Texas life and health exam study guide, by area

How to use it

Each section’s heading in the outline ends with a number. In the general part they add up to 100 and in the state part to 30, the scoreable questions in each, and the outline does not say what they count, so treat them as a guide to how much weight a section carries. Spend your time in proportion: in the general part, sections V (16), I, II and VI (15 each) are the largest, and in the state part section I, Texas law common to life and health (14), is the largest. [Outline p.4] [Outline p.6] [Outline p.7]

For Texas law the outline gives the Insurance Code section or Texas Administrative Code rule for most topics. Read those, not a summary: the state part is where a general textbook leaves you short. Pearson VUE says neither TDI nor it endorses any particular study materials. [Handbook p.18] Test yourself on the free practice test.

Part one: general knowledge

100 scoreable questions on product knowledge, terms and concepts. [Outline p.4]

I. Types of policies (15) [Outline p.4]

• Traditional whole life products: Ordinary whole life; Limited-pay and single-premium life.
• Interest/market-sensitive/adjustable life products: Universal life; Variable whole life; Variable universal life; Interest-sensitive whole life; Indexed life.
• Term life: Level; Decreasing; Return of premium; Annually renewable; Renewable.
• Annuities: Single and flexible premium; Immediate and deferred; Fixed and variable; Indexed; Accumulation and Annuity Periods; Payout options.
• Combination plans and variations: Joint life (first to die); Survivorship life (second to die).

II. Policy riders, provisions, options, and exclusions (15) [Outline p.5]

• Policy riders: Waiver of premium and waiver of monthly deduction; Guaranteed insurability; Payor benefit; Accidental death and/or accidental death and dismemberment; Term riders; Other insureds; Long term care; Return of premium; Disability; Cost of Living.
• Policy provisions and options: Entire contract; Insuring clause; Free look; Consideration; Owner's rights; Beneficiary designations; Premium Payment; Reinstatement; Policy loans, withdrawals, partial surrenders; Non-forfeiture options; Dividends and dividend options; Incontestability; Assignments; Suicide; Misstatement of age and gender; Settlement options; Accelerated death benefits.
• Policy exclusions: War; Aviation; Dangerous Occupation.

III. Completing the application, underwriting, and delivering the policies (12) [Outline p.5]

• Completing the application: Required signatures; Changes in the application; Consequences of incomplete applications; Warranties and representations; Collecting the initial premium and issuing the receipt; Replacement; Disclosures at point of sale; USA PATRIOT Act/anti-money laundering; Gramm-Leach-Bliley Act (GLBA) Privacy.
• Underwriting: Insurable interest; Medical information and consumer reports; Fair Credit Reporting Act; Risk classification; Stranger/Investor-owned life insurance.
• Delivering the policy: When coverage begins; Explaining the policy and its provisions, riders, exclusions, and ratings to the client.
• Contract law: Elements of a contract; Consideration; Offer and Acceptance; Competent parties; Legal purpose; Unique aspects of the insurance contract; Conditional; Unilateral; Adhesion; Aleatory.

IV. Retirement and other insurance concepts (8) [Outline p.5]

• Third-party ownership; Life Settlements; Group life insurance; Conversion privilege; Contributory vs. noncontributory; Qualified plans; Nonqualified plans; Life insurance needs analysis/suitability; Key person; Buy sell; Social Security benefits; Tax treatment of insurance premiums, proceeds, and dividends; Modified Endowment Contracts (MECs).

V. Types of policies (16) [Outline p.6]

• Disability income: Individual disability income policy; Business overhead expense policy; Business disability buyout policy; Group disability income policy; Key employee policy.
• Accidental death and dismemberment.
• Medical expense insurance: Basic hospital, medical, and surgical policies; Major medical policies; Health Maintenance Organizations (HMOs); Preferred Provider Organizations (PPOs); Point of Service (POS) plans; Flexible Spending Accounts (FSAs); High Deductible Health Plans (HDHPs) and related; Health Reimbursement Accounts (HRAs).
• Medicare supplement policies.
• Group insurance: Differences between individual and group contracts; General characteristics; COBRA.
• Individual/Group Long Term Care (LTC): Eligibility; Levels of care.
• Other policies: Dental; Vision; Cancer; Critical illness or specified disease; Worksite (employer-sponsored); Hospital indemnity; Short-term medical; Accident.

