17 Free Texas Life Agent Practice Questions: Policy Types, Riders and Annuities (2026)
How to Use This Life Policies and Annuities Question Set
Types of policies and Policy riders, provisions, options and exclusions each carry 15 scored questions on the Life Agent exam's general knowledge section, the two heaviest categories in a 50-question section that also covers application and underwriting (12) and retirement and other insurance concepts (8). Annuities are tested inside the types-of-policies weight rather than as a separate category. Together these two categories are 30 of the 50 general scored questions, more than a third of the whole 80-question scored exam.
These 17 questions come from Chapters 2 through 4 of LanePrep's Texas Life Agent quiz bank, none of them repeated from the free 25-question sample across the whole exam: 7 on life insurance policy types (Chapter 2), 3 on annuities (Chapter 3), and 7 on beneficiary designations, settlement options and policy provisions (Chapter 4). Each question shows its chapter, so a miss tells you exactly which audio lesson to replay.
Work them before you read the answer. Every question has the explanation folded underneath it. Guessing and then reading is worth more than reading and then agreeing.
Practice Questions 1-6: Term and Whole Life Policy Types
Chapter 2 moves through the shapes a life policy can take: the convertible feature that lets a term policy become permanent coverage without new proof of insurability, the return-of-premium term policy that refunds premiums if the insured outlives the term, straight life's level premiums paid for life, the limited-pay design that stops collecting premiums after a set number of years, a single premium that pays up a whole life policy from day one, and the joint life policy that pays out on the first of two insureds to die.
Question 1 (Chapter 2)
A client, David, currently has a 15-year Level Term life insurance policy. He anticipates that his long-term financial needs will require permanent life insurance coverage in the future, but he wants to avoid having to prove his insurability again when he makes that transition. Which feature should David's current term policy include to guarantee this option?
- A) Convertible Feature
- B) Renewable Feature
- C) Accelerated Death Benefit Rider
- D) Return-of-Premium Feature
Show answer & explanation
Answer: A
A Convertible Feature allows the policyowner to convert a term policy into a permanent life insurance policy (such as Whole Life or Universal Life) without providing new evidence of insurability. This is crucial for David as he wants to avoid proving insurability when transitioning to permanent coverage. The Renewable Feature allows renewal of the term policy, not conversion to permanent. Accelerated Death Benefit is a rider for terminal illness, and Return-of-Premium is a type of term policy that returns premiums if the insured outlives the term.
Question 2 (Chapter 2)
Emily purchased a 20-year term life insurance policy with a unique provision. If she outlives the 20-year term, she will receive all of the premiums she paid back. Which type of term life insurance policy did Emily purchase?
- A) Return-of-Premium Term Life
- B) Level Term Life
- C) Decreasing Term Life
- D) Increasing Term Life
Show answer & explanation
Answer: A
Return-of-Premium Term Life insurance is a specific type of term policy that, if the insured outlives the policy term, returns all or a portion of the premiums paid to the policyowner. This feature makes the premiums significantly higher than traditional term policies. The other options (Level, Decreasing, Increasing Term) do not offer a return of premiums if the insured outlives the term.
Question 3 (Chapter 2)
A 40-year-old client, Michael, wants a life insurance policy that offers lifelong coverage, builds cash value steadily over time, and has level premiums that he will pay until his death. He is looking for simplicity and predictability. Which type of policy would best meet Michael's needs?
- A) Limited-Pay Whole Life
- B) Universal Life
- C) Decreasing Term Life
- D) Straight Life (Ordinary Life)
Show answer & explanation
Answer: D
Straight Life, also known as Ordinary Life, is a type of Whole Life insurance characterized by level premiums payable for the entire life of the insured, level death benefit, and guaranteed cash value accumulation. This aligns perfectly with Michael's desire for lifelong coverage, steady cash value, and level premiums paid until death. Limited-Pay Whole Life has premiums paid for a shorter, specified period. Universal Life offers flexible premiums and an adjustable death benefit, which is less predictable. Decreasing Term is temporary coverage with no cash value.
Question 4 (Chapter 2)
Mrs. Rodriguez, a successful business owner, wants to purchase a permanent life insurance policy but prefers to pay all premiums within a specific, shorter period, such as 20 years, rather than for her entire life. After this period, she wants the policy to remain in force with no further premium payments required. Which policy type would be most suitable for Mrs. Rodriguez?
- A) Limited-Pay Whole Life
- B) Straight Life
- C) Single-Premium Whole Life
- D) Graded-Premium Whole Life
Show answer & explanation
Answer: A
Limited-Pay Whole Life insurance is designed for individuals who want to pay for their entire life insurance coverage over a shorter, specified period (e.g., 10-pay, 20-pay, or paid-up at age 65). Once the premiums are paid, the policy remains in force for the insured's lifetime, and no further premiums are due. Straight Life requires premiums for life. Single-Premium Whole Life involves one large upfront payment. Graded-Premium Whole Life has lower initial premiums that increase over time.
