L&H ch 14

Unfair Discrimination

A person may not refuse to insure or provide/continue coverage to an individual, limit the amount, extent, or kind of coverage available for an individual, or charge an individual a rate that is different from the rate charged to other individuals for the same coverage because of the individual's: Race, color, religion, or national origin Age, gender, marital status, or geographic location Disability or partial disability However, an insurer or health maintenance organization may consider marital status in defining persons eligible for dependent benefits.

Consumer Complaints

If a consumer files a written complaint with the Department, the Department must keep records of all related information on file. The Department must notify each party to an active complaint of its status at least quarterly until disposition, unless the notice would compromise an undercover investigation.

Statements of the Insured

In the absence of fraud, life insurance policies must consider a statement made by an insured a representation and not a warranty.

False Financial Statements

It is an unfair method of competition to, with the intent to deceive: File with a public official or to make, publish, disseminate, circulate, deliver, or place before the public a false statement of financial condition of an insurer Make a false entry in an insurer's book, report, or statement or willfully omit to make a true entry of a material fact relating to the insurer's business

Reinstatement

All life insurance policies that provide nonforfeiture benefits must include a provision that states if the policy lapses due to unpaid premiums, the policy may be reinstated within 3 years (or longer, at the insurer's option). This reinstatement provision only applies if the policy has not been surrendered to the insurer and cancelled.

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.

Free Look

If a buyer's guide and the disclosure document are not provided at or before the time of application, a free look period of at least 15 calendar days must be provided during which the applicant may return the contract without penalty. Notice of the free look period must be provided to consumers in a notice that is included on or attached to the cover page of the delivered annuity contract. The notice must prominently disclose information concerning the 15-day free look period. The free look period begins on the date the consumer receives the annuity contract and runs concurrently with any other free look period required under he laws of Texas. An unconditional refund without penalty for variable or modified guaranteed annuity contracts will mean a refund equal to the cash surrender value provided in the annuity contract, plus any fees or charges deducted from the premiums or imposed under the contract.

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. Coverage isn't available for a resident with respect to an impaired or insolvent insurer domiciled in another jurisdiction if guaranty protection is provided to the resident by the law of that jurisdiction.

Annuity Rescission Period

A fixed annuity contract must provide for a period of at least 20 days after the date the contract is delivered. The purchaser may rescind the contract to receive an unconditional refund of premiums paid for the contract, including any contract fees or charges. Variable or modified guaranteed annuity contracts must also provide a period of at least 20 days after the date the contract is delivered for the purchaser to rescind the contract to receive an unconditional refund without penalty. The refund is equal to the cash surrender value provided in the annuity contract, plus any fees or charges deducted from the premiums or imposed under the contract.

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. An agent may not receive additional fees for any other services provided to the same client, except those provided in the contract.

Boycott, Coercion, and Intimidation

Boycott, coercion, and intimidation are unfair methods of competition defined as forceful actions intended to result in the unreasonable restraint of trade, or the establishment of a monopoly, in the business of insurance.

Coverage for Drug and Alcohol Treatment

Chemical dependency, as it 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. 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 Coverage for drug and alcohol treatment cannot be provided on a less favorable basis than coverage is generally provided for physical illness under the plan. Coverage must be subject to the same limits with respect to duration, dollar amounts, deductibles, and coinsurance factors that apply to coverage generally provided for physical illness under the plan. Exception A group health benefit plan may establish coverage limits for duration or dollar amounts that are less favorable than for coverage generally provided for physical illness if those limits are sufficient to provide appropriate care and treatment under the guidelines and standards of the Texas Commission on Alcohol and Drug Abuse.

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.

Defamation

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.

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.

Suicide Clause

If death is the result of a suicide within the first 2 years after a policy is issued, the insurer has the right to void the policy and refund premiums to the owner or beneficiary. However, suicide may not be a defense against payment after the second year.

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

License Denial, Renewal, and Expiration

Under certain circumstances, the Department may discipline a licensee or deny a license application if the individual has: 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 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

Group Underwriting Requirements

A group life insurance policy must state any conditions under which the insurer can require an eligible individual to furnish evidence of insurability as a condition of obtaining part or all of the coverage. An authorized life insurance company is not prohibited from guaranteeing to issue individual life insurance policies (other than a group term plan) insuring the participants in a qualified pension or profit-sharing plan without evidence of insurability.

Extensions and Exemptions

If requested by an agent on a timely basis, the department may extend the time for an agent to comply with or exempt the agent for some or all of the continuing education requirements for a licensing period if the agent is unable to comply due to illness, medical disability, or another extenuating circumstance. The Commissioner will determine the criteria for an exemption or extension.

Dependent Coverage

Insurance under a group life insurance policy may be extended to cover The spouse of an eligible individual insured under the policy A natural or adopted child or grandchild of the insured if the child is younger than age 25 A physically or mentally disabled child/grandchild age 25 or older and under the insured parent/grandparent's supervision. The amount of insurance on the life of the spouse or a child may not exceed the amount of insurance for which the insured is eligible under the policy. A group life insurance policy that provides benefits for dependents of an insured may provide for continuation of any part of those benefits after the death of the insured individual.

