Texas Statutes and Rules — Life Insurance Only — practice questions

4.6% of the exam ≈6 real questions 9 free questions here

Required life policy provisions, group and credit life, replacement and nonforfeiture under the Texas Insurance Code: 6 of the 130 scored questions.

Where people lose points

• Grace period at least one month; group life 31 days.
• Policy loans are required once three full years of premiums are paid.
• Death claims must be settled within two months of proof.
• The replacing insurer notifies the existing insurer within five business days.

Questions and answers, explained

All 5 questions above, with the correct answer and why it is correct. Everything here is on texas statutes and rules — life insurance only.

1. A Texas endowment policy matures. Under 28 TAC 4.621, the settlement at maturity may not be less than:

   • AThe total premiums paid, without interest
   • BThe cash surrender value shown for the end of the tenth policy year
   • CThe face amount plus any dividend additions, less any policy debtCorrect
   • DWhatever amount the insurer declares that year

   Why: 28 TAC 4.621(c) bars any mode of settlement at maturity worth less than the face amount plus dividend additions, less any indebtedness and any premium the policy allows to be deducted.

   Reference 28 TAC 4.621 — Texas outline II.B.16

2. Under TIC 1111.052, which condition can qualify an insured for an accelerated benefit under a Texas term life policy?

   • AReaching age 65 with the policy in force for ten years
   • BA job loss that leaves the insured unable to keep paying the policy's premiums on time
   • CA temporary illness expected to resolve within a month
   • DA condition requiring an organ transplant, confirmed by a written medical opinionCorrect

   Why: TIC 1111.052 allows an accelerated term life benefit when the insurer has a satisfactory written medical opinion that the insured has a terminal illness, a long-term care illness, or a condition likely to cause permanent disability or premature death, such as AIDS, a malignant tumor, a condition requiring an organ transplant, or coronary artery disease causing acute infarction or requiring surgery. The benefit is deducted from the death benefit.

   Reference TIC 1111.052 — Texas outline II.B.13

3. A Texas group life policy is fully paid by the employer, with no employee contribution. Under TIC 1131.204, whom must it insure?

   • AAll eligible employees, except any whose evidence of insurability is unsatisfactoryCorrect
   • BOnly full-time employees with at least one year of service
   • CAt least 75 percent of eligible employees, with the employer choosing which ones to include
   • DOnly employees who sign up during an open enrollment period

   Why: TIC 1131.204 requires a group policy to cover at least two employees at issue and, when employees pay no part of the premium, to insure all eligible employees, or all of them except those whose evidence of insurability is not satisfactory to the insurer. Noncontributory plans cannot let employees opt out, which protects against adverse selection.

   Reference TIC 1131.204 — Texas outline II.D.1

4. A car dealer sells credit life insurance to buyers it finances. Which practice violates TIC Chapter 1153?

   • ACharging the buyer more for the coverage than the premium the insurer charges the dealerCorrect
   • BIssuing a group certificate to the buyer as evidence of insurance
   • CReporting the buyer's death claim promptly to the insurer
   • DStarting coverage on the same date the buyer becomes legally obligated to the dealer on the loan

   Why: TIC 1153.201 bars a creditor from charging a debtor more than the premium the insurer charges the creditor. Coverage normally begins when the debtor becomes obligated (1153.157), evidence is an individual policy or group certificate (1153.153), and claims must be reported promptly; the creditor may not act as the insurer's claim representative (1153.204).

   Reference TIC 1153.153, 1153.157, 1153.201, 1153.204 — Texas outline II.E

5. A Texas annuity buyer did not receive the buyer's guide and disclosure document at or before the time of application. What free look period must the contract provide?

   • AAt least 10 days, counted from the date of the application
   • BNone, because annuities have no free look in Texas
   • CAt least 3 business days from the application date
   • DAt least 15 calendar days from receipt of the contractCorrect

   Why: 28 TAC 4.2311 requires a free look of at least 15 calendar days when the buyer's guide and disclosure document were not provided at or before application. The period starts when the consumer receives the contract and runs concurrently with any other free look period.

   Reference 28 TAC 4.2310-4.2311 — Texas outline II.A.2, II.B.1

Topics inside this domain

• Texas prompt claim payment deadlines
• Texas required life insurance policy provisions
• Replacing life insurance and annuities in Texas

Drill other domains

• Types of Life Policies and Annuities (11.5%)
• Life Policy Riders, Provisions, Options and Exclusions (11.5%)
• Life Application, Underwriting and Policy Delivery (9.2%)
• Retirement and Other Life Insurance Concepts (6.2%)
• Types of Health Policies (12.3%)
• Health Policy Provisions, Clauses and Riders (11.5%)

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