Texas Life and Health Insurance Practice Test

Answer choices

1. A. A PPO, because out-of-network care is never covered
2. B. A POS plan, because it eliminates referrals and network incentives
3. C. An HMO, because elective out-of-network care costs the same
4. D. An EPO network-only health plan except for emergencies

Wrong-answer review

• A. A PPO, because out-of-network care is never covered: PPO plans cover out-of-network care at higher costs; they do not exclude such benefits entirely.
• B. A POS plan, because it eliminates referrals and network incentives: POS plans require primary-care referrals for specialists and offer lower costs for network care, differing from EPOs.
• C. An HMO, because elective out-of-network care costs the same: An HMO is also generally network focused, but the scenario’s specific network-only-except-emergencies design most directly identifies an EPO.

Answer choices

1. A. Nothing, because flexible premiums make policy charges optional
2. B. The insurer must convert the contract automatically to paid-up term coverage
3. C. Provide funding before value is insufficient for charges
4. D. The death benefit must remain in force because every universal-life policy has an unconditional no-lapse guarantee

Answer choices

1. A. Preferred risk classification decided only by the underwriter
2. B. The agent may guarantee preferred status whenever the application reports no current illness
3. C. Every applicant who is not substandard must receive the preferred class
4. D. Risk classification is based only on the amount of coverage requested, not mortality factors

Answer choices

1. A. Impose any penalty immediately without statutory grounds or required process
2. B. Issue the license holder a private judicial judgment for damages on behalf of every customer
3. C. Investigate records, hold a hearing, and issue an authorized order
4. D. Transfer the license to another person without an application

Answer choices

1. A. Coverage begins only when the child receives a Social Security number
2. B. Coverage begins only at the plan’s next annual enrollment period
3. C. Coverage is automatically permanent without any notice, premium, or contract condition
4. D. Coverage from birth under statutory and contract conditions

Answer choices

1. A. The three-year benefit period is the waiting period, and the 90 days measure inflation
2. B. Elimination period delays payment; benefit period limits duration
3. C. Both numbers are activities-of-daily-living triggers rather than timing limits
4. D. Inflation protection erases both the elimination period and benefit pool

Answer choices

1. A. Incontestability requires free lifetime coverage after the policy’s second anniversary
2. B. All unpaid premiums become waived automatically once the policy is incontestable
3. C. The insurer may terminate only by treating every missed premium as an age misstatement
4. D. Nonpayment remains an exception to the incontestability provision

Answer choices

1. A. Receiving the distribution personally makes every later deposit a direct trustee transfer
2. B. An indirect rollover permanently exempts the distribution and all earnings from taxation
3. C. Timing and withholding apply only when no participant ever receives the funds
4. D. Indirect rollover subject to timing and withholding rules

Answer choices

1. A. Key-person disability coverage payable only for a nonowner employee’s economic value
2. B. Disability buy-sell coverage used to purchase the owner’s business interest
3. C. Business-overhead expense insurance for eligible operating costs
4. D. Personal disability-income coverage treated as reimbursement for every business expense

Answer choices

1. A. Deny it automatically because every out-of-network service is elective
2. B. Pay only if the enrollee changes the evidence of coverage
3. C. Apply emergency and protected out-of-network coverage rules to the claim
4. D. Ignore the evidence of coverage because emergency care has no benefit terms