Texas Statutes and Rules Pertinent to Life Insurance Only

An illustration must state that it is not a part of the insurance contract

"NOT PART OF CONTRACT"

Advertisements

-Accurate and not misleading -Insurers are responsible for all advertisements

Life Insurance Policy Comparison methods

-Interest-Adjusted Net Cost method: time value of money -Comparative Interest Rate method: rate of return

Duties of the replacing producer

-Present to the applicant a Notice Regarding Replacement that is signed by both the applicant and the producer. A copy must be left with the applicant. -Obtain a list of all existing life insurance and/or annuity policies to be replaced including policy numbers and the names of all companies being replaced. -Leave the applicant with the original or a copy of written or printed communications used for presentation to the applicant. -Submit to the replacing insurance company a copy of the replacement notices with the application.

Illustrations

-Presentations of non-regulated elements -General rule-include information about the insurer, insured, underwriting classifications, and policy benefits -Must be clearly labeled "Life Insurance Illustration"

Nonforfeiture requirements do not apply to the following types of insurance products

-Reinsurance -group insurance - Pure endowment -Annuities -Most term policies -Polices delivered outside of Texas through an agent or other company representative -Any policy that does not cash values or nonforfeiture values

The following provisions apply to termination and conversion of group life insurance policies issued in this state.

-The individuals who have been covered under a group policy for at least 5 years must apply for an insurance policy and pay the first premium to the insurer within 31 days after the date the individual's membership in a group life terminates -The individual policy must be issued without evidence of insurability -The insured has the right to select any individual policy offered, by the insurer, except for term insurance -The amount of the individual policy coverage cannot exceed the lesser of the amount of the prior group coverage of 2,000

Policy Provisions

-The policy, a copy of the application, and any attached riders make up the entire contract - All statements of the insured are deemed representations and not warranties -Life insurance policies are incontestable after the policy has been in force after 2 years -In the case of misstatement of an insured age, the policy will pay benefits based on what the premiums paid would have purchased at the insured's correct age. -A life insurance policy that has cash value must have a provision for the policy owner to borrow fropm

prohibited provisions

-certain limitation periods -retroactive issuance, exchange, or conversion -settlement upon maturity amount

Which of the following is correct regarding credit life insurance?

It insures the life of a debtor

An individual covered under a group life insurance policy may convert the policy to any of the following EXCEPT

LEVEL TERM

An individual covered under a group life insurance policy may convert the policy to any of the following EXCEPT

Level term

Nonforfeiture law

Nonforfeiture benefits are built into the policy and provide a guarantee that they cannot be forfeited or lost by the owner

During replacement of life insurance, a replacing insurer must do which of the following?

Obtain a list of all life insurance policies that will be replaced.

All of the following are mandatory life insurance policy provisions EXCEPT

Policy backdating

Duties of of the replacing producer

Present to the applicant a NOTICE REAGARDING REPLACEMENT that is signed both the applicant and the producer. A copy must be left with the applicant

According to the state nonforfeiture law for life insurance policies, insurers must offer at least one of the following nonforfeiture options EXCEPT

Reduction of premium

The regulations regarding replacement apply to which of the following?

Renewable term

Duties of the replacing insurance company

Require from the producer a list of the applicant's life insurance or annuity contracts to be replaced and a copy of the replacement notice provided to the applicant; and Send each existing insurance company a written communication advising of the proposed replacement within a specified period of time of the date that the application is received in the replacing insurance company's home or regional office. A policy summary or ledger statement containing policy data on the proposed life insurance or annuity must be included.

Which of the following may be included on an insurance advertisement?

Testimonials from compensated individuals

A life insurance policy must ensure the following

That upon surrender of the policy no later than 60 days after the due date of a premium payment, the company will pay a cash surrender value if the premiums have been paid for at least 3 full years for ordinary life insurance policies, or 5 years for industrial life insurance policies.

Prohibited practices in life insurance

Anything that is deceitful

All of the following information must be disclosed to the viator prior to the execution of a viatical settlement contract EXCEPT

Availability of stranger -originated life insurance (STOLI)

All of the following statements are correct regarding credit life insurance EXCEPT

Benefits are paid to the borrower's beneficiary

All of the following statements are correct regarding credit life insurance except

Benefits are paid to the borrowers beneficiary

Prohibited Provisions

Certain limitations period, a life insurance policy may not contain a provision under which the policy is issued on a date more than 6 months before the date of application if it causes the insured to rate at an age that is younger than the insured's age on the date of application. (back dating)

Which of the following is used to compare the cost of one life insurance policy against another in order to guide prospective purchasers to policies that are competitively priced?

