Texas statutes and rules pertinent to life insurance only
group policy provisions
-2 year incontestability period -31 day grace period -misstatement of age, insurer will adjust premium and/or the benefit to correct age -dependent coverage applies to insured's spouse & kids -prohibited from including any provision that reduces time period during an action may be started under the policy to less than 2 years
termination and conversion of group life policies in texas
-eligible individuals who have covered under group policy for at least 5 yrs must apply for individual policy & pay first premium to the insurer 31 days after the date the individual's membership in a group plan terminates -individual policy must be issued w/out evidence of insurability -the insured has right to select any individual policy offered by the insurer, except for term insurance -amount of individual policy coverage cannot exceed the lesser amount of the prior group coverage
illustration must contain basic info
-name of insurer -name & business address of producer or insurer's authorized rep -name, age, sex of proposed insured -underwriting or rating classification upon which illustration is based -generic name of policy, company product name, & form # -initial death benefit -dividend option election or app of nonguaranteed elements -illustration date -a prominent label stating "life insurance illustration"
all insurers must offer at least once of the following nonforfeiture options:
-reduced paid-up -extended term -shortened benefit term
nonforfeiture requirements do not apply to the following types of insurance products:
-reinsurance -group insurance -pure endowment -annuities -most term policies -policies delivered outside of texas through an agent or other company rep -any policy that does not provide for cash values of nonforfeiture
viatical settlements may be rescinding within what time period after the viator receives the proceeds?
15 days
an individual covered under a group life insurance policy may convert the policy to any of the following except
15-year level term
purchasers of a fixed annuity must be provided a free-look period of at least
20 days, in which premiums and contract fees must be returned to the applicant
conversion to an individual whole life policy is permitted without evidence of insurability within how many days of the termination of employment?
31 days
interest-adjusted net cost method
Considers the time value of money by applying an interest adjustment to yearly premiums and dividends.
if a policyowner surrender his life insurance policy that has been in force for 5 years within 60 days after the premium due date, what will the insurer be required to pay?
a cash surrender value
grace period
a consumer must be provided a grace period of at least 1 month for the payment of each premium during which the policy remains in force
retroactive issuance, exchange or conversion
a life insurance policy may not contain a provision under which the policy is issued on a date more 6 MONTHS before the date of the application (BACKDATING) if it causes the insured to rate to an age that is younger than the insured's age on the date of app
certain limitation periods
a life insurance policy may not include a provision that limits the time during which a lawsuit may be filed to a period of less that 2 years after the cause of action
policy loans
a life insurance policy must allow the policy to take out a policy loan from the policy's cash value as long as: -the policy is in force -premiums have been paid for at least 3 full years -the policy is properly assigned
dividend
a payment made by a policy (distribution of profits or returned of unused funds)
claimant
a person who submits a claim for payment of benefits
illustration
a presentation or depiction that includes non guaranteed elements of a policy of individual or group life insurance over a period of years
advertising must be
accurate and not misrepresent the facts
not part of contract
an illustration must clearly state that it is not a part of the insurance contract
replacement
any transaction in which new life insurance or a new annuity is purchased and
the insured must
assign all rights & policies
group policy issued in texas must cover
at least 2 employees
solicitation of insurance
attempt to persuade a person to buy a policy
what info cannot be disclosed to the viator prior to the execution of a viatical settlement contract?
availability of stranger-originated life insurance (STOLI)
Upon the submission of a death claim under a life insurance policy, when should the insurer pay the policy benefit?
within 2 months
credit insurance
written to insure the life of the debtor and pay off balance of a loan in the event of the death of the debtor
duty of agents
before using an ad, an agent must file its contents with the home office of the insurer, and receive a written approval
the creditor is the owner and the
beneficiary of the policy although the premiums are generally paid by the borrower (debtor)
NOT TRUE statement about credit life insurance
benefits are paid to the borrower's beneficiary
nonforfeiture values
benefits in a life insurance policy that the policyowner cannot lose
nonforfeiture benefits are
built into the policy and provide a guarantee that they cannot be forfeited (lost) by the policyowner. regulated by state laq
credit life insurance
cannot pay out more than the balance of the debt
what is used to compare the cost of one life insurance policy against another in order to guide prospective purchasers to policies that are competitively priced?
cost comparison methods
credit life is usually written as
decreasing term insurance
the usage of words or symbol that are similar to what entity is prohibited in life insurance ads?
federal government
when possible, what should insurers strive to eliminate from illustrations?
footnotes and caveats
free look provision
if a buyer's guide and disclosure doc are not provided to the applicant at or before the time of the application, the applicant must be allowed a free-look period of at least 15 calendar days during which the applicant may return the policy for unconditional refund without penalty
policy proceeds
in life insurance, the death benefit
duty of insurers
insurers marketing policies in TX must maintain a system of control over the content, form, & method of dissemination of all ads on their policies
upon surrender of policy
no later than 60 days after due fate of premium payment, company will pay a cash surrender value (instead of a paid-up nonforfeiture benefit)
if a person is compensated for a testimonial in an ad, which of the following statements should be included in the ad?
paid endorsement
nonguaranteed elements
policy components that are not guaranteed in the contract or that may fluctuate
lapse
policy termination due to nonpayment of premium
rescind
remove or cancel (ex: void a contract)
the insurer whose policies are advertised is
responsible for all its advertisements. regardless of who wrote, created, presented, or distributed them
disclosure
revealed information to help someone make an intelligent and educated decision
testimonials
statements or endorsements made by clients based on their experience with products or services
the initial amount of credit life insurance may NOT exceed
the amount to be repaid under the contract
replacing insurer
the company that issues the new policy -present to a notice regarding replacement that is signed by applicant & producer -obtain list of what needs to be replaced -leave applicant with OG copy -submit placing insurance company a copy of replacement notice with app
existing insurer
the company whose policy is being replaced -get list from producer of applicant's life insurance or annuit contracts -send existing insurance company written communication advising proposed replacement
coverage under group life may extended to
the insured's spouse and eligible children
higher the CIR
the less expensive the higher-premium policy
settlement upon maturity
the life insurance policy may not contain a provision for a settlement at maturity that is LESS THAN THE FACE AMOUNT of the policy plus the amount of any dividend additions to the policy minus any debt owed to company & any premium that may be deducted from the settlement
comparative interest rate method (CIR)
the rate of return that must be earned on a "side fund" in a buy term invest the difference plan so that the value of the side fund will be equal to the surrender value of the higher premium policy at a designated point in time
values not guaranteed
those values that are not guaranteed must be identified as such
which of the following CANNOT be included along with illustrations used to sell life insurance?
vanishing premium info