11 - Texas Laws and Rules Pertinent to Insurance

A promotional advertising item is not considered a rebate unless it has a value equal to or less than what amount? - $50 - $25 - $100 - $10

$25

An employee is covered under a company group life plan with a $50,000 death benefit. What is the MAXIMUM amount a spouse may be insured for under this program? - $10,000 - $25,000 - $40,000 - $50,000

$25,000

An insured may assign up to ___ of policy ownership under an individual life insurance policy. - 25% - 50% - 75% - 100%

100%

In TX, how long must a policy be in force before an insurance company must pay death benefits for suicide?

2 years

A new general property and casualty licensee must complete at LEAST ____ hours of continuing education within 24 months of initial licensure

24

In TX, an individual life insurance policy is REQUIRED to have a grace period of: - 15 days - 20 days - 30 days - 31 days

31 days

____ of continuing education MUST be completed in the classroom or classroom equivalent: - 20% - 50% - 80% - 100%

50%

How long can a cash surrender value payment be deferred by the insurance company under the Nonforfeiture Law? - 1 month - 4 months - 6 months - 9 months

6 months

A temporary agent's license issued by the commissioner of insurance is valid for up to ___ days: - 60 - 90 - 120 - 180

90

What is the monetary penalty for willfully violating a cease-and-desist order? - a fine of up to $500 - a fine of up to $250 - a fine of up to $50 - a fine of up to $100

A fine of up to $500

Which of the following actions does the Commissioner of Insurance NOT have the power to conduct? - Activate insurance companies' financial reserves - Issue a cease-and-desist order - Issue insurance licenses - Regulate the business of insurance in this state

Activate insurance companies' financial reserves

An example of false advertising would be: - paid testimonials from celebrity endorsements - an insurer exaggerating its dividends in a magazine advertisement - a producer spending more than $25 on marketing gifts for a client - an insurer advertising in an insurance trade journal

An insurer exaggerating its dividends in a magazine advertisement

In TX, which of these statements regarding the Suicide clause is TRUE? - an insurer may not use suicide as a defense against payment after the first year - an insurer must always pay a death benefit when the cause of death was suicide - an insurance company may only deny a suicide death claim if an exclusionary rider is attached to the policy - an insurer may not use suicide as a defense against payment after the second year

An insurer may not use suicide as a defense against payment after the second year

With whom may an agent legally share commissions? - insured - applicant - beneficiary - another agent with the same line of insurance

Another agent with the same line of insurance

Which of the following is a requirement for obtaining a TX insurance agent's license? - be honest, trustworthy, and reliable - be at least 21 years old - be a college graduate - be a high school graduate

Be honest, trustworthy, and reliable

As a condition for a loan, a bank requires the borrower to purchase credit insurance from a specific company. What is the bank guilty of? - coercion - defamation - rebating - misrepresentation

Coercion

Which of the following is NOT included in a life insurance illustration? - Underwriting classification upon which the illustration is based - Insurer's name - Amount of death benefit - Company's mortality table

Company's mortality table

How often must an insurance agent license normally be renewed? - every six months - each year - every two years - every three years

Every two years

Which of these provisions is NOT required in life insurance policies? - Free look - Grace period - Extended Term - Entire contract

Extended Term

What is an organization that solicits insurance only to its members? - domestic society - singular company - limited liability company - fraternal benefit society

Fraternal benefit society

Which of the following groups may NOT be insured by a group life insurance policy? - Employees - Supervisors - Administrators - Individuals who are related by blood

Individuals who are related by blood

Which Unfair Trade Practice involves an agent telling a prospective client that a policy's dividends are guaranteed? - twisting - rebating - misrepresentation - sliding

Misrepresentation

When will a hearing be held after a notice of hearing, alleging participation in an unfair or deceptive act, is served to a licensee or insurer by the Commissioner? - no sooner than 30 days - no sooner than 15 days - no sooner than 10 days - no sooner than 6 days

No sooner than 6 days

Which action will a life insurance company most likely take if an insured dies and it is discovered that the insured's age was misstated on the application? - pay an amount reduced by a specific percentage of the face amount - pay nothing - pay an amount the premiums would have purchased at the insured's actual age - pay 50% of the initial death benefit

Pay an amount the premiums would have purchased at the insured's actual age

Which of the following is NOT a required provision in group life policies? - Free look - Incontestible - Conversion - Right to Loan