State and National Insurance Association Credit

Licensees who hold a national designation certification or are a member in good standing of a state or national insurance association may accumulate up to 2 hours for reviewing that sponsor's or association's educational materials and up to 4 hours for attending its educational presentations. The maximum credit hours earned is four and they may not count toward the ethics requirements.

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 The Department will set the fees in amounts considered reasonable and necessary.

License Termination, Revocation, and Suspension

An individual who was denied a license, or whose license was revoked, must wait 5 years before applying for an agent license. This restriction does not apply if the license denial was due to a failure to pass the required written exam or submit a properly completed license application. The Commissioner may deny a license application after the 5-year period if the applicant fails to show good cause for the issuance of a new license.

Assignment

Life insurance policies are permitted to contain a provision that allows the transfer or assignment of up to 100% ownership (rights) of the policy, benefits or proceeds. However, policies cannot allow for the assignment of guaranteed returns and dividends to a third party for the purpose of establishing an investment for the policyholder. The transfer of legal rights and benefits can be made through either a collateral assignment or an absolute assignment.

Replacement

Purpose The purpose of replacement regulations is to: Regulate the activities of insurers and agents regarding the replacement of existing life insurance and annuities Establish minimums standards of conduct of replacement transactions to protect the interests of purchasers of life insurance and annuities Ensure life insurance and annuity purchasers receive information to make decisions in their best interest Establish penalties for failure to comply with these requirements

Misrepresentation Regarding Policy or Insurer

A misrepresentation is an untrue or misleading statement, the omission of a pertinent disclosure or a material fact, or a material misstatement of law, whether the misstatement is made verbally or in writing, if it concerns: The terms of a policy The benefits or advantages promised by a policy The dividends, or share of surplus, to be received from a policy The financial condition of an insurer The legal reserve system used by a life insurer The use of a policy type or class that misrepresents the true nature of the policy The use of a misrepresentation to a policyholder to induce the policyholder to lapse, cancel, or surrender an existing policy

Stock and Mutual Insurers

A stock insurer is 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. A mutual insurer is 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.

Investigation and Notice of Hearings

If the Commissioner determines, upon review and examination of records, that the financial condition of an insurer indicates a condition that might make the insurer's continued operation hazardous to policyholders, creditors, or the public, the Commissioner may, after notice of a hearing, order the insurer to take action to remedy the condition. The impairment of the surplus of an insurance company is prohibited. The Commissioner will order an insurer to correct the impairment by bringing the surplus to an acceptable level specified by the Commissioner or to cease doing business in this state. After issuing the order, the Commissioner will immediately institute any preceding necessary to determine any further action.

Deceptive Name, Word, Symbol, Device, or Slogan

It is an unfair or deceptive practice in the business of insurance to display or use in any way a name, word, symbol, device, or slogan, including titles, designations, character names, and distinctive features that are deceptively similar to those used by any other insurance entity authorized to engage in business under the laws of this state.

Duties of the Replacing Agent

An agent initiating an application for life insurance or annuity must submit to the insurer, as part of the application, a statement signed by both the applicant and the agent as to whether the applicant has existing policies or contracts. If the applicant has existing policies, the agent must present and read a Notice Regarding Replacement no later than at the time of application. The notice must be signed by both the applicant and the agent. The Notice Regarding Application must include: A list of all policies or contracts being replaced The name of the insurer and named insured The policy or contract number, or application/receipt number A statement as to whether the policy or contract will be replaced At the time of application, the agent must leave with the applicant the Notice Regarding Replacement and the original (or a copy) of all sales material. The agent must submit to the replacing insurer: A signed statement indicating if replacement is involved A copy of the notice regarding replacement A statement identifying insurer-approved sales materials used Copies of individual sales materials including illustrations relating to a specific policy

Payment of Premiums

Life insurance policies must provide for premiums to be paid in advance to the home office or an agent of the company and a receipt must be provided to the insured. A policy may provide that any unpaid premiums or installments to the end of the current policy year may be deducted from the proceeds payable upon death.

Insurance Fraud Unit

The Department's insurance fraud unit was created to enforce laws pertaining to fraudulent insurance acts. The insurance fraud unit may receive, review, and investigate anti-fraud reports and must provide written annual reports to the Commissioner that contain the number of completed cases and its recommendations for response to those cases. An insurer is not required to complete a fraud investigation before requesting that the Commissioner conduct an investigation.

Required Health Policy Provisions

Coverage for Newborns and Dependents A health benefit plan that provides maternity benefits or accident and health coverage for additional newborn children may not be issued in Texas if the plan excludes or limits: Initial coverage of a newborn child for a period of time Coverage for congenital defects of a newborn child Health coverage for 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. Any individual accident and health insurance policy providing coverage for an insured's dependent children must cover natural children and may not limit or exclude coverage for adopted children.

