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Texas Life Agent Practice Exam

20 exam-style questions drawn from the same bank as our full Texas Life Agent course (Texas General Lines Agent — Life, Accident, Health and HMO — Exam Prep). Answer all 20, then grade yourself — most state exams require 70% to pass. Explanations for every question are part of the full course.

1. A Texas life agent moves from Houston to Austin and changes both home and business addresses. Under 28 TAC §19.802, the agent must notify TDI of the address change within how many days?
90 days30 days10 days60 days
2. A Texas producer moves an existing client from one policy to another policy issued by the SAME carrier, gaining a fresh first-year commission on a nearly identical contract. This is best described as:
Twisting, because the replacement crossed from one contract to anotherControlled business, because the producer benefited from the transactionDefamation, because the original contract was implicitly criticizedChurning, the intra-company form of commission-driven replacement
3. An annuity payout that ends at the annuitant's death with nothing left to heirs is
Joint and survivorLife with period certainCash refundLife only
4. Beneficiary income from settlement options is taxed in which manner?
All payments are fully tax-free as a continuation of the death benefit under IRC §101(a) — applies to lump-sum life proceeds, not the settlement option in scope here under §101(d) which carves out post-death interest for income tax purposesThe portion of each payment representing the original death benefit is income-tax-free under IRC §101(a); the portion representing interest earned after the insured's death is taxableAll payments are fully taxable as ordinary income under IRC §72 governing annuity payouts — applies to non-qualified annuity contracts, not the life-insurance settlement option in scope here under §101(a) exclusion rules for life death benefitsOnly the first $50,000 of total payments is tax-free under IRC §79 governing group term life imputed-income exclusion — applies only to employer-paid group life coverage, not to a settlement payout in scope here on individual life proceeds
5. The person whose life determines annuity payments is the
BeneficiaryOwnerAnnuitantPayee
6. Which of the following is a classic AML 'red flag' a life insurance producer should escalate?
Applicant requests illustrations for several products before deciding under standard comparison-shopping practices applied during the consultation phase of life-insurance product selection between competing carriersApplicant pays the first annual premium by personal check from his own bank under standard payment-routing rules applied to first-year premium collection for life-insurance contracts at issuance in the state of issue todayApplicant names his spouse as primary beneficiary under TIC §1131 standard provisions for life policies — applies to family beneficiary designation that is a routine designation under standard life-insurance practiceApplicant insists on overpaying premium with multiple money orders just under the reporting threshold and quickly requests partial surrender
7. A Guaranteed Insurability Option (GIO) rider gives the insured the right to:
Convert term insurance to whole life only after evidence of insurability — applicable to surplus-lines placements, which the scenario explicitly excludesIncrease the death benefit each year by the inflation rate, automatically — required if and only if the policy includes a co-insurance penalty endorsementCancel the policy and receive all premiums back — required under the federal preemption framework that yields here to the state-law rulePurchase additional life insurance at specified ages or events without proving insurability
8. Converting annuity value into a stream of income payments is
AnnuitizationExchangeAccumulationSurrender
9. Under the Incontestable Clause required in Texas individual life policies, after the policy has been in force during the lifetime of the insured for the contestable period (usually 2 years), the insurer:
Has no protection from claim payment under any circumstanceMay reduce the face amount if it later finds underwriting was based on incomplete informationGenerally cannot contest the policy except for nonpayment of premium and, in some forms, fraudMay still rescind for any innocent misstatement
10. Gifts up to a set amount per recipient each year without gift tax fall under the
Lifetime exemptionStep-up in basisAnnual exclusionUnlimited marital deduction
11. In a typical employer-sponsored group life plan, who is the policy owner and who receives a certificate of insurance?
The employer owns the master policy; each covered employee receives a certificate of insuranceThe state of Texas owns the policy; employees receive certificates under the state-sponsored mandatory group life programThe insurer owns both the policy and the certificates; the employer simply remits premium under the group billing scheduleEach employee owns the policy; the employer receives the certificate of insurance and serves as group plan administrator
12. The beneficiary who receives proceeds if no primary beneficiary survives is the
Estate beneficiaryContingent beneficiaryPrimary beneficiaryRevocable beneficiary
13. Transferring all ownership rights in a policy to another party is an
Beneficiary changeReinstatementAbsolute assignmentCollateral assignment
14. The provision limiting the benefit if the insured dies by suicide early in the policy is the
Aviation exclusionWar exclusionIncontestable clauseSuicide clause
15. Which of the following statements BEST distinguishes HIPAA from GLBA in the life-insurance context?
HIPAA and GLBA are different names for the same rule under the federal privacy framework applied to life-insurance carriers operating in Texas under TIC §601HIPAA covers driving records and GLBA covers medical records under the federal privacy framework applied to life-insurance carriers operating in TexasHIPAA governs protected health information (PHI) held by covered healthcare entities; GLBA governs nonpublic personal financial information held by financial institutions, including insurersOnly HIPAA applies in Texas under the federal privacy framework applied to life-insurance carriers operating in Texas under TIC §601 standard privacy provisions
16. A report on an applicant's lifestyle, finances and habits from a third party is an
MIB reportInspection reportParamedical examAttending physician statement
17. If a primary beneficiary predeceases the insured, the death proceeds are typically paid to:
The insured's employer under the workplace-payout extension of certain group life master policiesThe insurer, who keeps them under the carrier-retention provision of standard life formsThe contingent (secondary) beneficiary, if one is named and survivingThe state of Texas as escheated property under the immediate-escheat provision of life forms
18. Loans and withdrawals from a MEC are taxed on what basis?
Gain firstBasis firstTax freePro rata
19. The maximum rate an indexed annuity can credit is its
Participation rateCap rateFloor rateSpread
20. A receipt providing temporary coverage regardless of insurability until the insurer acts is a
Binding receiptDelivery receiptConditional receiptPolicy summary

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