Ch. 14- State Laws
According to the Texas Insurance Code, an insurance company incorporated in New Mexico is a(n):
Foreign insurer
All of the following statements about life insurance policy provisions are correct, except:
If a policy lapses due to unpaid premiums, it may only be reinstated up to 2 years after lapse-- 3 years
Guaranteed Issue
Insurers must provide health insurance to any person regardless of medical history or current state of health; premiums must be offered at an average and the law restricts the ability of the insurer to limit the scope of coverage
Pediatric vision services
required to be offered under all health insurance plans purchased through the marketplace. includes yearly screenings.
To terminate an agent's appointment
the insurance company must send notice to the Texas Department of Insurance.
Which of the following is not included in a Summary of Benefits and Coverage?
Premium
An individual who was denied a license, or whose license was revoked, must wait
5 years before applying for an agent license.
All of the following are required to be included in a life insurance illustration, except:
Company specific mortality tables- A life insurance illustration must include the insurer's name, authorized representative of insurer or agent, proposed insured's name, age and gender, underwriting or rating classification used as the basis for the illustration, policy's generic name, company product name and policy form number, and the initial death benefit. Companies do not have specific mortality tables.
Dependents
Coverage for dependents must continue to age 26
Preventive Services
Preventive care benefits must be provided for children and adults at no cost under marketplace health plans, as long as they are delivered by a doctor in the plan's network. The plan cannot charge a deductible, copayment, or coinsurance for these services. Covered services include immunizations and screenings for obesity, cancer, HIV, depression, and Type 2 diabetes.
If a policy is sold by an agent through an unauthorized insurer, who would be liable if the insured sustains a loss on the policy?
The insurer and the agent- If a loss is sustained, both the unauthorized insurer and the agent who assisted, directly or indirectly, in the sale of the contract, are liable to the insured for the amount of a claim or loss under the terms of the contract.
Bronze plans
cover 60% of the benefit costs
alien insurer
organized under the laws of a jurisdiction outside the United States, whether it is admitted to do business in this state
To terminate an agent's appointment, the insurer must:
Notify the Texas Department of Insurance of the termination of appointment, which does not cancel or terminate the license.
Mental Health Parity
Coverage for treatment of pre-existing mental health and substance abuse conditions must begin the day coverage starts.
Which of the following is an example of what an advertisement cannot do?
Imply that an insurer is endorsed by a government entity
Enrollee
Individual enrolled in a health care plan and includes dependents.
Health Maintenance Organization (HMO)
Provides a health care plan to enrollees on a prepaid basis.
Grace Period
This provision must provide for a period of at least 30 days for the payment of any premium falling due after the first premium during which the coverage remains in effect.
An outline of coverage must be delivered to an applicant for an individual or group LTC insurance policy or certificate
at the time of initial solicitation. The delivery must be conducted by means that direct the attention of the recipient to the document and its purpose in a prominent manner.
An agent's license expires on the _____ anniversary of the date the license was issued.
second
If an HIV test result is positive
the insurer must notify, in writing, a physician designated by the proposed insured or, if one is not designated, insurer will notify the Texas Department of HEALTH
With respect to advertising requirements, all of the following are allowable unless the insurer:
An advertisement may not include the terms savings, investment, investment plan, profit, profit sharing, interest plan, or other similar terms that imply that the product advertised is something other than life insurance or an annuity.
The Commissioner is authorized to perform all of the following duties, except:
Suspend insurance licenses for up to 5 years- its only 1 year
An HMO must hold an open-enrollment period at least annually for:
31 days
Preexisting Condition
A condition for which medical advice was given or treatment was recommended by, or received from, a physician within six months before the effective date of coverage.
Which of the following statements is false regarding types of insurers?
A foreign insurer is organized under the laws of a jurisdiction outside of the U.S.-- should be another state
The outline of coverage must be a freestanding document, not contain any advertising material, and include the following information:
A policy designation stating the type of policy (i.e., individual or group) The purpose of the outline of coverage (i.e., a brief description of some of the policy's important features) The terms under which the policy or certificate may be returned and the premium refunded A description of benefits provided by the policy, including covered services, deductibles, waiting periods, elimination periods, benefit maximums, institutional and non-institutional benefits by skill level, and eligibility for the payment of benefits The policy's limitations and exclusions The offer of all available nonforfeiture options, including the premiums and percentages of premium increases associated with each option and a disclosure that if the nonforfeiture options are rejected that a contingent benefit upon lapse will be provided A disclosure regarding federal tax treatment of the long-term care insurance policy
Health Insurance Premium Tax Credit
A tax credit can be used to lower monthly premiums ONLY when an individual enrolls in a plan through the marketplace. The tax credit is based on the individual's estimated household income. If an individual obtains minimum essential coverage OUTSIDE the marketplace (through a private company), is offered affordable employer-sponsored coverage, or is eligible for Medicaid, Medicare, or other designated coverage, the individual is not eligible for premium subsidies.
A license may be suspended or revoked for which of the following?
An agent is actively engaged in soliciting insurance only to family members
Which of the following is a method used by an HMO to compensate a physician or provider for providing a defined set of health care services and is based on a predetermined payment per enrollee:
Capitation is a method used by an HMO to compensate a physician or provider for providing a defined set of health care services and is based on a predetermined payment per enrollee and not the quantity of services actually provided.
Long-term Care Partnership Insurance Policy
Policy provides access to Medicaid under special eligibility rules should additional LTC coverage be needed beyond what the policy provides.