Group Life Insurance

Eligible Groups A group life policy may be delivered in this state only if it covers an eligible group. Eligible groups include: Employers to insure employees for the benefit of persons other than the employer Labor unions, to insure members actively engaged in the same occupation Governmental entities or associations of public employees, to insure the employees or members for the benefit of persons other than the entity or association Federal government employees and dependents Creditors, to insure their debtors

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. The certificate must state the specific kinds of insurance authorized. When issued, a Certificate of Authority is effective until suspended or revoked and must state the specific lines of insurance for which the insurer is authorized to transact business. Authorized insurers are required to file an annual statement with the Department. Failure to file an annual statement as required by law subjects the insurer to suspension or revocation of the 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.

Confidentiality

Information received by the Department that relates to an investigation by the insurance fraud unit is considered confidential and not a public record during the period of investigation, when protecting a person under investigation from unwarranted injury, or to serve the best interests of the public.

False Information and Advertising

It is an unfair method of competition to make, publish, disseminate, circulate, or place before the public, directly or indirectly, an advertisement, announcement, or statement that is untrue, deceptive, or misleading regarding the business of insurance or a person's conduct in the insurance business. This applies to all advertisements or statements published, circulated, or placed before the public: In a newspaper, magazine, or other publication In a notice, circular, brochure, letter, or poster Over the radio, television, or through the Internet In any other manner No insurance company advertising may use the word dividends, or similar words, to imply that future dividends will be paid or are guaranteed. The word dividends includes every return of premium and payment to policyholders based on the financial performance or earnings of the insurance company. However, dividends does not include the return of premium under a mandatory policy provision or an endorsement that clearly provides for the use of a rating plan approved by the Department

Medicare Supplements

Minimum Standards 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 When soliciting Medicare supplement policies, agents may not misrepresent themselves as being affiliated with the federal government, Social Security, or the Medicare program.

Legal Action

A life insurance policy may not include a provision that limits the time during which legal action under the policy may be taken to a period of less than 2 years after the date the cause of action occurs. In other words, the statute of limitations for taking legal action cannot be less than 2 years.

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.

Marketing Standards

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 The following acts and practices are prohibited when marketing Medicare supplement 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 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 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)

Credit Life

Credit life insurance may be issued as an individual decreasing term life insurance policy issued to a debtor or as a group term life insurance policy issued to a creditor providing insurance on the lives of its creditors. A creditor may not charge a debtor for credit insurance coverage an amount that exceeds that amount of premium the insurer charges the creditor for that insurance. The initial amount of credit life insurance on a debtor may not exceed the total amount of debt repayable to the creditor. The coverage for credit life insurance begins no sooner than the date the debt was incurred. A claim for recovery under a credit life insurance policy must be reported promptly to the insurer and handled as other life insurance claims are handled. The creditor cannot be designated as claim representative for the insurer in settling or adjusting a claim. If a claim is submitted, the credit life insurance policy premium is not fully earned and the unearned portion will be refunded. If credit life insurance is required as additional security for a debt, the debtor may provide the required amount of coverage through an existing policy owned by the debtor or a policy obtained by the debtor through an authorized insurer. The creditor cannot require that coverage be obtained through the creditor. If the underlying debt or the insurance terminates before the originally scheduled termination date of the insurance, the debtor is entitled to a refund of unearned premium.

Agent Duties and Responsibilities

Fiduciary Capacity Agents have a fiduciary duty to their clients, both applicants and insureds, and their insurers, especially when handling premium funds. A fiduciary duty is one founded on trust or confidence in the integrity of another. A fiduciary responsibility is the highest standard of conduct and care imposed by both ethics and law. A fiduciary: Owes loyalty to the principal Cannot put their, or anyone else's, personal interests before those of the principal Cannot profit from the relationship unless the principal permits it

Group Life Insurance Required Provisions

Grace Period A group life insurance policy must provide that the premium payor is entitled to a grace period of 31 days for the payment of any premium, except the first. During the grace period, the death benefit coverage continues in force unless written notice of discontinuance is given to the insurer in accordance with the policy. Incontestability A group life insurance policy must provide that the validity of the policy may not be contested, except for nonpayment of premiums, after the policy has been in force for two years after its date of issue.

Grace Period

Life insurance policies must contain a grace period provision that allows for a period of at least 1 month from the due date for the payment of each premium, after the first payment, while the policy remains in force. A grace period provision may provide for an interest charge on premiums paid during this period or may provide that if the insured dies during the grace period, the overdue premium will be deducted from any death benefits paid.

Payment of Claims

Life insurance policies must settle a claim within 2 months after the insurer receives proof of death and proof of the claimant's right to the policy's proceeds.

Long-Term Care Nonforfeiture Provision

No insurer may offer a long-term care policy in this state unless the insurer offers the option to purchase a policy that contains a nonforfeiture provision. This provision also applies to riders for group and individual annuities and life insurance policies that provide LTC insurance. A nonforfeiture provision provides a benefit when the insured defaults in the payment of any premium. The benefit amount may be adjusted after issue only as necessary to reflect changes in claims, persistency, and interest as reflected in changes in rates for premium paying contracts. 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 The shortened benefit period provision must provide paid-up long-term care insurance coverage after lapse. The same benefits will be payable for a qualifying claim, but the lifetime maximum dollars or days of benefits will be based on standard nonforfeiture credits.