Question 5 (Chapter 2)
A wealthy individual wishes to purchase a substantial life insurance policy and wants to fund it with a single, large upfront payment to maximize immediate cash value growth and ensure the policy is paid up from the start. Which type of whole life policy would be appropriate?
- A) Limited-Pay Whole Life
- B) Modified Whole Life
- C) Graded-Premium Whole Life
- D) Single-Premium Whole Life
Show answer & explanation
Answer: D
Single-Premium Whole Life requires one large upfront payment, after which the policy is considered paid-up for life. This type of policy offers immediate cash value accumulation and is often chosen by individuals who have a lump sum of money and want to maximize the policy's growth potential from the outset. Limited-Pay Whole Life involves multiple payments over a shorter period. Modified and Graded-Premium Whole Life policies have varying premium structures over time, not a single upfront payment.
Question 6 (Chapter 2)
Mr. and Mrs. Smith want to purchase a life insurance policy that covers both of them but pays out the death benefit only upon the death of the first insured. This payout is intended to provide immediate financial support to the surviving spouse. Which type of policy should they consider?
- A) Joint Life
- B) Survivorship Life
- C) Family Policy
- D) Individual Whole Life policies for each
Show answer & explanation
Answer: A
Joint Life insurance (often called 'First-to-Die' policy) covers two or more lives and pays out the death benefit upon the first death among the insureds. The policy then terminates. This is suitable for couples who want to provide financial support to the surviving spouse immediately. Survivorship Life (Second-to-Die) pays out only upon the death of the last insured. A Family Policy typically covers the primary insured, spouse, and children with different types of coverage. Individual policies would be separate contracts.
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Practice Questions 7-11: Survivorship Life, Annuities and the Waiver of Premium Rider
Chapter 2 closes with survivorship life, the second-to-die policy built for estate tax liquidity after both spouses have died. Chapter 3 then opens the annuity section: the flexible premium deferred annuity suited to regular contributions over many working years, the single premium immediate annuity that turns a lump sum into income right away, and the fixed annuity that trades market risk for a guaranteed rate. Chapter 4 opens with the waiver of premium rider that keeps a policy in force during a qualifying total disability.
Question 7 (Chapter 2)
A wealthy couple, the Johnsons, are concerned about estate taxes and want to ensure their heirs have sufficient funds to cover these taxes when both of them have passed away. They are looking for a life insurance policy that covers both of them but will only pay out the death benefit after the second spouse dies. Which type of policy would be most appropriate?
- A) Joint Life
- B) Individual Universal Life policies
- C) Family Income Rider attached to a Whole Life policy
- D) Survivorship Life
Show answer & explanation
Answer: D
Survivorship Life insurance, also known as 'Second-to-Die' insurance, covers two or more lives and pays out the death benefit only upon the death of the last surviving insured. This type of policy is commonly used for estate planning purposes, such as covering estate taxes, as these taxes are typically due after the second spouse's death. Joint Life pays on the first death. Individual policies would pay on each death separately. A Family Income Rider provides a monthly income benefit for a specified period after the primary insured's death.
Question 8 (Chapter 3)
John, 45, wants to start saving for retirement but prefers to make regular, smaller contributions over many years rather than a single large deposit. He is looking for an annuity that allows him to contribute monthly until he retires at age 65. Which funding method is most suitable for John's needs?
- A) Single Premium Immediate Annuity (SPIA).
- B) Flexible Premium Deferred Annuity.
- C) Single Premium Deferred Annuity.
- D) Immediate Variable Annuity.
Show answer & explanation
Answer: B
John's desire to make regular, smaller contributions over many years points to a Flexible Premium annuity. Since he plans to contribute until retirement at age 65, the payouts will be deferred until a later date, making it a Deferred Annuity. Therefore, a Flexible Premium Deferred Annuity is the most suitable option. A Single Premium annuity involves one lump sum, and an Immediate Annuity starts payouts within one year, neither of which fits John's scenario.
Question 9 (Chapter 3)
Sarah, 72, recently sold her home and received a large sum of money. She needs to supplement her current retirement income immediately and wants to start receiving monthly payments as soon as possible, ideally within the next few months. Which type of annuity would best meet Sarah's immediate income needs?
- A) Single Premium Immediate Annuity (SPIA).
- B) Flexible Premium Deferred Annuity.
- C) Equity-Indexed Deferred Annuity.
- D) Variable Deferred Annuity.