Producer A tells his clients, falsely, that a rival insurer does not pay claims in a timely fashion. This is an example of what Unfair Trade Practice?
Defamation
Deductibles
The HMO may only charge a deductible for services that are actually performed outside the HMO's service area or by a physician or provider not in the HMO's provider network. The HMO must state the deductible in the group, individual, or conversion certificate.
Copayments
The copayment may be expressed as a dollar amount or a percentage of the contracted rate (not to exceed 50%). The HMO must state the copayment in the group, individual, or conversion certificate.
All of the following regarding Evidence of Coverage are correct, except:
The evidence of coverage must be delivered in writing- it can be done electronically
Exclusions and Limitations
This provision must set forth any exclusions and limitations that pertain to basic, limited, or single health care services.
Summary of Benefits and Coverage (SBC)
explains the plan's benefits and services, and must be written in easy-to-understand language. It must include covered benefits and services, cost-sharing provision (deductibles, copayments, coinsurance) and coverage exceptions, exclusions, and limitations.
What does evidence of coverage include
the name, address, and phone number of the HMO. A toll-free number, as defined in insurance code, must appear on the face page of the contract or certificate.
Automatic fine
$50 per credit hour not completed (not exceed $500 per license reporting period)
What is the maximum allowable percentage of policy ownership an insured may transfer under an assignment?
100%- Life insurance policies are permitted to contain a provision that allows the transfer or assignment of up to 100% ownership or rights of the policy, benefits, or proceeds.
It is an Unfair Claims Settlement Practice to fail to acknowledge a claim how long after receiving it?
15 business days
Which of the following is a true statement about the regulation of advertising?
A basic illustration shows both guaranteed and non-guaranteed elements
Which of the following would NOT be an eligible group for group life insurance?
A group of individuals formed solely for purchasing life insurance
Qualified Long-term Care Insurance Contract
A long-term care insurance contract with benefits that are not taxable.
Capitation
A method used by an HMO to compensate a physician or provider for providing a defined set of health care services and is based on a predetermined payment per enrollee and not the quantity of services actually provided
Which type of insurance company is owned by its policyholders?
A mutual insurer is owned by its policyholders.
Which insurance company's board of directors is elected by its policyholders?
A mutual insurer's board of trustees or directors is elected by the policyholders.
Level Premium Long-term Care Policy
A non-cancellable long-term care policy.
Eligibility requirements must clearly be stated as follows:
A subscriber must reside, live, or work in the service area and the legal residence of any enrolled dependents must be the same as the subscriber The conditions under which dependent enrollees may be added The evidence of coverage may not contain a provision excluding or limiting coverage for a newborn child Newborn children are covered immediately at birth for the initial 31 days and the enrollee must be provided 31 days after the birth to notify the HMO of the addition of the newborn as a covered dependent Benefits may be provided to an enrollee's dependent grandchild who is living in the same household The limiting age applicable to an unmarried child or grandchild of the enrollee is age 25 and must be clearly stated
There are 10 categories of benefits that must be offered by every plan offered in a marketplace. The Essential Health benefits package must provide at least the following:
Ambulatory patient services Maternity and newborn care Emergency services Hospitalization Laboratory services Preventive, wellness, and chronic disease management Mental and behavioral health services and substance use disorder Prescription drugs Pediatric services, including dental and vision care Rehabilitative and habilitative services and devices
Long-term Care Insurance
An insurance policy that provides coverage for not less than 12 consecutive months for each covered person on an expense-incurred, indemnity, prepaid, per diem or other basis for one or more necessary or medically necessary services of the following types, administered in a setting other than an acute care unit of a hospital: diagnostic, preventive, therapeutic, curing, treating, mitigating, rehabilitative, maintenance, or personal care.
Which of the following is considered false advertising?
An insurer exaggerates its dividends in statements published in a newspaper
A long-term care policy issued in Texas must, at a minimum, be offered as:
Guaranteed renewable
A corporation applying for an agency license must meet which of the following requirements?
At least one officer or active partner must be individually licensed int eh same line of authority. Only the employees transacting insurance must also be individually licensed. Each business location acting under the authority of a license must be registered separately with the Department. There is no requirement for how long a business has been incorporated prior to applying for an agency license.
Life and Health Insurance Counselor
Charges a fee or other compensation to examine a life, accident, or health policy, annuity or pure endowment contract to provide advice or other information regarding: The policy, plan, or contract terms, conditions, benefits, coverage, or premiums The advisability of changing, exchanging, converting, replacing, surrendering, continuing, or rejecting a policy, plan, or contract from an insurer or health plan issuer
Holding which of the following professional designations will exempt a person from taking the life licensing examination?
Chartered Life Underwriter (CLU)
Which of the following is not a valid nonforfeiture benefit option required when the nonforfeiture provision is included in a long-term care policy?
Contingent paid up- The nonforfeiture provision provides a benefit in the event of a default in the payment of any premiums, and the reduced paid-up, extended term, shortened benefit period, and other options approved by the U.S. Secretary of Health and Human Services can be selected.
Coverage for newborns must begin:
Coverage for newborns must begin at birth for 31 days. For coverage to continue beyond 31 days the owner must pay the premium within 31 days of birth.
Publishing or circulating information that is maliciously derogatory to the financial condition of an insurance company with the intent to injure is known as:
Defamation is the publication or circulation of a statement that is false, maliciously critical of, or derogatory to the financial condition of an insurance company if it is intended to injure any individual or organization engaged in the business of insurance.