Cost comparison methods

Which of the following is TRUE about credit life insurance?

Creditor is the policy owner

Which of the following is TRUE about credit life insurance?

Creditor is the policy owner, also the the beneficiary; the debtor is the insured

Which of the following is NOT allowed in credit life insurance?

Creditor requiring that a debtor buys insurance from a certain insurer

When possible, what should insurers strive to eliminate from illustrations?

Footnotes and caveats

Which of the following must be included in all life insurance advertisements?

Identity of the actual insurer

Regarding credit life insurance, who is responsible for reporting termination of debt to the insurer?

The creditor

Which of the following is NOT required on an illustration used in the sale of a life insurance policy?

The name of the primary and secondary beneficiaries

Those values that are not guaranteed must be identified as such

VALUES NOT GUARANTEED

Which of the following CANNOT be included along with illustrations used to sell life insurance?

Vanishing premium information

Policy loans

a life insurance policy must allow the policy owner to take out a policy loan from the policy's cash value as long as the policy is in force, the premiums have been paid for at least 3 years, and the policy is properly assigned.

The insured may assign

all rights and benefits under the policy to any individual, firm, corporation, association, trust, or other legal entity, other than the insured's employer

The creditor is the owner and beneficiary of the policy

although the premiums are generally paid by the borrower

Solicitation

an attempt to persuade a person verbally or in writing to buy an insurance policy

The insured may assign all rights and benefits under the policy to

any individual, firm, corporation, association, trust, or other legal entity, other than the insured's employer.

Duty of agents

before using an advertisement, an agent must file its contents with the home office of the insurer and receive a written approval.

The term of credit life insurance polices

begins on the date the debtor becomes obligated to the creditor

Credit life insurance

cannot pay out more than the balance of the debt

Credit life insurance

cannot pay out more than the balance of the debt so that there is no financial incentive for the death of the insured

Grace Period

consumer must be provided a grace period of at least one month for the payment of each premium during witch the policy remains in force. If the insured dies during the grace period, the over due premium will be deducted from any settlement made under the policy.

The type of insurance sold to a debtor and designated to pay the amount due on a loan if the debtor dies before the loan is repaid is called

credit life

They type of insurance sold to a debtor and designated due on a loan if the debtor dies before the loan is repaid is called

credit life

Which of the following would be the beneficiary in credit life insurance?

creditor

Which of the following is TRUE about credit life insurance?

creditor is the policy owner

Credit life is usually written as

decreasing term insurance, and it may be written as an individual policy or as a group plan.

The insurer is responsible

for all advertisement regardless of who wrote it or published it, created it, or distributed it

nonforfeiture laws

forfeiture benefits are built into the policy and provide guarantee that they cannot be lost by the policy owner. Thee guarantees are required by state law to be included in the policy

If evidence of the insured is required and provided after 30 days

from the time the debtor becomes obligated to the creditor, coverage may begin upon the approval of the insurer

Group Life Insurance

in Texas must cover at least 2 employees or labor union members on the date of its issue. If the insured employees to not pay any part of the premium, the policy must ensure all eligible employees

All advertisements are the responsibility of the

insurer

Duty of insurers

insurers marketing policies in Texas must maintain a system of control over the content/ form/ method of dissemination of all advertisements and policies

Credit Insurance

is a special type of coverage written to ensure the life of the debtor and pay off the balance of a loan in the event of the death of a debtor

Credit insurance

is a special type of coverage written to insure the life of the debtor and pay off the balance of a loan in the event of the death of a debtor

The replacement regulations does not apply to the following types of insurance:

-credit life -group life insurance and group annuities (not direct solicitation) -An application to the existing insurer that issued the existing policy when a contractual change or conversation privilege is being exercised, or when the existing policy is being replaced by the same insurer -Replacement under a binding or conditional receipt issued by the same company -Policies used to fund an employee pension or welfare benefit plan that are covered by ERISA -New insurance coverage provided under a life insurance policy the cost for which is borne in full by the insured's employer -Existing nonconvertible, nonrenewable term life insurance policy that expires within 5 years - immediate annuities purchased with proceeds from an existing contract -structured settlements

An illustration of a life insurance policy generally includes

-name of insurer - name and business address of producer or insured's authorized representative -name, age, and sex of proposed insured, except when a composite illustration is permitted under this regulation - underwriting or rating classification upon which the illustration is based -Generic name of policy, the company product, and form number -initial death benefit -dividend option election or application of non-guaranteed benefits if applicable -illustration dates -A prominent label stating "life insurance illustration"

Forfeiture agreements do not apply to the following insurance products

-reinsurance -group insurance -pure endowment -annuities -most term policies -policies delivered outside of Texas through an agent or other company representative -any policy that does not provide for cash values or nonforfeiture values

A life insurance policy must ensure the following

-that upon surrender of the policy, no later than 60 days after the due date of premium payment, the company will pay a cash surrender value if the premiums have been paid for at least 3 full years for ordinary life insurance policies

Viatical settlements may be rescinding within what time period after the viator receives the proceeds?

