Chapter 10

All of the following are considered unfair or deceptive acts in connection with the sale of insurance EXCEPTa) Lacking standards for the investigation of an insured's claims.b) Attempting to settle a claim in which liability is clear.c) Stating facts or provisions in a way that misrepresents the true nature of the policy.d) Delaying a settlement because there is other insurance that will satisfy any portion of the loss.

c

All of the following are considered unfair trade practices in the business of insurance except A. Sharing commissions B. Boycott C. Rebating D. Defamation

A. Sharing commissions Sharing commissions is allowed as long as both producers are properly licensed. All other choices are unfair trade practices.

Which of the following is the closest term to an authorized insurer? A. Legal B. Admitted C. Certified D. Licensed

B. Admitted

The Commissioner has full power and authority to do all of the following EXCEPT A. Issue Certificates of Authority B. Enforce the Insurance code C. Issue cease and desist orders D. Draft insurance laws

D. Draft insurance laws

Two individuals are in the same risk and age class; yet, they are charged different rates for their insurance policies due to an insignificant factor. What is this called? A. Adverse selection B. Discrimination C. Law of large numbers D. Misrepresentation

B. Discrimination

Which of the following will NOT be considered unfair discrimination by insurers? A. Cancelling individual coverage based on the insured's marital status B. Assigning different risk classifications to applicants based on gender identity C. Discriminating in benefits and coverages based on the insured's habits and lifestyle. D. Charging applicants with similar health histories different premiums based on their ethnicity.

Discriminating in benefits and coverages based on the insured's habits and lifestyle. Insurers are also not allowed to cancel individual coverage due to a change in marital status. Discriminating in benefits based on the insured's habits and lifestyle (such as smoking or dangerous hobbies) is acceptable.

Which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices? A. making comparisons between different policies B. stating that the insurance policy is a share of stock C. exaggerating the benefits provided in the policy D. stating that the competitors arbitrary increase their premiums each year

A. making comparisons between different policies

To legally transact insurance in this state, an insurer must obtain which of the following? A. Certificate of Insurance B. Certificate of Authority C. Power of Attorney D. Business entity license

B. Certificate of Authority

Which of the following is NOT true regarding a Certificate of Authority? a) It is issued to group insurance participants. b) It may be necessary for transacting business in a specific state. c) It is equivalent to an insurance license. d) It is issued by the state department of insurance.

a) It is issued to group insurance participants.

In Texas how is the Commissioner of Insurance placed in office? A. Appointed by the Senate for a term of 2 years. B. By election, at the same election when other state officials are chosen. C. Appointed by the Governor for a term of 2 years D. Appointed by the Governor for a term of 4

C. Appointed by the Governor for a term of 2 years

Who might receive dividends from a mutual insurer? A. Stockholders B. Agents C. Policyholders D. Subscribers

C. Policyholders

All of the following are considered unfair or deceptive acts in connection with the sale of insurance EXCEPTa) Lacking standards for the investigation of an insured's claims.b) Attempting to settle a claim in which liability is clear.c) Stating facts or provisions in a way that misrepresents the true nature of the policy.d) Delaying a settlement because there is other insurance that will satisfy any portion of the loss.

B

An agent's license will terminate within how many days from the due date of obligatory fees and continuing education requirements A. 30 B. 180 C. 90 D. 60

C. 90

An insurer advertises a health policy that is covered by the Life and Health Insurance Guaranty Association. The advertisement includes statement that protection is provided by the Guaranty Association. Which of the following is true?

Mentioning the Guaranty Association in advertisement is considered to be unfair trade practice