Producer A tells his clients, falsely, that a rival insurer does not pay claims in a timely fashion. This is an example of what Unfair Trade Practice?
Defamation is the publication or circulation of a statement that is false, maliciously critical of, or derogatory to the financial condition of an insurance company if it is intended to injure any individual or organization engaged in the business of insurance. Defamation includes the aiding, abetting, or encouragement of such a statement whether it is made verbally or in writing.
The Commissioner may examine the records of an insurance company for the purpose of:
Determining solvency- The primary purpose of examining the records of an insurance company is to review the financial condition of an insurer and determine solvency.
Immunizations
HMOs are not permitted to charge a deductible or copayment for immunizations provided to children from birth until a child's sixth birthday. An exception exists for a small employer health benefit plan; these types of plans may charge a deductible or copayment for a child's immunizations.
If an insurer requires an individual to be tested for the AIDS virus, all of the following are required, if applicable, except:
Gather statistical information that identifies the applicant to share with other insurers-The insurer may not gather or share information that identifies the applicant.
A health benefit plan issuer must renew any employer's health benefit plan, if the employer wishes to renew it, unless the employer:
Hasn't paid the required premium Has committed fraud or intentional material misrepresentation (an intentional misrepresentation must not include any health status related misrepresentation) Hasn't complied with the plan's terms (premium contribution, group size, or participation requirements) Has no enrollee who resides or works in the geographic service area Terminates membership in an association, but only if coverage is terminated uniformly without regard to a factor related to a covered individual's health status
Basic Health Care Services
Health care services that the Commissioner determines a person might reasonably need to be maintained in good health.
Replacement
If a Medicare supplement policy replaces another Medicare supplement policy, the replacing insurer must waive any times periods applicable to pre-existing condition waiting periods, elimination periods, and probationary periods to the extent time has expired under the original policy.
Under the ACA, a catastrophic plan may be purchased by any of the following, except an individual:
Individuals enrolled in Medicaid are not eligible for a catastrophic plan under the ACA.
catastrophic plan
Individuals under the age of 30, or individuals eligible for a hardship exemption from the federal government, or cannot afford other health insurance coverage. Individuals already enrolled in Medicaid are not eligible for a catastrophic plan.
Preexisting Conditions
Insurers may not discriminate against or charge higher rates based on preexisting conditions
Controlled Business
It is prohibited to license an applicant who has the intent to engage in the business of insurance principally to handle business that the applicant controls only through ownership, mortgage, family relationship, or employment. The applicant must have the intent to engage in business in which, in any calendar year, at least 25% of the total volume of premiums is derived from persons other than the business controlled by the license applicant
Which of the following is not a duty of the Commissioner?
Make state insurance laws
Which of the following is not a duty of the Commissioner?
Make state insurance laws-The Commissioner must enforce state insurance laws, not establish them.
What prohibited trade practice is committed if an agent provides misleading information regarding guaranteed dividends, terms, advantages, or disadvantages of a policy?
Misrepresentation involves a false statement made to a policyholder about a policy to induce the policyholder to lapse, cancel, or surrender an existing policy.
An HMO may cancel coverage for a subscriber in a group, as well as the subscriber's enrolled dependents, for the following reasons, which do not include factors related to health status:
Nonpayment of amounts due under the contractCoverage may be cancelled after no less than 30 days' written noticeNo written notice will be required for failure to pay premium Subscriber does not reside, live, or work in the service area of the HMO, or in an area for which the HMO is authorized to do businessHMO must terminate coverage uniformly without regard to any health status-related factor of enrollees
An enrollee may have coverage cancelled or nonrenewed by an HMO for which of the following?
Nonpayment of premium- An enrollee may have coverage cancelled or nonrenewed for failing to pay premiums or moving outside the service area, but not for health or lifestyle status.
An HMO may cancel an individual contract for the following reasons:
Nonpayment of premiums in accordance with the terms of the contract, including any timeliness provisions; coverage may be cancelled without written notice Where the subscriber does not reside, live, or work in the service area of the HMO, or in an area for which the HMO is authorized to do business:Coverage must be terminated uniformly without regard to any factor related to the health status of the enrollee
A licensed agent is required do which of the following before transacting insurance in Texas?
Obtain an appointment from an insurer Excellent! Licensed agents are not permitted to transact insurance as an agent until they have been appointed by an insurer authorized to transact insurance in this state.
Pediatric Dental and Vision Services
Pediatric dental coverage must be offered for children 18 years old and younger on health plans purchased through the marketplace but not required to be purchased.
Which of the following NOT a fiduciary duty of an agent?
Recommend the most profitable coverage for the agent- Fiduciary duties require an agent to put the best interests of the insurer and applicant before his/her own interests.
Nonforfeiture provisions must be clearly and conspicuously captioned and at least one of the following nonforfeiture benefit options must be offered:
Reduced paid-up insurance Extended term insurance Shortened benefit period Other offerings approved by the U.S. Secretary of Health and Human Services
A small employer health insurer may not offer coverage to an eligible employee unless the employee has:
Satisfied the applicable waiting period, which cannot exceed 90 days.
