Texas Statutes and Rules Pertinent to Life Insurance Only
An illustration must state that it is not a part of the insurance contract
"NOT PART OF CONTRACT"
Advertisements
-Accurate and not misleading -Insurers are responsible for all advertisements
Life Insurance Policy Comparison methods
-Interest-Adjusted Net Cost method: time value of money -Comparative Interest Rate method: rate of return
Duties of the replacing producer
-Present to the applicant a Notice Regarding Replacement that is signed by both the applicant and the producer. A copy must be left with the applicant. -Obtain a list of all existing life insurance and/or annuity policies to be replaced including policy numbers and the names of all companies being replaced. -Leave the applicant with the original or a copy of written or printed communications used for presentation to the applicant. -Submit to the replacing insurance company a copy of the replacement notices with the application.
Illustrations
-Presentations of non-regulated elements -General rule-include information about the insurer, insured, underwriting classifications, and policy benefits -Must be clearly labeled "Life Insurance Illustration"
Nonforfeiture requirements do not apply to the following types of insurance products
-Reinsurance -group insurance - Pure endowment -Annuities -Most term policies -Polices delivered outside of Texas through an agent or other company representative -Any policy that does not cash values or nonforfeiture values
The following provisions apply to termination and conversion of group life insurance policies issued in this state.
-The individuals who have been covered under a group policy for at least 5 years must apply for an insurance policy and pay the first premium to the insurer within 31 days after the date the individual's membership in a group life terminates -The individual policy must be issued without evidence of insurability -The insured has the right to select any individual policy offered, by the insurer, except for term insurance -The amount of the individual policy coverage cannot exceed the lesser of the amount of the prior group coverage of 2,000
Policy Provisions
-The policy, a copy of the application, and any attached riders make up the entire contract - All statements of the insured are deemed representations and not warranties -Life insurance policies are incontestable after the policy has been in force after 2 years -In the case of misstatement of an insured age, the policy will pay benefits based on what the premiums paid would have purchased at the insured's correct age. -A life insurance policy that has cash value must have a provision for the policy owner to borrow fropm
prohibited provisions
-certain limitation periods -retroactive issuance, exchange, or conversion -settlement upon maturity amount
Which of the following is correct regarding credit life insurance?
It insures the life of a debtor
An individual covered under a group life insurance policy may convert the policy to any of the following EXCEPT
LEVEL TERM
An individual covered under a group life insurance policy may convert the policy to any of the following EXCEPT
Level term
Nonforfeiture law
Nonforfeiture benefits are built into the policy and provide a guarantee that they cannot be forfeited or lost by the owner
During replacement of life insurance, a replacing insurer must do which of the following?
Obtain a list of all life insurance policies that will be replaced.
All of the following are mandatory life insurance policy provisions EXCEPT
Policy backdating
Duties of of the replacing producer
Present to the applicant a NOTICE REAGARDING REPLACEMENT that is signed both the applicant and the producer. A copy must be left with the applicant
According to the state nonforfeiture law for life insurance policies, insurers must offer at least one of the following nonforfeiture options EXCEPT
Reduction of premium
The regulations regarding replacement apply to which of the following?
Renewable term
Duties of the replacing insurance company
Require from the producer a list of the applicant's life insurance or annuity contracts to be replaced and a copy of the replacement notice provided to the applicant; and Send each existing insurance company a written communication advising of the proposed replacement within a specified period of time of the date that the application is received in the replacing insurance company's home or regional office. A policy summary or ledger statement containing policy data on the proposed life insurance or annuity must be included.
Which of the following may be included on an insurance advertisement?
Testimonials from compensated individuals
A life insurance policy must ensure the following
That upon surrender of the policy no later than 60 days after the due date of a premium payment, the company will pay a cash surrender value if the premiums have been paid for at least 3 full years for ordinary life insurance policies, or 5 years for industrial life insurance policies.
Prohibited practices in life insurance
Anything that is deceitful
All of the following information must be disclosed to the viator prior to the execution of a viatical settlement contract EXCEPT
Availability of stranger -originated life insurance (STOLI)
All of the following statements are correct regarding credit life insurance EXCEPT
Benefits are paid to the borrower's beneficiary
All of the following statements are correct regarding credit life insurance except
Benefits are paid to the borrowers beneficiary
Prohibited Provisions
Certain limitations period, a life insurance policy may not contain a provision under which the policy is issued on a date more than 6 months before the date of application if it causes the insured to rate at an age that is younger than the insured's age on the date of application. (back dating)
Which of the following is used to compare the cost of one life insurance policy against another in order to guide prospective purchasers to policies that are competitively priced?