Show answer & explanation
Answer: A
Sarah has a large lump sum (Single Premium) and needs income immediately (within one year). A Single Premium Immediate Annuity (SPIA) is designed for this exact purpose, converting a lump sum into an immediate, regular income stream. Deferred annuities would delay payments, and flexible premium annuities involve multiple contributions over time, neither of which fits her immediate need.
Question 10 (Chapter 3)
Mr. Henderson is considering an annuity and prioritizes safety and predictable income. He wants a guaranteed interest rate on his principal and stable, fixed payments during the annuitization phase, without exposure to stock market fluctuations. Which type of annuity would be most appropriate for Mr. Henderson?
- A) Variable Annuity.
- B) Fixed Annuity.
- C) Equity-Indexed Annuity.
- D) Market Value Adjusted Annuity.
Show answer & explanation
Answer: B
Mr. Henderson's desire for a guaranteed interest rate, stable fixed payments, and no exposure to market fluctuations are all hallmarks of a Fixed Annuity. The principal is held in the insurer's general account, and the insurer bears the investment risk. Variable annuities expose the annuitant to market risk, and equity-indexed annuities, while offering a minimum guarantee, also link returns to an index, introducing some variability.
Question 11 (Chapter 4)
John has a whole life insurance policy with a Waiver of Premium rider. He becomes totally disabled and is unable to work. What will happen to his policy premiums?
- A) The policy will automatically convert to a paid-up policy with a reduced face amount.
- B) The premiums will be deducted from the policy's cash value as an automatic premium loan.
- C) John must continue to pay premiums, but he will receive a tax credit for the payments.
- D) The premiums will be paid by the insurance company for the duration of his disability, and the policy will remain in force.
Show answer & explanation
Answer: D
The Waiver of Premium rider is designed to protect the policy if the insured becomes totally disabled. If the insured meets the definition of total disability as defined in the policy, the insurance company will waive (pay) all future premiums for the duration of the disability, keeping the policy in force. Options A and B describe other policy provisions or nonforfeiture options, and option C is incorrect regarding tax credits for premium payments.
Practice Questions 12-17: Beneficiary Designations, Settlement Options and Policy Provisions
Chapter 4 continues through the provisions and riders built around the death benefit itself: the per stirpes designation that passes a deceased beneficiary's share to their own children, the fixed period installment settlement option, the automatic premium loan that prevents an accidental lapse, the entire contract provision that limits the agreement to what is actually in the policy and its attachments, the reinstatement requirements for a lapsed policy, and the accelerated death benefit rider that pays part of the death benefit to a terminally ill insured while still living.
Question 12 (Chapter 4)
A policyowner wants to ensure that if she dies, her three children (Alice, Bob, and Carol) receive equal shares of the death benefit. If one of her children predeceases her, she wants that child's share to go to their own children (her grandchildren). Which beneficiary designation method should she use?
- A) Per Capita
- B) Revocable
- C) Irrevocable
- D) Per Stirpes
Show answer & explanation
Answer: D
Per Stirpes (meaning 'by the branch' or 'by roots') ensures that if a named beneficiary predeceases the insured, that beneficiary's share will pass to their living descendants (e.g., grandchildren). Per Capita (meaning 'by the head') would distribute the death benefit only among the surviving named beneficiaries, excluding the descendants of any deceased beneficiaries. Revocable and Irrevocable refer to the ability to change the beneficiary, not the distribution method.
Question 13 (Chapter 4)
Upon the death of the insured, the beneficiary wants to receive the death benefit in regular, equal installments for a specific period of 15 years, regardless of how long they live. Which settlement option should the beneficiary choose?
- A) Fixed Period Installments
- B) Lump Sum
- C) Interest Only
- D) Life Income with Period Certain
Show answer & explanation
Answer: A
The Fixed Period Installments (or Period Certain) settlement option pays the death benefit, including interest, in equal installments over a specified period of time. The amount of each installment is determined by the death benefit amount and the chosen period. Lump Sum is a single payment. Interest Only leaves the principal with the insurer and pays out only the interest. Life Income with Period Certain provides income for the beneficiary's life, with a guarantee for a minimum period, which is different from a fixed period regardless of life expectancy.
Question 14 (Chapter 4)
A policyowner wants to ensure their life insurance policy will not lapse due to an accidental oversight in paying a premium. They have sufficient cash value in the policy. Which policy provision or option would best prevent an unintentional lapse?
- A) Automatic Premium Loan (APL) provision
- B) Grace Period
- C) Reinstatement Provision
- D) Extended Term Insurance
Show answer & explanation
Answer: A
The Automatic Premium Loan (APL) provision is a rider that, if elected, automatically borrows from the policy's cash value to pay a premium that is due, preventing the policy from lapsing. The Grace Period provides a short window after the due date but doesn't pay the premium. The Reinstatement Provision allows a lapsed policy to be restored, but the goal is to prevent the lapse in the first place. Extended Term Insurance is a nonforfeiture option used when premiums are stopped entirely, not for preventing an accidental lapse.