Benefits EOC
The evidence of coverage must include all the health care services and other benefits available to enrollees under the basic, limited, or single health care service plan. It must also state any limitations on services and benefits, including any deductible or copayment feature
Medicare Select
The following words and terms must be included in all Medicare Select policies, certificates, and plans of operation and must be defined as described in Texas Statutes: Complaint Emergency care Grievance Medicare Select issuer Medicare Select policy or Medicare Select Certificate Network provider Non-network provider Service area
Enrollment
The initial enrollment period for subscribers and dependents must be at least 31 days, with a 31-day open enrollment period provided at least annually (every 12 months). A late enrollee may be excluded from coverage until the next open enrollment period.
Out-of-pocket Limit
The out-of-pocket limit is the maximum amount a person can pay during a policy period before the health plan begins paying 100% for essential health benefits and includes deductibles, copayments, coinsurance, and any other qualified medical expense, but does NOT include premiums
Which of the following is false regarding provisions for life policies?
The policy may not include a provision for reinstatement--A life policy must have a provision that provides for reinstatement of the policy within 3 years.
Written authorization of the release of test results is limited to:
The proposed insured, or the person legally authorized to consent to the test A licensed physician or other person designated by the insured An insurance medical information exchange that uses generic codes to assure confidentiality and may prepare statistical reports that do not disclose the identity of any particular insured Persons within the insurer's organization responsible for making underwriting decisions on behalf of the insurer
Cold lead Advertising
The use of any marketing method that fails to disclose in an obvious manner that its purpose is to solicit insurance and that contact will be made by an insurance company or agent (other regulatory definitions of "cold lead advertising" also exist)
ACA other requirement
There are no lifetime or annual limits
Entire Contract, Amendments
This provision must state that the coverage form, applications, and any attachments constitute the entire contract between the parties. To be valid, any change in the coverage form must be approved by an officer of the HMO and attached to the particular form. No agent has the authority to change the form or waive any of its provisions.
False advertising, misrepresentation, and defamation are all examples of which of the following?
Unfair Methods of Competition- Rebating, fraud, unfair comparison, and boycott, coercion, intimidation are also considered Unfair Methods of Competition, or Unfair Trade Practices.
Suitability
When recommending the purchase or replacement of any Medicare supplement policy, an agent must make reasonable efforts to determine the appropriateness of such a purchase or replacement. The sale of a Medicare supplement policy that will provide an individual with more than one Medicare supplement policy is prohibited. An insurer may not issue a Medicare supplement policy to an individual who is enrolled in Medicare Part C unless the effective date of the Medicare supplement coverage is after the termination date of the individual's Medicare Part C coverage.
Outline of Coverage
must explain grievance procedures and any provision allowing a premium refund if the insured dies. The Outline must be provided to all applicants at the time of application and an acknowledgment of receipt must be obtained.
Continuing Education
All licensees must complete continuing education requirements before the expiration date of the license AND at least 50% of the hours must be completed in a classroom, or classroom equivalent, setting. Continuing education hours completed in other professions, or in association with professional designations in insurance-related fields may be accepted by the Department.
Agent License
Is at least 18 years of age Has not committed an act for which a license may be denied Submitted the application, appropriate fees, and any other required information Passed a licensing exam within the past 12 months
When soliciting Medicare supplement policies, agents may not
misrepresent themselves as being affiliated with the federal government, Social Security, or the Medicare program.
A licensed agent is required to obtain which of the following before transacting insurance in Texas?
An appointment from an insurer - Licensed agents are not permitted to transact insurance as an agent until they have been appointed by an insurer authorized to transact insurance in this state.
Examination of Records
An insurer may be examined whenever it is deemed necessary, but domestic and licensed insurers must be examined by the Commissioner or appointed examiner no less frequently than once every 5 years.
A licensed life insurance agent in Texas can share commissions with which of the following?
Another licensed life insurance agent in Texas who assisted with the sale- An insurer or agent may not pay to another person, or accept from another person, a commission or other valuable consideration unless such person holds a license to act as an agent in the same line of insurance in this state. Insurance counselors cannot charge a fee and get paid commission and temporary licensees cannot get paid commission.
Licensing Persons with Criminal Backgrounds
Any offense for which fraud, dishonesty, or deceit is an essential element Any criminal violation of Texas insurance code, state or federal insurance law, or state or federal securities law that pertains to the business of insurance Any felony that involves moral turpitude (an act that violates accepted moral standards) or a breach of fiduciary duty Any offense with the essential elements of criminal homicide, felony assault, arson, robbery, burglary, or theft Kidnapping, public lewdness, indecent exposure, indecency with a child under age 17, prohibited sexual conduct, certain domestic violence crimes in violation of a court order, stalking, and child pornography Commission of a misdemeanor or felony, or engaging in fraudulent or dishonesty activity, relating to the duties associated with the license
All of the following are required to be included in a life insurance illustration, except:
Company specific mortality tables
All Medicare supplement policies must offer coverage for all of the following, except:
Disability income- Medicare supplement policies provide coverage for medical services from a physician or hospital. They do not provide income for losses from a disability.
Temperory license cant be given to those who
Does not intend to apply for a license to sell insurance or memberships to the general public Plans to write controlled business. A temporary license holder may not obtain commission on sales made to a person with a family, employment, or business relationship.
Guaranteed renewable basis
Every Medicare supplement policy must be issued a guaranteed renewable basis.