Assignment of Benefits

Subject to the terms of a group life insurance policy, an insured may make an absolute or collateral assignment of all rights and benefits to any individual, firm, corporation, or other legal entity. This right applies without regard to the date a policy is issued.

Commissioner of Insurance

The Commissioner is the Chief Executive and Administrative Officer of the Texas Department of Insurance (TDI) and is appointed by the governor, with the advice and consent of the senate, for a two-year term. Qualifications of appointment require the Commissioner to be a competent and experienced administrator, be well informed and qualified in the field of insurance regulation, and have at least 5 years experience in the administration of business or government, which may include former employment with the TDI.

Penalties

The department may examine and investigate any person engaged in the business of insurance to determine if an unfair method of competition, deceptive act or prohibited practice has occurred. If a proceeding by the department regarding any charges of violation is in the interest of the public, the department will issue and serve a statement of the charges and a notice of the hearing on these charges, including the time and place for the hearing. The department may not hold the hearing before the 6th day after the date the notice is served. Any person charged with a violation of an unfair or deceptive act is entitled to a hearing to show cause why a cease and desist order should not be entered requiring the person to refrain from such activity. If, after a hearing, it is determined that a person committed a violation, the department will make written findings and issue a cease and desist order from engaging in the act to be a violation. If a cease and desist order is violated, an administrative penalty may be imposed and the state may also recover a civil penalty.

Duties of the Replacing Insurer

The insurer must verify that the required forms are received and are in compliance. The replacing insurer must notify the existing insurer of the proposed replacement and mail a copy of the illustration or policy summary for the proposed policy no later than the 5th business day after receipt of the application. The replacing insurer must maintain copies of the notice regarding replacement until the later of 5 years from the date of notification or the date of the next regular examination by the regulatory authority of the insurer's home state. The replacing insurer must notify the policy or contract owner of the right to return the policy within 30 days of delivery to receive a full refund of all premiums.

Foreign, Domestic, and Alien Insurers

A domicile is the jurisdiction in which an insurer is formed or incorporated, such as a state or country. A domestic insurer is organized under the laws of this state, whether it is admitted to do business in this state A foreign insurer is organized under the laws of another U.S. jurisdiction (i.e., another state), whether it is admitted to do business in this state An alien insurer is organized under the laws of a jurisdiction outside the United States, whether it is admitted to do business in this state

Fraud

A fraudulent insurance act is an act that violates a penal law and is committed while engaging in the insurance business, as part of an insurance transaction, or as a part of an attempt to defraud an insurer. Examples of fraudulent acts include accepting premiums for coverage that will knowingly not be provided, submitting a false claim or altered bill to an insurance company, or filing false statements with the intent to deceive. Reporting Fraudulent Insurance Acts If any person discovers or reasonably suspects that a fraudulent insurance act has been committed, or will be committed, the person: Must file a written report with the Department's insurance fraud unit or the National Association of Insurance Commissioners (NAIC) May also file a report to any authorized government agency The report must be filed within 30 days after determining that insurance fraud has been, or will be, committed. A person reporting any type of fraudulent act is granted immunity from civil action if the report is made to an authorized government agency, the Department, a law enforcement officer, the National Association of Insurance Commissioners or its employee, a state or federal anti-fraud agency, or an insurance regulatory agency. Immunity is only granted if the person filing the report is not acting maliciously, with fraudulent intent, or in bad faith. An insurance company must provide information on fraudulent claims if requested by law enforcement agencies, the Commissioner, or the Attorney General. The insured does not have the right to request such information.

Policy Loans

A life insurance policy must provide that the company that issues the policy will loan to the policy owner at a specified interest rate an amount equal to the sum of the policy's cash value and any dividend additions to the policy, or, at the policy owner's option, an amount less than that sum, if: The policy is in force The premiums for the policy have been paid for at least 3 full years The policy is properly assigned A life insurance policy must also provide that: A policy loan is secured only by the policy The company may deduct from a policy loan the sum of the amount of existing debt on the policy and the balance of unpaid premiums for the current policy year The company may collect in advance interest on the policy loan to the end of the current policy year Failure to repay the policy loan or interest on the loan does not void the policy until the total amount owed under the loan equals or exceeds the policy's cash value A life insurance policy may not require a prerequisite to a policy loan if the prerequisite is not required or authorized by this section.

Request for Hearing

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 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.

Life and Health Insurance Counselor

A person who: 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 premiumsThe advisability of changing, exchanging, converting, replacing, surrendering, continuing, or rejecting a policy, plan, or contract from an insurer or health plan issuer Publicly uses a title (e.g. insurance adviser, analyst, counselor, or specialist; policyholders' adviser or counselor) that indicates the person is engaged in the business of giving advice or other information to any person having an interest in a life, accident, or health policy, health benefit plan, or annuity or pure endowment contract

Settlement at Maturity

A policy cannot contain a provision for any mode of settlement at maturity of less value than the amount insured, plus dividends, less any indebtedness to the company and less any premium that may be deducted. The policy may provide an exception and reduce the amount of insurance if death occurs from suicide in the first 2 years, while sane or insane, stated hazardous occupations, or from aviation activities under conditions specified under the policy. If benefits are not paid as stated, the insurer will refund the premium payments.