Right to Loan

Which of these is NOT an example of doing insurance business? - Selling shares of stock - Receiving an insurance application - Collecting insurance premium - Delivering an insurance policy

Selling shares of stock

All of these statements about the Commissioner of Insurance are true EXCEPT - The Commissioner must be elected - The Commissioner regulates the business of insurance in this state - The Commissioner ensures that TX insurance laws are executed - The Commissioner protects and ensures the fair treatment of consumers

The Commissioner must be elected

Why would the Insurance Commissioner examine the records of an insurance company? - to determine the solvency of the company - to set insurance rates for the company - to assist in underwriting - to assess the company's value

To determine the solvency of the company

How long does an insurance company appointment remain in force? - one year - two years - three years - until terminated

Until terminated

What is required for an agent whose license has been revoked? - wait at least five years before applying for a new license - wait at least ten years before applying for a new license - submit a letter of apology to the insurance commissioner along with a $500 fine - obtain a personal $500,000 E&O policy

Wait at least five years before applying for a new license

If an insured's age was misstated on a life insurance contract, the Misstatement of Age provision requires that any death benefit payable would be: - reduced by 50% - an amount that premiums paid would have purchased at the current age - contested in front of an arbitrator - forfeited

an amount that the premiums paid would have purchased at the current age

An insurer is NOT required to provide information on fraudulent claims if requested by: - the TX Department of Insurance - Attorney General - Commissioner - insured

an insured

A certificate of ____ permits an insurance company to transact business in Texas - authenticity - admission - permission - authority

authority

B, an insurance agent, tells his clients that their rights may be impaired if they fail to complete a release form within a given period of time. B may be found guilty of: - boycotting - rebating - coercion - discrimination

coercion

The phrase "transacting business" includes: - obtaining an insurance license - collecting premiums - setting insurance rates - advertising a new product in a trade journal

collecting premiums

An insurance company organized under New York laws and licensed to do business in TX is considered a(n): - reciprocal company - foreign company - alien company - export company

foreign company

During a sales presentation for a participating life insurance policy, an agent MUST: - make a prospect understand that dividends are NOT guaranteed - make a prospect understand that dividends ARE guaranteed - offer to the prospect a minimum return of investment - offer to the prospect a portion of the commissions

make a prospect understand that dividends are NOT guaranteed

Who owns a stock insurance company? - board of directors - stockholders - agents - policyowners

stockholders

An example of an unfair claims settlement practice is: - making it mandatory that proof of loss be provided for each claim - requiring a time limit for submitting a claim - paying a claim in a timely matter - turning down a claim without providing the basis of denial

turning down a claim without providing the basis of denial

ABC Insurance Company is actively engaging in boycott, coercion, and intimidation that results in the unreasonable restraint of trade. ABC is committing a prohibited act under Texas insurance laws covering: - twisting - false advertising - rebating - unfair methods of competition

unfair methods of competition

A foreign insurance company conducting insurance business in TX: - is not subject to TX insurance laws - was formed under the laws of another state - was formed under the laws of another country - is only authorized to write business outside the US

was formed under the laws of another state

Credit Life insurance is - illegal in this state - insurance issued on a debtor to cover outstanding loan balances - not regulated in this state - insurance issued to a creditor to cover outstanding loan balances

insurance issued on a debtor to cover outstanding loan balances

A license may be denied, suspended, or revoked if the licensee: - engages in replacement of an existing policy - is found guilty of misrepresentation in obtaining the license - files for bankruptcy - fails to meet a sales quota

is found guilty of misrepresentation in obtaining the license

An example of rebating would be: - returning a portion of a premium as inducement to purchase insurance - advertising cheaper insurance rates than competitors - a mutual insurance company paying dividends to its policyowners - an offer of rated insurance coverage

returning a portion of a premium as inducement to purchase insurance

To terminate an agent's appointment, an insurance company must: - send termination notice to the TX department of insurance - send termination notice to governor - pay a termination fee - request a hearing before the commissioner of insurance

send termination notice to the Texas Department of Insurance

Who is liable when an insured suffers a loss on a policy sold by an agent through an insurer not authorized to conduct business in Texas? - insured - agent and insured - agent - commissioner of insurance

the agent

A domestic insurance company in TX is considered a company that? - own real estate in TX - write insurance on risks located only in TX - is incorporated and formed in TX - honors the charter of the national association of insurance commissioners (naic)

is incorporated and formed in TX

An insurance agent has a fiduciary responsibility to all of the following EXCEPT - applicants - insureds - insurers - other agents

other agents