The following Basic (Core) benefits must be provided by all Medicare supplement policies or certificates issued in Texas:
Part A Medicare eligible expenses for hospitalization for days 61-90 per benefit period for the amount not covered by Medicare Part A Medicare eligible expenses incurred for hospitalization for each Medicare lifetime inpatient reserve day used for the amount not covered by Medicare 100% of the Medicare Part A eligible expenses for hospitalization for 365 additional days after the lifetime reserve days have been exhausted The reasonable cost of the first 3 pints of blood under Medicare Parts A and B Coinsurance amounts of Medicare eligible expenses under Part B after the deductible is met
An individual who was denied a license must wait to reapply for a license a minimum of:
5 years
Certificate of Authority
In order for an insurance company to transact insurance in Texas, it must submit an application for a Certificate of Authority. If the Department finds the applicant has complied with state law, it will approve the application and issue the Certificate of Authority authorizing the insurer to engage in the business of insurance.
Twisting
The practice of knowingly making a misleading representation or incomplete or fraudulent comparison of any policies or insurers to induce any person to lapse, forfeit, surrender, terminate, retain, pledge, assign, convert, or borrow against a policy or to take out a policy with another insurer
The Department may take the following disciplinary action in addition to any other remedy available under Texas Insurance Code, the insurance laws of another state, or any rule of the Commissioner:
Deny an application for an original license or a certificate that verifies an agent's qualifications to sell complex insurance products Suspend, revoke, or deny renewal of a license or a certificate that verifies an agent's qualifications to sell complex insurance products Place a licensee on probation if his/her license has been suspended Assess an administrative penalty Reprimand a licensee Require a licensee to qualify or requalify for a certificate to sell a particular insurance product or a complex insurance product line
temporary agent
it will be valid for 90 days, and in no case, may be issued or renewed to the same applicant more than once in any consecutive six-month period. To be eligible for a temporary license, an individual must submit an application accompanied by: The appropriate nonrefundable fee A certificate signed by an agent, insurer, or HMO stating that:The applicant is being considered for appointment by the agent, insurer, or HMOThe agent, insurer, or HMO wants a temporary license to be issued to the applicantThe applicant will complete at least 40 hours of supervised training, with at least 10 of those hours completed in a classroom setting, within 14 days from the application date
Advance notice
10-day in advance written notice about penalty
Small Employer Health Benefit Plans
An 8-hour certification course is required before a licensee may advertise that he/she is specially trained to serve small employers in the health benefit plan market 5 hours of certified continuing education, per licensing period, is required for a licensee to renew a small employer health benefit plan specialty certification
A corporation applying for an agency license must meet which of the following requirements?
At least one officer or active partner are individually licensed in the same line of authority as the agency
Coverage for Newborns and Dependents
Initial coverage of a newborn child for a period of time Coverage for congenital defects of a newborn child
Agent Compensation
Insurers issuing Medicare supplement policies may provide a commission to an agent for the sale of a Medicare supplement policy only if the first year commission is no more than 200% of the commission paid for the renewal commission in the 2nd year.
A Certificate of Authority is issued to an insurer for which of the following reasons?
It certifies the insurer is authorized to transact insurance in this state.
A renewal license
issued to an agent authorizes the agent to represent and act for all insurers for which the agent is appointed. Agent appointments remain in force until they are terminated or withdrawn.
Medicare supplement policy
may not describe benefit payments as usual and customary.
An individual who holds a general life, accident and health, life agent, life and health counselor, adjuster, general property and casualty, or personal lines property and casualty license must complete
24 continuing education hours for all licenses during each two-year license period. Each individual must complete 2 hours of ethics as part of the 24 hours.
An individual life insurance policy must have a grace period of at least ______ days.
31 days
Who is NOT eligible for an agent license in this state?
A 17-year-old who passed the licensing exam 6 months ago
Minimum Benefit Standards in TX
A Medicare supplement policy may not exclude or limit benefits for losses incurred more than 6 months from the effective date of coverage due to a preexisting condition Limitations or exclusions on coverage may not be more restrictive than those of Medicare A policy cannot contain benefits that duplicate benefits provided by Medicare A policy may not indemnify against losses resulting from sickness on a different basis than losses resulting from accidents Benefits that are designed to cover cost-sharing amounts under Medicare must automatically change to coincide with any changes in the applicable Medicare deductible, copayment, or coinsurance amounts (premiums may be modified to correspond with changes)
Records Maintenance
An agent must maintain all insurance records, including all records relating to customer complaints, separate from the records of any other business in which the agent may be engaged. Records must include information for each transaction such as the type of insurance sold (contract issued), names of the insured, name of the insurance company, and amount of premiums paid.
An insurance agent does NOT owe a fiduciary duty to:
An agent owes a fiduciary responsibility to its insurer, insurance applicants, insureds, but not insurance counselors or other agents.
An agent's appointment:
An agent's appointment remains in force until terminated or withdrawn by the insurer.
An individual may be denied a license by the Department for all of the following reasons, except if the individual has:
An individual may be denied a license by the Department for all of the following reasons, except if the individual has:
Insurance Contracts with Unauthorized Insurers
An insurance contract effective in this state and entered into by an unauthorized insurer is unenforceable by the insurer. If a loss is sustained, both the unauthorized insurer and the agent who assisted, directly or indirectly, in the sale of the contract, are liable to the insured for the amount of a claim or loss under the terms of the contract. If the unauthorized insurer fails to pay the claim or loss, the agent is responsible for the full amount.
Which of the following is considered false advertising?
An insurer exaggerates its dividends in statements published in a newspaper - While all choices are considered violations, advertising only applies to untrue information placed before the public, such as in a newspaper.
Which of the following statements about continuing education is true?