Cost comparison methods
Which of the following is TRUE about credit life insurance?
Creditor is the policy owner
Which of the following is TRUE about credit life insurance?
Creditor is the policy owner, also the the beneficiary; the debtor is the insured
Which of the following is NOT allowed in credit life insurance?
Creditor requiring that a debtor buys insurance from a certain insurer
When possible, what should insurers strive to eliminate from illustrations?
Footnotes and caveats
Which of the following must be included in all life insurance advertisements?
Identity of the actual insurer
Regarding credit life insurance, who is responsible for reporting termination of debt to the insurer?
The creditor
Which of the following is NOT required on an illustration used in the sale of a life insurance policy?
The name of the primary and secondary beneficiaries
Those values that are not guaranteed must be identified as such
VALUES NOT GUARANTEED
Which of the following CANNOT be included along with illustrations used to sell life insurance?
Vanishing premium information
Policy loans
a life insurance policy must allow the policy owner to take out a policy loan from the policy's cash value as long as the policy is in force, the premiums have been paid for at least 3 years, and the policy is properly assigned.
The insured may assign
all rights and benefits under the policy to any individual, firm, corporation, association, trust, or other legal entity, other than the insured's employer
The creditor is the owner and beneficiary of the policy
although the premiums are generally paid by the borrower
Solicitation
an attempt to persuade a person verbally or in writing to buy an insurance policy
The insured may assign all rights and benefits under the policy to
any individual, firm, corporation, association, trust, or other legal entity, other than the insured's employer.
Duty of agents
before using an advertisement, an agent must file its contents with the home office of the insurer and receive a written approval.
The term of credit life insurance polices
begins on the date the debtor becomes obligated to the creditor
Credit life insurance
cannot pay out more than the balance of the debt
Credit life insurance
cannot pay out more than the balance of the debt so that there is no financial incentive for the death of the insured
Grace Period
consumer must be provided a grace period of at least one month for the payment of each premium during witch the policy remains in force. If the insured dies during the grace period, the over due premium will be deducted from any settlement made under the policy.
The type of insurance sold to a debtor and designated to pay the amount due on a loan if the debtor dies before the loan is repaid is called
credit life
They type of insurance sold to a debtor and designated due on a loan if the debtor dies before the loan is repaid is called
credit life
Which of the following would be the beneficiary in credit life insurance?
creditor
Which of the following is TRUE about credit life insurance?
creditor is the policy owner
Credit life is usually written as
decreasing term insurance, and it may be written as an individual policy or as a group plan.
The insurer is responsible
for all advertisement regardless of who wrote it or published it, created it, or distributed it
nonforfeiture laws
forfeiture benefits are built into the policy and provide guarantee that they cannot be lost by the policy owner. Thee guarantees are required by state law to be included in the policy
If evidence of the insured is required and provided after 30 days
from the time the debtor becomes obligated to the creditor, coverage may begin upon the approval of the insurer
Group Life Insurance
in Texas must cover at least 2 employees or labor union members on the date of its issue. If the insured employees to not pay any part of the premium, the policy must ensure all eligible employees
All advertisements are the responsibility of the
insurer
Duty of insurers
insurers marketing policies in Texas must maintain a system of control over the content/ form/ method of dissemination of all advertisements and policies
Credit Insurance
is a special type of coverage written to ensure the life of the debtor and pay off the balance of a loan in the event of the death of a debtor
Credit insurance
is a special type of coverage written to insure the life of the debtor and pay off the balance of a loan in the event of the death of a debtor
The replacement regulations does not apply to the following types of insurance:
-credit life -group life insurance and group annuities (not direct solicitation) -An application to the existing insurer that issued the existing policy when a contractual change or conversation privilege is being exercised, or when the existing policy is being replaced by the same insurer -Replacement under a binding or conditional receipt issued by the same company -Policies used to fund an employee pension or welfare benefit plan that are covered by ERISA -New insurance coverage provided under a life insurance policy the cost for which is borne in full by the insured's employer -Existing nonconvertible, nonrenewable term life insurance policy that expires within 5 years - immediate annuities purchased with proceeds from an existing contract -structured settlements
An illustration of a life insurance policy generally includes
-name of insurer - name and business address of producer or insured's authorized representative -name, age, and sex of proposed insured, except when a composite illustration is permitted under this regulation - underwriting or rating classification upon which the illustration is based -Generic name of policy, the company product, and form number -initial death benefit -dividend option election or application of non-guaranteed benefits if applicable -illustration dates -A prominent label stating "life insurance illustration"
Forfeiture agreements do not apply to the following insurance products
-reinsurance -group insurance -pure endowment -annuities -most term policies -policies delivered outside of Texas through an agent or other company representative -any policy that does not provide for cash values or nonforfeiture values
A life insurance policy must ensure the following
-that upon surrender of the policy, no later than 60 days after the due date of premium payment, the company will pay a cash surrender value if the premiums have been paid for at least 3 full years for ordinary life insurance policies
Viatical settlements may be rescinding within what time period after the viator receives the proceeds?