VI. Policy provisions, clauses, and riders (15) [Outline p.6]

• Mandatory and optional provisions: Entire contract; Time limit on certain defenses (incontestable); Grace period; Reinstatement; Notice of claim; Claim forms; Proof of loss; Time of payment of claims; Payment of claims; Physical examination and autopsy; Legal actions; Change of beneficiary; Misstatement of age or gender; Change of occupation; Illegal occupation; Relation of earnings to insurance.
• Other provisions and clauses: Insuring clause; Free look; Consideration clause; Probationary period; Elimination period; Waiver of premium; Exclusions and limitations; Preexisting conditions; Coinsurance; Deductibles; Eligible expenses; Copayments; Pre-authorizations and prior approval requirements; Usual, reasonable, and customary (URC) charges; Lifetime, annual, or per cause maximum benefit.
• Riders: Impairment/exclusions; Guaranteed insurability; Future increase option.
• Rights of renewability: Noncancelable; Cancelable; Guaranteed renewable.

VII. Social insurance (6) [Outline p.6]

• Medicare (Parts A, B, C, D); Medicaid; Social Security benefits.

VIII. Other insurance concepts (5) [Outline p.6]

• Total, partial, recurrent and residual disability; Owner's rights; Dependent children benefits; Primary and contingent beneficiaries; Modes of premium payments; Nonduplication and coordination of benefits; Occupational vs. non-occupational; Tax treatment of premiums and proceeds of insurance contracts; Managed care; Workers Compensation; Subrogation.

IX. Field underwriting procedures (8) [Outline p.6]

• Completing the application; Explaining sources of insurability and HIPAA privacy information; Initial premium payment and receipt and consequences of the receipt; Submitting application (and initial premium if collected) to company for underwriting; Policy delivery; Explaining policy and its provisions, riders, exclusions, and ratings to clients; Replacement; Contract law.

Part two: Texas law

30 scoreable questions on Texas statutes and rules. [Outline p.7]

I. Texas statutes and rules common to life and health insurance (14) [Outline p.7]

• Commissioner of Insurance: General powers and duties; Examination of records; Investigation/Notice of hearing; Penalties; Cease and desist orders.
• Insurance definitions: Certificate of authority; Transacting insurance; Foreign, domestic, alien; Stock, mutual; Fraternals.
• Licensing requirements: Agent/Agency; Nonresident agent; Temporary; Exemptions/exceptions; Appointment; Continuing education; Records maintenance; License denial, renewal, expiration; License termination, revocation, suspension; Notification to Department of certain information; Change of address; Felony convictions; Administrative action taken against a license.
• Marketing practices: Unfair/Prohibited trade practices; Claims methods and practices; False advertising; Misrepresentation; Defamation; Rebating; Fraud; Boycott, coercion, intimidation; Commingling; Unfair discrimination.
• Agent duties/responsibilities: Commission sharing.
• Texas Life and Health Guaranty Association.

II. Texas statutes and rules pertinent to life insurance only (6) [Outline p.7]

• Marketing and Solicitation: Advertising/Illustrations; Policy Summary/Buyer's Guide.
• Individual life and annuity policy provisions: Free look; Grace period; Policy loans; Prohibited provisions; Incontestability; Entire Contract; Premiums payable in advance; Statement of insured; Misstatement of age; Time for Settlement of a Claim; Designation of beneficiary, transfer, or assignment of policy; Assignment of benefits; Accelerated Term Life benefits; Reinstatement; Limitations of lawsuits; Settlement at maturity.
• Group life: Group eligibility and underwriting requirements; Conversion to individual policy; Dependent coverage; Assignment; Required provisions; Accelerated benefits.
• Credit life.
• Replacement: Purpose; Definitions; Duties of agent; Duties of replacing insurance company.
• Nonforfeiture law.

III. Texas statutes and rules pertinent to accident and health insurance only (7) [Outline p.8]

• Required group and individual policy provisions: Coverage for newborns; Definition of dependent; Coverage for chemical dependency.
• Medicare supplement: Minimum standards; Cancellation.
• AIDS testing requirements.
• Long Term Care.
• Small group health insurance: Eligibility; Coverage and Benefits.
• Affordable Care Act: Exchanges/Marketplace (Section 1321); Taxes and subsidies (Section 1401, 1402); Essential health benefits (Section 1302, 18022); Employer notification responsibilities (Section 1511-1515).

IV. Texas statutes and rules pertinent to health maintenance organizations (HMOs) (3) [Outline p.8]

• Definitions; Evidence of coverage; Nonrenewal/cancellation; Enrollment; Out of network claims.