At least 50% of continuing education hours must be completed in a classroom or classroom equivalent setting.-At least 50% of continuing education hours must be completed in a classroom or classroom equivalent setting. Licensees must complete 2 hours of ethics (not 3), 24 CE hours per person (not per license) and they must be completed BEFORE the expiration date.
A group health benefit plan must provide coverage for the necessary care and treatment of chemical dependency by one of the following:
Directly by the group health benefit plan issuer Another entity, including a single service HMO, under contract with the group health benefit plan issuer
request of hearing for certificate of authority
If the Department issues a denial or disapproval of an application for a Certificate of Authority, the applicant may request a hearing. The Commissioner must request a hearing date no later than 30 days after the applicant's request for the hearing
Guaranteed Issue
Insurers may not: Deny or condition the issuance of a Medicare supplement policy if it is offered to, and available for, an eligible person Discriminate in the pricing of a Medicare supplement policy because of heath status, claims experience, receipt of healthcare, or medical condition Impose a pre-existing condition exclusion
Transacting Insurance
Issuing or proposing to issue, as an insurer, an insurance contract Taking or receiving of an insurance application Receiving or collecting any consideration for insurance, including a premium, commission, membership fee, or assessment Issuing or delivering an insurance contract Directly or indirectly acting as an insurance producer or otherwise representing an insurer
If a license has been expired for between 90 days to 1 year:
Person must file a new application with the Department, along with the license fee and an additional fee equal to one-half the license fee Person is NOT required to take a licensing exam
When taking an application for a Medicare supplement policy, an agent must provide the applicant with a(n):
The Outline of Coverage must be provided to all applicants at the time of application and an acknowledgment of receipt must be obtained.
Guaranty Association
The Texas Life and Health Insurance Guaranty Association was created for the payment of claims or continuation of policy obligations of financially impaired or insolvent insurers. A financially impaired insurer does not have assets at least equal to all its liabilities. An insolvent insurer is unable to pay its obligations on time.
Exemptions from Examination
The department may not require the passing of a licensing examination if the applicant is: Renewing an unexpired license Renewing a license that expired less than 1 year before the date of the application, as long as the previous license was not denied, revoked, or suspended Applying for a life-only or life, accident and health license and holds a Chartered Life Underwriter (CLU) professional designation Applying for a property and casualty license and holds a Chartered Property and Casualty Underwriter (CPCU) professional designation
High-pressure Sales Tactics
The employment of any marketing method that induces or recommends the purchase of insurance coverage through the use of force, fear, threats, or undue pressure
Hearing
The hearing must be held not later than 10 days after the date the Commissioner receives the request for a hearing, unless the parties mutually agree to a later hearing date.
License Denial
Willfully violated a state insurance law Intentionally made a material misstatement in the license application Obtained, or attempted to obtain, a license by fraud or misrepresentation Misappropriated funds, converted funds to the individual's own use, or illegally withheld funds belonging to an insurer, HMO, or insured Engaged in fraudulent or dishonest acts or practices Committed a material misrepresentation of the terms/conditions of an insurance policy Committed a material misrepresentation, or incomplete comparisons, regarding the terms or conditions pertaining to an insurance policy for the purpose of inducing the owner to forfeit, surrender, or lapse the contract and replace it with another insurance policy or contract Been convicted of a felony Offered or given an insurance premium rebate or commission to an insured Has had an existing license revoked Not been actively engaged in soliciting or writing insurance for the general public as required by law (an agent cannot solicit insurance only from family members) Obtained, or attempted to obtain, a license for the primary purpose of writing controlled business
LTC Partnership and Medicare-related Products
An 8-hour certification course is required before acting as an agent with regard to any of these products 4 hours of certified continuing education, per licensing period, is required if a licensee acts as an agent, or intends to act as an agent, with regard to these products
Duty of the commisioner
In addition to administering insurance regulations in Texas, the powers and duties include: Regulating the business of insurance in this state Executes and enforces, but does not establish, the state's insurance code and other insurance laws Ensuring fair competition within the insurance industry to foster competition Protecting and ensuring the fair treatment of consumers and handling insurance-related consumer complaints Issuing producer licenses and approving, disapproving, or denying applications for a certificate of authority to act as an insurer Examining the records of an insurer to determine financial condition and solvency The Commissioner is empowered to make reasonable rules and regulations to enforce existing laws, conduct investigations of violations of the insurance code, hold hearings, issue subpoenas, administer oaths, take testimony, issue cease and desist orders, and assess penalties.
With respect to advertising requirements, all of the following are allowable unless the insurer:
Includes the terms investment, savings plan, or profit sharing- An advertisement may not include the terms savings, investment, investment plan, profit, profit sharing, interest plan, or other similar terms that imply that the product advertised is something other than life insurance or an annuity.
Which of the following is NOT transacting insurance?
Selling stocks, bonds, and mutual funds
The Texas Department of Insurance requires all licensees to:
Since the relationship between licensees and the public is one of trust, the Department requires all licensees to be honest, trustworthy and reliable.
30-day free look period
Each Medicare supplement policy must include a free look provision which states that the insured may return the policy within 30 days of its delivery for any reason to receive a full premium refund.
All of the following statements about life insurance policy provisions are correct, except:
If a policy lapses due to unpaid premiums, it may only be reinstated up to 2 years after lapse -- wrong, 3 years
Which of the following is not a prohibited claims settlement practice?