Temporary Agent

A temporary agent license may be issued by the Department under certain circumstances; 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 An applicant is not required to pass a written exam to obtain a temporary license; however, a temporary license cannot be issued to an applicant 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.

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. A licensee must submit a timely written request to the Department to extend the time required to complete continuing education, or to be exempted from some or all of the requirements due to illness, medical disability, or extenuating circumstances beyond the licensee's control. 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 automatic fine will be charged to a licensee who fails to obtain the required number of continuing education hours and attempts to renew a license, applies for an expired license, or applies for a new license. The automatic fine is $50 per credit hour not completed, not to exceed $500 per license, per reporting period.

Rules Specific to Life Insurance and Annuity Advertising

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. An invitation to contract must disclose: Exclusions and limitations affecting benefit payments Any charges or penalties—including administrative fees, surrender charges, and termination fees—contained in an annuity or life insurance policy An advertisement may not offer a policy that utilizes a reduced initial premium rate in a manner that overemphasizes the availability and amount of the initial reduced premium. The insurer may not describe a reduced initial or first year premium as free insurance. An insurer may advertise preferred rates to classes of policyholders that qualify for those rates. Before using an advertisement, an agent must file it with the insurer's home office for written approval, unless the agent received it from the insurer. Every insurer marketing policies in this state must establish and maintain a control system over the content, form, and method of dissemination of all policy advertisements. The insurer is responsible for advertisements prepared or approved. The insurer may not avoid responsibility by authorizing anyone else to prepare or authorize such advertisements. An enrollment period during which "a particular insurance product" may be purchased on an individual basis cannot be offered unless at least 3 months has elapsed between the close of the preceding enrollment period for the same product and the opening of the new enrollment period. An advertisement cannot contain a statement to the effect that only a specific number of policies will be sold, or that a time is fixed for the discontinuance of the sale of the particular policy advertised because of special advantages available in the policy.

Illustrations

An illustration is a presentation or depiction used to solicit or sell a life insurance policy; it shows non-guaranteed elements over a period of years and includes, but is not limited to, a basic, supplemental, or in-force illustration. A basic illustration is an illustration that shows both guaranteed and non-guaranteed elements A supplemental illustration is an illustration, furnished in addition to a basic illustration, that depicts only a scale of non-guaranteed elements An in-force illustration is an illustration furnished at any time after the policy it depicts has been in force for 1 year or longer Potential group life insurance enrollees must be given a quote with the enrollment materials for all life insurance products other than term insurance. An illustration used in the sale of a life insurance policy must be clearly labeled "life insurance illustration" and contain basic information including the: Insurer's name Name of the authorized representative of the producer or insurer Proposed insured's name, age, and gender Underwriting or rating classification upon which the illustration is based Policy's generic name, the company product's name, and the form number Initial death benefit amount When an illustration is used to sell a life insurance policy, an insurer, its producers, and other authorized representatives or agents may not: Represent the policy as anything other than a life policy Use or describe non-guaranteed elements in a misleading way State or imply that the payment or amount of non-guaranteed elements is guaranteed Use an illustration that is illegal or that depicts policy performance more favorable to the policyowner than that produced by the illustrated policy Give an applicant an incomplete illustration Falsely imply premium payments will not be required for each year in order to maintain the illustrated death benefits Use any term implying the policy becomes paid up A basic illustration must clearly identify the assumed dates of payment receipt and benefit payout within a policy year. A basic illustration must also identify the assumed payments upon which the illustrated benefits and values are based as premium outlay or contract premium. Basic illustrations must show, and clearly label, guaranteed death benefits and values available upon surrender as guaranteed. During a sales presentation, an agent must include a statement that dividends, if applicable, are not guaranteed.

Notification to Department of Certain Information

An individual licensed as an agent must notify the department on a monthly basis of: A change of the license holder's mailing address A felony conviction of the license holder An administrative action taken against the license holder by a financial or insurance regulator of this state, another state, or the United States A corporation or partnership licensed as an agent must file under oath, on a form developed by the department, biographical information for: Each executive officer, director, or unlicensed partner who administers the entity's operations in this state Each shareholder who is in control of the corporation or partner who has the right or ability to control the partnership If the corporation or partnership is owned, in whole or in part, by another entity, each individual who is in control of the parent entity A corporation or partnership must notify the department no later than 30 days after the date of: A felony conviction of a licensed agent of the entity or an individual associated with the entity who is required to file biographical information with the department The addition/removal of an officer, director, partner, member, or manager

Unfair or Deceptive Claim Methods and Practices (continued)

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. Complaint Records, Reporting, and Minimum Standard of Performance A complaint is considered any written communication expressing a grievance. All insurers 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. If, based on complaints of unfair claim settlement practices, the Department finds an insurer should be closely supervised, the Department may require the insurer to file periodic reports as often as deemed necessary. The Department will compile the information received from the insurer and compare the insurer's performance to a minimum standard of performance adopted by the Commissioner.

