The content outline, section by section

Nine general sections and four Texas ones, weighted to the question.

The Texas life and health content outline, section by sectionThe outline splits 130 scored questions into nine general sections worth 100 questions and four Texas sections worth 30. Every count is published, dow…
Types of life policies: the 15-question sectionSection I is worth 15 questions, one of the two largest life sections on the paper. It covers five families: traditional whole life, interest-sensitiv…
Whole life, limited-pay and single-premiumAll three are permanent, level-premium, guaranteed-cash-value contracts. They differ on the premium-paying period alone: ordinary whole life pays to m…
Universal life: the unbundled policyUniversal life is flexible premium adjustable life: the owner varies what they pay, and the insurer takes the cost of insurance and expenses out of th…
Variable life and variable universal lifeBoth put cash value in separate accounts the owner directs, so the owner carries the investment risk and the seller needs a securities registration as…
Indexed life insurance, and why it is not a variable productIndexed life credits interest by reference to a market index while the money stays in the insurer's general account. The owner is not invested in the …
Term life: level, decreasing, return of premium and annually renewableThe outline names four: level, decreasing, return of premium and annually renewable. Term has no cash value and pays only if death occurs within the p…
Renewable against convertible: two different promisesRenewable keeps the same term policy going for another term without new evidence of insurability, at a higher premium for the older age. Convertible e…
Annuities on the Texas exam: the six things the outline listsAnnuities are the largest single heading in section I, with six sub-items against two for whole life. The exam sorts them on four axes: how the premiu…
Fixed, variable and indexed annuitiesA fixed annuity credits a guaranteed rate from the insurer's general account, so the insurer carries the risk. A variable annuity uses separate accoun…
Annuity payout options, ranked by who is protectedStraight life pays the largest income and stops at death with nothing to a beneficiary. Every other option buys protection for someone else by reducin…
Joint life and survivorship life: which death paysJoint life covers two people and pays on the first death. Survivorship life covers two people and pays on the second. Pearson's outline labels them fi…
Life policy riders: the ten the outline namesThe outline names ten: waiver of premium, guaranteed insurability, payor benefit, accidental death and dismemberment, term riders, other insureds, lon…
Waiver of premium against payor benefitWaiver of premium waives premiums when the insured becomes totally disabled. Payor benefit waives them when the person paying for a child's policy die…
The guaranteed insurability riderA guaranteed insurability rider sells the right to buy additional coverage at stated future dates or life events without proving insurability again. T…
Accidental death and dismembermentThe rider pays an additional benefit if death is accidental, often equal to the face amount, and pays scheduled amounts for dismemberment such as loss…
Life policy provisions and options: the section II mapSection II carries 15 questions across three headings: riders, provisions and options, and exclusions. The provisions heading is the largest, listing …
Nonforfeiture options: what you keep when you stop payingThree options: take the cash surrender value, take a smaller paid-up policy for life, or take the full face amount as term insurance for a limited per…
Dividend options, and why they are not nonforfeiture optionsA participating policy can pay a dividend, and the owner chooses what to do with it: take cash, reduce the next premium, leave it to accumulate at int…
Grace period, reinstatement and automatic premium loanThe grace period keeps a policy in force for a period after a premium is missed. An automatic premium loan pays the premium out of cash value before t…
Incontestability and the suicide clauseTexas requires a life policy to be incontestable after two years in force during the insured's lifetime, except for nonpayment of premium. The suicide…
Beneficiary designations: five sub-items, one sectionThe outline gives beneficiary designations five sub-items, more than any other provision: primary and contingent, revocable and irrevocable, common di…
Settlement options: how a death benefit is actually paidFive options: lump sum, interest only, fixed period, fixed amount, and life income. The death benefit itself is not taxable income; interest paid unde…
Accelerated death benefitsAn accelerated death benefit pays part of the face amount to the insured while still living, on proof of a qualifying condition. Texas allows it for t…
Life policy exclusions: war, aviation and dangerous occupationThree, and only three, are listed: war, aviation and dangerous occupation. All are usually handled by exclusion or by an extra premium rather than a r…
Completing the application: the agent's part of section IIISection III is worth 12 questions and opens with nine sub-items on completing the application: signatures, corrections, incomplete answers, warranties…
Warranties against representations, and where concealment fitsA warranty is guaranteed true and any breach lets the insurer void the contract. A representation is believed true, and only a material misrepresentat…