Requiring a claimant's federal income tax return to settle the claim is permitted under a court order or if the claim involves a fire, lost profits, or lost income.
Coverage start for newborns
newborn infants must begin at birth and continue for at least 31 days. An insurer may require the policyholder to notify the insurer of the birth of the newborn child, and pay any additional premium required to maintain the coverage in force before coverage continues beyond the 31-day period. Any additional premium required for the initial period of coverage may be charged.
domestic insurer
organized under the laws of this state, whether it is admitted to do business in this state
Chemical dependency
applies to health insurance, is defined as the abuse of, a psychological or physical dependence on, or an addiction to alcohol or a controlled substance.
Evidence of Coverage
A certificate or agreement issued to an enrollee that states the coverage in which the enrollee is entitled.
Small employer health benefit plan requirements:
A health carrier may require small employers to answer questions designed to determine the level of contribution by the small employer, the number of employees and eligible employees, and the percentage of participation of eligible employees of the small employer An eligible employee does not include an employee who has not satisfied any applicable waiting or affiliation period. A waiting period may be established by the employer that cannot exceed 90 days An open enrollment period must extend at least 31 consecutive days after the date the new entrant begins employment The carrier must treat all similar small employer groups in a consistent and uniform manner when terminating plans due to a participation level of less than the qualifying amount Availability of coverage is subject to minimum participation requirements; a small employer with only two eligible employees must have 100% participation. Must provide plans without regard to factors related to health status (on a guaranteed issue basis)
Any legal resident is eligible to purchase a plan through the marketplace as long as the applicant is a U.S. citizen and meets their state of residency requirements.
Any legal resident is eligible to purchase a plan through the marketplace as long as the applicant is a U.S. citizen and meets their state of residency requirements.
The Texas Department of Insurance requires all licensees to:
Be honest, trustworthy, and reliable
Cancellation
No Medicare supplement policy or certificate may be canceled or nonrenewed based solely on the health status of the insured. An issuer cannot cancel or nonrenew a policy for any reason other than nonpayment of policy premium or material misrepresentation.
evidence of coverage
No evidence of coverage may be issued, delivered, or used in Texas unless it has been filed for review and received approval of the Commissioner of Insurance
If a proposed insured is required to take an HIV-related test to detect the AIDS virus as part of the application process, the insurer must:
Provide written notice to the proposed insured or parent/legal guardian of proposed insured Obtain written authorization/consent of the proposed insured or parent/legal guardian on the Notice and Consent for HIV-Related Testing form
In Texas, when the Commissioner cancels or revokes an insurance license, he/she may also do all of the following except:
Suspend the license for up to 5 years-- only 1 years
Guaranteed renewability describes a policy in which:
The policyholder has the right to continue the policy when making timely premium payments The insurer does not have any unilateral right to change any provision or rider while the insurance is in force The insurer cannot non-renew the policy; however, it may revise rates if doing so for every policyholder within a class The policyholder has the right to cancel a long-term care contract without required notice of cancellation and the insurer must return any unearned premium to the policyholder
Incontestability
This provision must explain that all statements made by the subscriber on the enrollment application will be considered representations and not warranties. It must also explain: The statements are considered to be truthful and made to the best of the subscriber's knowledge and belief A statement may not be used in a contest to void, cancel, or non-renew an enrollee's coverage or reduce benefits unless:It is in a written enrollment application signed by the subscriberA signed copy of the enrollment application is, or has been, furnished to the subscriber or the subscriber's personal representative An individual contract may only be contested because of fraud or intentional misrepresentation of material fact made on the enrollment application
Termination Due to Attaining Limiting Age
This provision must state the coverage will not be terminated due to a child's attainment of a limiting age if the child is incapable of self-sustaining employment due to mental retardation or physical disability, and is chiefly dependent upon the subscriber for support and maintenance. The HMO may require the subscriber to furnish proof of the incapacity and dependency within 31 days of the child's attainment of the limiting age, but may not do so more frequently than on an annual basis.
Silver plans
cover 70% of the benefit costs
Gold plans
cover 80% of the benefit costs
Platinum plans
cover 90% of the benefit costs
The Patient Protection and Affordable Care Act, commonly known as the Affordable Care Act (ACA)
primary goals are to provide stronger consumer rights and protections, to make health insurance more affordable, strengthen the Medicaid program, and to make available subsidized, regulated private insurance.
Certificate of Coverage
serves as proof of insurance. An insurance certificate issued by an association must include any condition of the certificate that affects the insurance rights of the covered parties in any material way. must include a plain statement of each accident, health, or other benefit covered and the terms under which the benefit is paid.
Inquiries
The Department may address a reasonable inquiry made to any insurer, agent, or holder of any type of authority to transact business in this state if it pertains to any of the following: That person's business condition Any matter concerning that person's transactions that the Department deems necessary for the public good
Under Nonforfeiture Law, a cash surrender payment may be deferred up to:
Under Nonforfeiture Law, the insurer reserves the right to defer payment of any cash surrender value for a period of 6 months after demand for payment and surrender of the policy.
License Expiration and Renewal
If not renewed, an insurance license will expire 2 years after the date it was issued.A person may renew an expired license if the license has been expired for 90 days or less.
Required Disclosures
The first page of a Medicare supplement policy must state the renewal or continuation provision, the insurer's reservation of the right to change premiums (if any), and any automatic renewal premium increases based on the age of the insured. Policy riders and endorsements must state any additional premium associated with their issue and be signed by the policyholder to be valid. An exception exists if a rider or endorsement is required by law or provides a service at the policyholder's request.