15 days
How long is the incontestability period in group life insurance policies issued in Texas?
2 years
Life insurance policies are incontestable after
2 years of being in force
Purchasers of a fixed annuity must be provided a free look period of at least
20 days
Unearned premiums must be refunded to the debtor within
30 days of the receipt of notice
Conversion to an individual whole life policy is permitted without evidence of insurability within how many days of the termination of employment?
31 days
How long is grace period in group policies?
31 days
How soon from the termination of debt under a credit life insurance policy must a creditor provide notice to the insurer?
60 days
The creditor must provide a notice of termination of dept to the insured within
60 days
Group life
A group policy issued in this state must cover at least 2 employees or labor union members
Settlement upon Maturity
A life insurance policy may not contain a provision for a settlement at maturity that is less than the face amount
Retroactive Issuance, Exchange or Conversion
A life insurance policy may not contain a provision under which the policy is issued on a date more than 6 months before the date of the application if it causes the insured to rate at an age that is younger than the insured's age on the date of the application
Certain limitation periods
A life insurance policy may not include a provision that limits the time during which a lawsuit may be filed to a period of less than 2 years after the cause of action
Policy Loans and Withdrawals
A life insurance policy must allow the policy owner to take out a policy loan from the policy's cash value as long as: -the policy is in force -the premiums have been paid for at least 3 years -and the policy is properly assigned
Free Look Provision
A policy provision required by state law that establishes a set number of 15 calendar days for the policyowner to review a newly issued policy. The policyowner may return the policy to the insurer during this time for any reason and receive a 100% refund. Also known as unconditional refund provision without penalty.
Free Look Provision
A policy provision required by state law that establishes a set number of days (15 calendar days) for the policyowner to review a newly issued policy. The policyowner may return the policy to the insurer during this time for any reason and receive a 100% refund. Also known as refund provision, unconditional refund provision, return provision, exchange provision, or right to examine.
Replacement: means any transaction in which life insurance or a new annuity is purchased and, as a result, the existing life insurance or annuity has been or will be any of the following
lapsed, forfeited, surrendered, or otherwise terminated. reissued with any reduction in cash value Converted to reduced paid up insurance, continued as extended term insurance or otherwise reduced in value by the use of non-forfeiture benefits; or other policy values; amended as to the effect either a reduction in benefits or in the term which for which coverage would otherwise remain in force or for which benefits would be paid; used in a financed purchase
Advertising
must be accurate and not misrepresent the facts
Settlement of Death Benefit
must be paid within 2 months
Advertisements
must be truthful and not misleading and if compensation is being paid, it must say "paid endorsement"
Purchasers of a fixed annuity
must have a free-look period of at least 20 days
Grace period must be at least
one month for the payment of each premium, if the insured dies within the grace period, the premium will be deducted from any settlement due under the policy.
Illustrations
presentation or depiction that includes non-guaranteed elements of a life insurance policy over a period of years
According to the state nonfofeiture law for life insurance policies, insurers must offer at least one of the following nonforfeiture options EXCEPT
reduction of premium
The regulations regarding replacement apply to which of the following?
renewable term
Decreasing Term Insurance
term insurance in which the annual premium remains constant but the face amount of the policy declines each year. It may be written as an individual policy or as a group policy.
The initial amount of credit life insurance may not exceed
the amount to be repaid under the contract
Viatical Settlement
the sale of a life insurance policy by a terminally ill insured to another party, typically to investors or investor groups, who hope to profit by the insured's early death
Coverage under a group life insurance may be extended to
the spouse and eligible children
What is the main purpose of the regulation on life insurance policy illustrations?
to help customers make educated decisions in buying life insurance
Dependent coverage
usually applies to the insured's spouse and children but may also include dependent parents or anyone else on which dependency can be proven.
Dependent coverage
usually applies to the insured's spouse and children, but may also include dependent parents or anyone else on which dependency can be proven.
Upon the submission of a death claim under a life insurance policy, when should the insurer pay the policy benefit?
within 2 months