15 days

How long is the incontestability period in group life insurance policies issued in Texas?

2 years

Life insurance policies are incontestable after

2 years of being in force

Purchasers of a fixed annuity must be provided a free look period of at least

20 days

Unearned premiums must be refunded to the debtor within

30 days of the receipt of notice

Conversion to an individual whole life policy is permitted without evidence of insurability within how many days of the termination of employment?

31 days

How long is grace period in group policies?

31 days

How soon from the termination of debt under a credit life insurance policy must a creditor provide notice to the insurer?

60 days

The creditor must provide a notice of termination of dept to the insured within

60 days

Group life

A group policy issued in this state must cover at least 2 employees or labor union members

Settlement upon Maturity

A life insurance policy may not contain a provision for a settlement at maturity that is less than the face amount

Retroactive Issuance, Exchange or Conversion

A life insurance policy may not contain a provision under which the policy is issued on a date more than 6 months before the date of the application if it causes the insured to rate at an age that is younger than the insured's age on the date of the application

Certain limitation periods

A life insurance policy may not include a provision that limits the time during which a lawsuit may be filed to a period of less than 2 years after the cause of action

Policy Loans and Withdrawals

A life insurance policy must allow the policy owner to take out a policy loan from the policy's cash value as long as: -the policy is in force -the premiums have been paid for at least 3 years -and the policy is properly assigned

Free Look Provision

A policy provision required by state law that establishes a set number of 15 calendar days for the policyowner to review a newly issued policy. The policyowner may return the policy to the insurer during this time for any reason and receive a 100% refund. Also known as unconditional refund provision without penalty.

Free Look Provision

A policy provision required by state law that establishes a set number of days (15 calendar days) for the policyowner to review a newly issued policy. The policyowner may return the policy to the insurer during this time for any reason and receive a 100% refund. Also known as refund provision, unconditional refund provision, return provision, exchange provision, or right to examine.

Replacement: means any transaction in which life insurance or a new annuity is purchased and, as a result, the existing life insurance or annuity has been or will be any of the following

lapsed, forfeited, surrendered, or otherwise terminated. reissued with any reduction in cash value Converted to reduced paid up insurance, continued as extended term insurance or otherwise reduced in value by the use of non-forfeiture benefits; or other policy values; amended as to the effect either a reduction in benefits or in the term which for which coverage would otherwise remain in force or for which benefits would be paid; used in a financed purchase

Advertising

must be accurate and not misrepresent the facts

Settlement of Death Benefit

must be paid within 2 months

Advertisements

must be truthful and not misleading and if compensation is being paid, it must say "paid endorsement"

Purchasers of a fixed annuity

must have a free-look period of at least 20 days

Grace period must be at least

one month for the payment of each premium, if the insured dies within the grace period, the premium will be deducted from any settlement due under the policy.

Illustrations

presentation or depiction that includes non-guaranteed elements of a life insurance policy over a period of years

According to the state nonfofeiture law for life insurance policies, insurers must offer at least one of the following nonforfeiture options EXCEPT

reduction of premium

The regulations regarding replacement apply to which of the following?

renewable term

Decreasing Term Insurance

term insurance in which the annual premium remains constant but the face amount of the policy declines each year. It may be written as an individual policy or as a group policy.

The initial amount of credit life insurance may not exceed

the amount to be repaid under the contract

Viatical Settlement

the sale of a life insurance policy by a terminally ill insured to another party, typically to investors or investor groups, who hope to profit by the insured's early death

Coverage under a group life insurance may be extended to

the spouse and eligible children

What is the main purpose of the regulation on life insurance policy illustrations?

to help customers make educated decisions in buying life insurance

Dependent coverage

usually applies to the insured's spouse and children but may also include dependent parents or anyone else on which dependency can be proven.

Dependent coverage

usually applies to the insured's spouse and children, but may also include dependent parents or anyone else on which dependency can be proven.

Upon the submission of a death claim under a life insurance policy, when should the insurer pay the policy benefit?

within 2 months