Any Medicare supplement advertising must be submitted to the Department for approval at least 60 days before it may be used. Marketing procedures must be established to ensure that:
The policy comparisons made by the issuer's agents are fair and accurate Excessive insurance is neither sold nor issued All prospective policyholders are advised before applying for coverage that the basic (core) benefit package is available; they must also be provided with an explanation of its contents Every reasonable effort is made to identify if an applicant for a Medicare supplement already has accident and sickness insurance and the types and amounts of coverage
Penalties
The Commissioner may cancel or revoke any authorization, after giving notice and the opportunity for a hearing, if the holder of a license or certificate of authority has violated or failed to comply with the Texas Insurance Code or any rule of the Commissioner. The Commissioner may also: Suspend the license for up to 1 year Issue a cease and desist order from the activity determined to be a violation Order the licensee to pay an administrative penalty Direct the licensee to make restitution to each Texas resident or insured in the amount, form, and within the period specified by the Commissioner
Complaint Records, Reporting, and Minimum Standard of Performance
must maintain a complete record of all complaints received by the insurer during the preceding 3 years or since the last examination by the Department, whichever is shorter. The records must indicate the total number of complaints, classification by line of insurance, nature of each complaint, disposition, and time spent processing each complaint.
foreign insurer
organized under the laws of another U.S. jurisdiction (i.e., another state), whether it is admitted to do business in this state
mutual insurer
owned by the company's policyholders, who may also be referred to as members, and issues Participating policies. The company's board of trustees or directors manages its operations and the board's members are elected by the policyholders. When the directors declare the issuance of dividends, which are a non-taxable return of profit, they are paid to the policyholders.
stock insurer
owned by the company's stockholders or shareholders and issues Non-participating policies. Directors and officers of the company manage the company's operations and are elected by the stockholders. When the directors declare the issuance of dividends, which are a taxable return of profit, they are paid to the stockholders.
Request for Hearing for cease and desist
A person affected by an order is entitled to request a hearing to contest the order. The person must request the hearing not later than 30 days after the date on which the person receives the order. A request to contest an order must: Be in writing Be directed to the Commissioner State the grounds for the request to set aside or modify the order
Guide to Health Insurance
An insurer must deliver a copy of the Guide to Health Insurance for People with Medicare (produced by the NAIC) with each policy and obtain the insured's acknowledgement that the policy was received.
Commission Sharing
An insurer or agent may not pay to another person, or accept from another person, a commission or other valuable consideration unless such person holds a license to act as an agent in the same line of insurance in this state. This does not prevent the payment of renewal or deferred commission to a person who no longer holds a license to act as an agent.
Commingling
Commingling is an unethical act of mixing personal funds with funds belonging to the insurance company. For example, depositing premium funds in a personal account is considered commingling. However, life insurance policy proceeds received by a trustee may be commingled with any other assets properly coming into the trust.
Which of the following does not describe an eligible group for group life insurance?
Employer groups, labor unions, government entities including dependents, and creditor groups are eligible. A group consistently exclusively of persons related by blood or marriage is not an eligible group by itself.
Delay in Payment of Claim
If an insurer delays payment of a claim for a period exceeding the period specified in the law, or if not specified, for a period exceeding 60 days, the insurer must pay damages to the policyholder or beneficiary in addition to the amount of the claim. Damages include interest on the amount of the claim at 18% per year along with reasonable and necessary attorney's fees.
Minimum standards for individual and group Medicare supplement insurance have been established to:
Provide for the reasonable standardization of coverage and simplification of terms and benefits Facilitate public understanding and comparison of such policies Eliminate policy provisions that may be misleading or confusing with respect to the purchase of coverage or the settlement of claims Provide for full disclosure in the sale of accident and sickness insurance persons eligible for Medicare
Appointment
Licensed agents are not permitted to transact insurance as an agent until they have been appointed by an insurer authorized to transact insurance in this state. An agent may represent and act as an agent for multiple insurers. The agent and the insurer involved must notify the department, on a form prescribed by the department with a nonrefundable fee, no more than 30 days from the effective date of the appointment of any additional appointment authorizing the agent to act as an agent for one or more additional insurers. This means that the agent may act on behalf of the appointing insurer before the department receives the notice filed.
If a license has been expired for 1 year or more:
Take a licensing exam, if an exam is required for an original license Comply with other requirements and procedures for obtaining a new license
Fees
The Department will collect a nonrefundable fee from each agent or insurer for the following: License application fee Appointment fee for each appointment of the agent by an insurer Examination fees License renewal application fees
Issuance of an Agency License to a Corporation or Partnership
The corporation or partnership is organized under the laws of a state and authorized under the corporation or partnership to act as an agent At least one officer or one active partner are individually licensed by the department separate from the entity for the same line of authority as the agency All persons transacting insurance are licensed individually and separately from the agency The corporation or partnership has the ability to pay any amount up to $25,000 it is legally obligated to pay to a customer and was caused by a negligent act, error, or omission The corporation or partnership intends to be actively engaged in the solicitation or writing of insurance for the general public and is actively engaged in the business of insurance Each business location acting under the authority of a license is registered separately with the Department An officer, director, member, manager, partner, or other controlling person of the corporation or partnership has not had a license suspended or revoked, been the subject of a disciplinary action by a regulator of any state, or committed an act for which a license may be denied