Requirements of Employer Group Insurance

Group life insurance plans issued to employers to benefit employees must meet the following requirements: All employees of the employer, or all of any class of employees as determined by conditions of employment, are eligible for insurance under the policy The policyholder (employer) must pay the premium for the policy wholly from the employer's funds, partly from the employer's funds and partly from the contribution by the employees, or wholly from the employee's funds The policy must cover at least 2 employees on the date the policy is issued

License Expiration and Renewal

If not renewed, an insurance license will expire 2 years after the date it was issued. An agent may renew a license that has not expired by filing the required renewal application and paying the renewal fee established by the Department. Agents may not renew licenses that have been suspended or revoked. Once issued, an original license remains in effect from the date a renewal application is filed until the renewal license is issued or the Commissioner revokes the license. A person may renew an expired license if the license has been expired for 90 days or less. To obtain a renewal license, the person must file with the Department a renewal application on the appropriate form and make payment for the required renewal fee AND an additional fee equal to one-half the renewal fee. If a license has been expired for more than 90 days, the person may not renew the license and must apply for a new license. Requirements for application of the new license differ based on how long the license has been expired. 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 feePerson is NOT required to take a licensing exam If a license has been expired for 1 year or more:Take a licensing exam, if an exam is required for an original licenseComply with other requirements and procedures for obtaining a new license If a licensee fails to maintain the qualifications necessary to obtain a license, the Department will revoke, suspend, or refuse to renew the license.

Cease & Desist Orders

If the Commissioner finds that an authorized person is in violation of insurance laws, the Commissioner may issue a cease and desist order. The order must contain a statement of the charges and it must be served by registered or certified mail, return receipt requested, to the affected person's last known address. If a health benefit plan issuer fails to comply with a cease and desist order, the Commissioner may revoke or suspend the issuer's certificate of authority or other authorization to operate a health benefit plan in this state.

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.

Unfair or Deceptive Claim Methods and Practices (continued)

Investigation and Disciplinary Procedures If the Department determines based on the number and types of complaints against an insurer that the insurer does not meet the minimum standards of performance, or that the number and type of complaints are not proportionate to the complaints against other insurers writing similar lines of insurance, the Department will investigate the insurer. The Department will review the findings of the investigation to determines if further action is necessary. If so determined, the Department will set a date for a hearing to review alleged violations further, notify the insurer of the date and the nature of any charges. If the Department finds the insurer is in violation, it will issue a cease and desist order to stop the unlawful practice. If the insurer fails to comply with the cease and desist order, the Department may: Revoke or suspend the insurer's Certificate of Authority Limit, regulate, or control the insurer's business activities with respect to the lines of business written, writing of policies and forms, and volume of business Require the insurer to pay reasonable attorney's fees to the Department

Fiduciary duties and responsibilities require an agent to:

Keep premium funds in a trust account separate from other funds Forward premiums to the insurer on a timely basis Report any material facts that may affect underwriting Solicit, negotiate, sell, and cancel insurance policies as required by the insurer Only recommend the purchase of policies that are suitable for the applicant Seek and gain knowledge of an applicant's insurance needs Review and evaluate an applicant's current insurance exposures, risks, coverage, and limits While acting in a fiduciary capacity on behalf of the insurer, also serve the best interests of the applicant or insured Recommend coverage that best protects the interests of the applicant and not based on commissions or any other factor that makes the agent's interests more important than those of the applicant

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. An appointment continues in effect without the necessity of renewal. 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. To terminate an agent's appointment, the insurance company must send notice to the Texas Department of Insurance.

Product Specific Training Requirements

Licensees who act as an agent with respect to certain products must complete certification courses and continuing education that relate specifically to the following products: LTC Partnership and Medicare-related ProductsAn 8-hour certification course is required before acting as an agent with regard to any of these products4 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 Small Employer Health Benefit PlansAn 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 market5 hours of certified continuing education, per licensing period, is required for a licensee to renew a small employer health benefit plan specialty certification

Incontestable Clause

Life insurance policies must include a provision that states an insurer may not contest a claim under a life insurance policy once it has been in force for 2 years from the effective date of coverage. The only exception to this requirement is for non-payment of policy premiums. An insurer may opt to include a provision that permits the insurer to contest a policy at any time for the insured's military service in a time of war. Suicide is excluded during the first 2 years of the policy. However, suicide cannot be used as a defense against payment after the second year the policy has been in force.

Misstatement of Age

Life insurance policies must include a provision that states if the age of an insured was misstated/understated on the application, the amount payable under the policy is the amount the premium paid would have purchased if the insured's age had been stated correctly.

Entire Contract

Life insurance policies must state that the policy, or the policy and its application, constitute the entire contract between the parties. A policy will be deemed incomplete if it attempts to incorporate by reference the provisions of any instrument which changes or adds to the terms of the policy. Some policy forms contain a provision that the application, if attached, is a part of the contract. If a policy containing such a provision is submitted without the application, the approval will authorize its issuance only without the application.

