on the index goes beyond the policy's minimum rate of return, the cash value
will mirror that of the index The premiums can be lowered or raised, based on investment performance Tied to an equity index such as the S&P 500 - ANSWER The premiums can be lowered
or raised, based on investment performance
Which of these is an element of a Variable Life policy? - ANSWER A fixed, level premium
What type of life insurance incorporates flexible premiums and an adjustable death benefit? - ANSWER Universal Life
T would like to be assured $10,000 is available in 10 years to replace a roof on his house. What kind of $10,000 policy should T purchase? - ANSWER Ten-Year Endowment
What type of life policy covers 2 lives and pays the face amount after the first one dies? - ANSWER Joint Life Policy
Life insurance that covers an insured's whole life with level premiums paid over a limited
time is called - ANSWER Limited-Pay Life
What kind of life insurance product covers children under their parent's policy? - ANSWER Term rider
Which is true concerning a Variable Universal Life policy? Policyowner controls where the investment will go and selects the amount of the premium payment Policyowner has no say where the investment will go but can choose the premium mode The investment vehicle for this type of policy is held in the insurer's general portfolio The death benefit can vary but the policyowner has no say in the premium amount paid
- ANSWER Policyowner controls where the investment will go and selects the amount of the premium payment
P is looking to purchase a life insurance policy that will pay a stated monthly income to his beneficiaries for 20 years after he dies and a lump sum of $20,000 at the end of that
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