The conditional receipt, and when coverage actually beginsA conditional receipt starts coverage from the date of the application or the medical exam, whichever is later, but only if the applicant turns out to…
Insurable interest: who may insure whose lifeInsurable interest means the applicant would suffer a genuine loss if the insured died. In life insurance it must exist when the policy is bought and …
Underwriting and risk classificationUnderwriting sorts applicants into classes: preferred, standard, substandard or declined. The classification sets the premium, not whether a claim is …
Consumer reports and the Fair Credit Reporting ActThe Fair Credit Reporting Act governs consumer reports used in underwriting. Applicants must be told a report may be obtained, may ask what an investi…
STOLI and investor-owned life insuranceStranger-originated life insurance is an arrangement where investors fund a policy on someone they have no insurable interest in, using the insured as…
Delivering the policy, and what delivery startsDelivery starts the free look period and is when the agent explains the policy, its riders, exclusions and any rating. Where no premium was collected …
The four elements of a contractFour: offer and acceptance, consideration, competent parties and legal purpose. In an insurance sale the applicant makes the offer and the insurer acc…
Conditional, unilateral, adhesion, aleatoryConditional: benefits are owed only if conditions are met. Unilateral: only the insurer makes an enforceable promise. Adhesion: one side wrote it and …
Third-party ownership and life settlementsThird-party ownership means the owner is not the insured, which is normal in business and estate arrangements. A life settlement is the sale of an exi…
Group life: conversion and contributory plansGroup life covers a group under one master contract, with certificates for members. Two sub-items are examined: the conversion privilege, letting a de…
Qualified against nonqualified retirement plansA qualified plan meets federal requirements, so contributions go in before tax and everything that comes out is taxable. A nonqualified plan uses mone…
Life insurance needs analysis and suitabilityNeeds analysis works out how much coverage a client actually requires. Two approaches are tested: the needs approach, which adds up obligations to be …
Key person and buy-sell insuranceKey person insurance is owned by the business on an employee whose loss would cost it money, with the business as beneficiary. A buy-sell agreement fu…
Tax treatment of premiums, proceeds and dividendsThree rules cover most of it. Premiums on personal life insurance are not deductible. Death benefits paid to a beneficiary are not taxable income. Div…
Modified endowment contracts, and what changes when a policy becomes oneA modified endowment contract is a life policy funded faster than the federal seven-pay test allows. The death benefit is still received free of incom…
Types of accident and health policies: the biggest section on the paperSection V carries 16 questions, the largest published count on the paper. It covers seven families: disability income, accidental death and dismemberm…
Disability income insuranceDisability income replaces earnings while the insured cannot work. Four variables define any policy: the definition of disability, the elimination per…
Own occupation against any occupationOwn occupation pays if the insured cannot perform the duties of their own job. Any occupation pays only if they cannot perform any job they are reason…
Business overhead expense and disability buyoutBusiness overhead expense pays the fixed costs of running a business while the owner is disabled, and never the owner's own income. Disability buyout …
Medical expense insurance: basic, major medical and what came afterBasic policies pay first dollar up to low limits with no deductible and cover one thing each. Major medical adds a deductible and coinsurance, covers …
HMO, PPO and POS plans comparedAn HMO uses a primary care gatekeeper and covers almost nothing out of network. A PPO has no gatekeeper and covers out-of-network care at a lower leve…
FSA, HSA and HRA comparedAn FSA is employee-funded through salary reduction and is generally use it or lose it. An HSA is owned by the individual, requires a qualifying high d…
High deductible health plansA high deductible health plan carries a deductible above a federally set floor and an out-of-pocket maximum below a federally set ceiling, which is wh…
Medicare supplement policiesA Medicare supplement, or Medigap, policy pays costs Medicare leaves to the beneficiary: deductibles, coinsurance and copayments. Plans are standardiz…
Group health insurance and COBRA continuationGroup health covers members under a master contract with certificates issued to them, underwritten as a group. COBRA lets a member who loses coverage …
Long term care insuranceLong term care insurance pays for extended care that health insurance and Medicare largely do not, and eligibility usually turns on being unable to pe…
Dental, vision and the supplemental policiesThe outline's other policies heading lists eight: dental, vision, cancer, critical illness or specified disease, worksite, hospital indemnity, short-t…
Health policy mandatory provisionsThe outline lists sixteen provisions in section VI, which is worth 15 questions. They govern the contract, the claims process and the adjustments an i…
Notice of claim, claim forms and proof of lossNotice of claim tells the insurer something has happened. The insurer then has to supply claim forms, and if it does not, the claimant may prove the l…