Nonforfeiture Law

Required Nonforfeiture Provisions Life Insurance Policies If there is a default in the premium payment, a life insurance policy must provide a paid-up nonforfeiture benefit, as stipulated in the policy, for the amount specified in the policy effective as of the premium due date. However, this will only occur if the policyowner makes a request no later than the 60 days after the due date of the defaulted premiums. Furthermore, the policyowner may elect an alternative nonforfeiture benefit by submitting a request to the insurer no later than 60 days after the due date of the defaulted premium. Nonforfeiture benefits offered on a life insurance policy include reduced paid-up, extended term, and cash surrender. The policy must provide that the owner may surrender the policy no later than 60 days after the premium due date. In lieu of a paid-up nonforfeiture benefit, the company will pay a cash surrender value in the amount specified in the policy if the premiums have been paid for at least 3 full years for an ordinary whole life insurance policy. The policy must contain a statement of the mortality table, interest rate, and method used to compute the cash surrender values and paid-up nonforfeiture benefits available under the policy, with a table showing the available cash surrender value and paid-up nonforfeiture benefits under the policy on each policy anniversary during the first 20 years or the term of the policy, whichever is shorter. 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.

Conversion to Individual Policy

Termination of Employment If an employee insured under a group life insurance policy loses coverage because of termination of employment, the individual is entitled to coverage under an individual policy. The individual policy must be applied for within 31 days after termination of employment and must be issued without evidence of insurability. The amount of coverage for the individual policy may not exceed the amount of coverage provided under the group life insurance policy. Termination of Coverage under Group Policy If a group life insurance policy is terminated by the policyholder, each insured covered under the policy for at least 5 years is entitled, upon termination of coverage, to convert coverage to an individual policy. Conversion may be achieved by applying and paying the first premium during the 31-day conversion period without evidence of insurability. Payment of Death Benefits Death benefits for a person who dies before the end of the 31-day conversion period are payable as a claim under the group policy, regardless of whether the deceased had applied for an individual policy.

Examination of Records

The Commissioner has a duty to examine each insurance carrier that is organized under the laws of Texas and each carrier that is authorized to engage in business in this state. The Commissioner may visit the insurance carrier's principal office for the purpose of investigating the affairs and condition. The Commissioner or appointed examiner must examine the financial condition of an insurer, including its ability to meet its financial obligations and liabilities, as well as its compliance with state law. The primary purpose of an examination is to determine solvency of the insurer. 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. The insurer or agent may be required to provide free access to all books and papers that relate to the insurer or agent's business affairs. The Commissioner may summon and examine under oath any of the insurer's officers, agents, and employees in relation to the insurer's affairs and condition. Failing to comply with a request of examination or to provide requested information by the department or appointed examiner will subject the insurer or insurer's agent to disciplinary action

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 The Commissioner may revoke or modify an insurer's certificate of authority if the insurer does not meet the requirements of law necessary for granting the issuance of a certificate of authority. Before doing so, the Commissioner must provide the insurer with at least 10 days' advance written notice before such revocation or modification. The notice must state the reason for the action.

General Powers and Duties

The Commissioner's powers and duties are granted by the Department and state legislature. 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.

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 Any person receiving such an inquiry must respond to it in writing no later than 15 days after receipt unless the person submits a written notice to the Department requesting additional time to respond. A record of all inquiries made by the department must be maintained by the department.

Licensing Persons with Criminal Backgrounds

The Department views the relationship between licensees and the public to be one where the public places its trust in licensees and relies upon them to act legally and ethically with respect to insurance products, which are often complex. Therefore, the Department requires licensees to be honest, trustworthy, and reliable. The Department has developed guidelines that determine what crimes disqualify persons from licensure due to their serious nature: 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

Agent

The Department will issue an agent license if the applicant: 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 An agent is a person authorized and licensed to transact insurance on behalf of an insurer, and includes a subagent and any other person who performs the acts of an agent, including selling, soliciting, and negotiating insurance or annuity contracts and collecting such premiums. An "agent" is NOT: A regular salaried employee or officer who:Devotes substantially all of his/her time to activities other than the solicitation of insurance applicationsDoes not receive a commission or other compensation directly from the sale of insuranceDoes not solicit or accept insurance applications from the public An employer, employee, or trustee engaged in the administration or operation of an employee benefits plan if not directly compensated by the insurer issuing the contracts The department may not issue a license as an agent unless it has been determined that the applicant intends to be actively engaged in the soliciting or writing of insurance for the general public and actively engaged in the business if insurance. 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. This prohibition is known as controlled business.