Question 15 (Chapter 4)
An insured applied for a life insurance policy and verbally told the agent that a specific rider would be included. However, the rider was not mentioned in the policy document itself or any attached amendments. When a claim arises, the policyowner argues the rider should apply. Which policy provision dictates the outcome?
- A) The Incontestability Clause
- B) The Misstatement of Age Provision
- C) The Grace Period
- D) The Entire Contract Provision
Show answer & explanation
Answer: D
The Entire Contract Provision states that the policy document, along with the application and any attached riders or amendments, constitutes the *entire contract* between the policyowner and the insurance company. This means that no verbal promises or separate documents not attached to the policy are binding. Therefore, the verbally promised rider would not be considered part of the contract. The other options address different aspects of a policy.
Question 16 (Chapter 4)
A policyowner allows their life insurance policy to lapse after failing to pay premiums for several months. They later decide they want to restore the policy to its original terms. Which of the following is typically NOT a requirement for reinstating a lapsed policy?
- A) Purchasing a new policy with a new issue date and updated premiums.
- B) Paying all back premiums with interest.
- C) Providing proof of insurability.
- D) Repaying any outstanding policy loans with interest.
Show answer & explanation
Answer: A
The Reinstatement Provision allows a lapsed policy to be restored to its original terms within the timeframe specified in the policy. The usual requirements include paying all back premiums with interest, providing proof of insurability (often a new medical exam), and repaying any outstanding policy loans with interest. Purchasing a new policy (option A) is an alternative to reinstatement but is not a requirement *for* reinstatement itself; reinstatement specifically avoids the need for a new policy.
Question 17 (Chapter 4)
An insured has a life insurance policy with an Accelerated Death Benefit rider. She is diagnosed with a terminal illness and given less than 12 months to live. What does this rider allow her to do?
- A) Increase her policy's death benefit without further underwriting.
- B) Convert her term life policy to a whole life policy.
- C) Waive future premium payments due to her illness.
- D) Receive a portion of her policy's death benefit while still living.
Show answer & explanation
Answer: D
The Accelerated Death Benefit rider allows an insured who is diagnosed with a terminal illness (or sometimes other qualifying conditions like critical or chronic illness) to receive a portion of their policy's death benefit while they are still alive. This provides financial relief during a difficult time. Option A describes a Guaranteed Insurability rider or Paid-Up Additions. Option B describes a Conversion privilege. Option C describes a Waiver of Premium rider.
The Mistakes That Cost Marks
Confusing the entire contract provision with the statement of insured. TIC 1101.003 is the entire contract provision, the policy plus the application plus any attached riders. TIC 1101.007 is a separate section, the statement of insured. The two numbers sit three digits apart and get swapped constantly.
Assuming a misstatement of age voids a policy. TIC 1101.008 adjusts the death benefit to what the premium paid would have purchased at the correct age; it does not void the contract or let the insurer deny the claim outright.
Treating the waiver of premium rider and the accelerated death benefit rider as interchangeable. A waiver of premium rider keeps the policy in force during a qualifying total disability by waiving future premiums. An accelerated death benefit rider pays out part of the death benefit early for a terminal illness. Neither one does what the other does.
Mixing up joint life and survivorship life. A joint (first-to-die) policy pays on the first of two insureds to die; a survivorship (second-to-die) policy pays only after both have died. They sit at opposite ends of a two-life policy, not next to each other.
Assuming every annuity behaves like a fixed annuity. A flexible premium deferred annuity, a single premium immediate annuity and a fixed annuity solve different problems, accumulation over time, immediate income from a lump sum, and a guaranteed rate with no market exposure, and the exam tests the difference between them.
Your Next Step
How did you score?
13 or more correct: You're clearing most of the policy types, riders and annuities material, the two heaviest-weighted categories on the exam. Move to the Texas insurance law set next, since the state section is where most candidates lose ground, then read how to pass the Texas Life Agent exam on the first try for the full study plan.
9-12 correct: You're in reasonable shape but not comfortable. Note which chapter your misses fell in and replay that chapter's audio lesson before retesting.
Under 9 correct: Start with Chapter 2 of the LanePrep Texas Life Agent course and work forward through Chapter 4 rather than testing yourself again right away. A free preview is available at /tx/life/preview, no signup required.
For a 25-question sample across the whole exam, see the free practice set.
Content outline weights from Pearson VUE's Texas Life Agent examination content outline (124401), effective September 1, 2026. Read October 2026.
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