Time of payment of claims, and payment of claimsTime of payment of claims sets how quickly the insurer must pay once it has proof of loss, with periodic payments for continuing losses such as disabi…
The optional provisions, and the other clausesMandatory provisions must appear and generally protect the insured. Optional provisions appear only if the insurer includes them and generally protect…
Coinsurance, deductibles and copaymentsA deductible is a fixed amount the member pays before the plan pays anything. Coinsurance is a percentage of the bill the member keeps paying afterwar…
Elimination period versus probationary periodAn elimination period begins after a disability starts and delays benefit payments. A probationary period begins when a policy starts and delays cover…
Preexisting conditions and exclusionsA preexisting-condition provision addresses health conditions that existed before coverage began. An exclusion removes a named risk or circumstance fr…
Usual, reasonable and customary chargesUsual, reasonable and customary charges are the amount a medical plan recognizes for a service in the relevant area. A provider may bill more, but the…
Noncancelable versus guaranteed renewableBoth provisions stop the insurer from canceling coverage while premiums are paid. Guaranteed renewable permits a class-wide premium increase. Noncance…
Health policy ridersA health policy rider amends the base contract. It may add a benefit, narrow coverage or protect premium payments after a qualifying event. Read the r…
Medicare Parts A, B, C and DPart A covers inpatient hospital-related benefits. Part B covers physician and outpatient medical services. Part C, Medicare Advantage, delivers Parts…
Medicaid explainedMedicaid is a needs-based public health program administered by states under federal rules. Eligibility depends on the applicable financial and catego…
Social Security disability and survivor benefitsSocial Security uses a worker’s covered earnings record to determine insured status and benefit eligibility. Its principal benefit families include re…
Total, partial, recurrent and residual disabilityTotal disability meets the policy’s full disability definition. Partial disability means the insured can perform some duties or work for less time. Re…
Coordination of benefits and the birthday ruleCoordination of benefits determines the order in which two health plans pay so combined benefits do not exceed the covered expense. Under the birthday…
Workers compensation and subrogationWorkers compensation addresses job-related injury and illness without using an ordinary health policy’s nonoccupational design. Subrogation lets an in…
Field underwriting proceduresField underwriting is the agent’s work of observing risk, completing the application accurately, obtaining required signatures and documents, handling…
Texas statutes common to life and healthThe common Texas-law section covers the commissioner’s authority, insurer authorization, agent licensing and appointments, continuing education, unfai…
The Texas Commissioner of InsuranceThe governor appoints the Texas Commissioner of Insurance with Senate advice and consent. The commissioner leads the Texas Department of Insurance, ad…
Texas agent licensing requirementsFor a Texas General Lines life, accident and health agent license, TDI lists three core steps: pass the examination, complete fingerprinting and apply…
Agent appointment in TexasA Texas agent license shows that the individual is qualified for the licensed authority. An appointment is the insurer’s separate authorization for th…
Texas continuing education requirementsA Texas General Lines life, accident and health agent must complete 24 hours of continuing education during the license period, including 3 hours of e…
Unfair and prohibited trade practices in TexasTexas insurance law prohibits named practices including misrepresentation, false information or advertising, unfair discrimination and other deceptive…
Rebating under Texas lawRebating is generally an inducement involving value or an advantage not specified in the insurance contract. Texas provisions govern life and health r…
The Texas Life and Health Insurance Guaranty AssociationThe Texas Life and Health Insurance Guaranty Association is a statutory safety mechanism for covered obligations when a member insurer becomes impaire…
Texas life insurance policy provisionsTexas life insurance statutes require or regulate provisions dealing with the contract, grace and reinstatement, claims, age statements, beneficiaries…
Replacement rules in TexasA replacement occurs when a new life policy or annuity transaction causes, or is financed through, the lapse, surrender, forfeiture, conversion, amend…
Texas group life and credit life insuranceTexas group life insurance uses a master policy with certificates for covered members and includes statutory conversion protection when qualifying gro…
Texas accident and health requirementsTexas accident and health requirements cover newborn and dependent coverage, mandated benefits, standard policy provisions, Medicare supplements, AIDS…
Small-group health insurance in TexasTexas small-employer health rules define eligible employers and employees, require qualifying coverage to be available under the statutory framework, …
The Affordable Care Act on the Texas examThe Texas outline names Affordable Care Act topics including the health insurance exchange, premium tax credits, cost-sharing reductions, essential he…
Texas HMO regulationTexas treats a health maintenance organization as an entity that arranges or provides care on a prepaid basis under its own certificate of authority. …