Unfair/Prohibited Trade Practices

The following acts are unfair methods of competition and/or unfair or deceptive acts or practices. Unfair or Deceptive Claim Methods and Practices It is an unfair method of competition to engage in the following settlement practices regarding a claim made by an insured or beneficiary: Misrepresenting to a claimant a material fact or policy provision relating to coverage at the time of issue Failing to acknowledge within 15 business days, or reasonable promptness, pertinent communications with respect to a claim Failing to adopt and implement reasonable standards for prompt investigation of insurance claims Failing to attempt in good faith to promptly and fairly settle a claim in which the insurer's liability is reasonably clear Failing within a reasonable time to affirm or deny coverage of a claim, or submit a reservation of rights letter, to a policyholder Compelling policyholders to institute a lawsuit to recover amounts due by offering substantially less than the amount ultimately recovered in lawsuits brought by policyholders Failing to maintain complaint records pertaining to all complaints received by the insurer during the 3 preceding years Failing to promptly provide claim forms as stated in the policy when the insurer requires forms as a prerequisite for a claim settlement Failing to attempt in good faith to promptly and fairly settle a claim in which the insurer's liability is reasonably clear under one portion of a policy to influence settlement under another portion of the policy unless payment under one portion of the coverage amounts to evidence of liability under another portion Denying a claim without providing a reasonable explanation of the basis in relationship to the facts or applicable law for the insurer's denial Refusing or unreasonably delaying a settlement offer under first-party coverage because other coverage may be available to the insured or that third-parties are responsible for damages suffered Attempting to enforce a full and final claim release from a policyholder when only a partial payment has been made, unless the payment is a compromise settlement Refusing to pay a claim without conducting a reasonable investigation of the claim Failing to respond promptly to a claimant who requested personal contact about, or a review of, a claim Delaying or refusing settlement of a claim under a Texas personal auto policy solely because another type of insurance is available to satisfy all or part of the loss; claimants have the right to choose under which policy to submit a claim and in what order to receive payment Requiring a claimant, as a condition of claim settlement, to provide federal income tax returns for review by the insurer unless the court orders production of the tax returns or the claim involves a fire loss or loss of profits or income Any other act as determined by rule of the Commissioner to constitute an unfair claim settlement practice

Minimum Benefit Standards

The following minimum benefit standards apply to Medicare supplement policies being advertised, solicited, or issued for delivery in this state: 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) 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

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 A Medicare Select issuer must have its plan of operation approved by the Commissioner before issuing a policy or certificate. Proposed changes to an issuer's plan of operation, except those to the network providers list, must be filed with the Commissioner 60 days before they are implemented. An updated list of network providers must be filed with the Commissioner at least quarterly. Each applicant must receive a full and fair written disclosure of the provisions, restrictions, and limitations of each Medicare Select policy or certificate. The applicant's signed receipt and acknowledgement of understanding must be obtained before an issuer may sell a Medicare Select policy or certificate. A Medicare Select issuer must have and use procedures for hearing complaints and resolving written grievances. These procedures must be described in each policy, certificate, and Outline of Coverage and must be reported annually to the Commissioner by March 31. At an insured's request, the issuer must give the insured the opportunity to purchase any Medicare supplement policy or certificate it offers that has comparable or lesser benefits and does not restrict the network.

Transacting Insurance

The transaction of insurance involves activities relating to the business of insurance, such as the solicitation and negotiation of insurance, including the execution of an insurance contract and the transaction of matters relating to the contract. The following acts that involve transacting insurance include: 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

Rebating

Unless expressly allowed by law—and with respect to life insurance, annuities, and accident and health insurance—the following acts are prohibited inducements to offer or purchase insurance: Pay, give, or allow (or offer to pay, give, or allow) a:Rebate of policy premiumsSpecial favor or advantage concerning policy dividends or benefitsValuable consideration not stated in the policy Give, sell, or purchase (or offer to give, sell, or purchase):Stocks, bonds, or securities of an insurerDividends or profits from the stocks, bonds, or securities of an insurerAnything of value not stated in the policy However, an agent is not prohibited from giving, in connection with an offer or sale of an insurance policy or contract, any item that is promotional advertising, educational, or considered a common courtesy extended to consumers and is valued at $25 or less. In addition, an agent may not pay, permit, give—or offer to pay, permit, or give—any of the following to a person, including an insured purchasing insurance, who does not hold an agent license: A commission, a rebate of premium, a contract for service, or any other valuable consideration or inducement not contained in the insurance policy A fee or other valuable consideration for referring a customer who seeks to purchase insurance or insurance advice if it is based on the customer's purchase of insurance

Accelerated Death Benefits

ife insurance policies may contain an accelerated benefit under individual or group term life coverage. For the accelerated benefit to apply, the insured must have a terminal illness, a long-term care illness, or an illness or physical condition that is likely to cause permanent disability or premature death, including but not limited to: Acquired immune deficiency syndrome (AIDS) A malignant tumor A condition that requires an organ transplant Coronary artery disease that results in acute infarction or requires surgery The board of trustees may adopt rules to provide for payment of accelerated life insurance death benefits to a terminally ill, terminally injured, or permanently disabled person (including an annuitant participating in optional term life insurance coverage) in amounts that benefit the participant without increasing the cost of providing the benefits. The amount of any accelerated death benefit payment must be deducted from the amount that would otherwise be payable as a death benefit. The policy or rider containing the accelerated death benefit must include the statement, "Death benefits, cash values, and loan values will be reduced if an acceleration-of-life-insurance benefit is paid."