CH 5 QUIZ
For which of the following actions can an agent's license be suspended or revoked? A. Rebates of premiums B. Misdemeanors C. Unintentional violations of state laws D. Misstatements on the application
A. Rebates of premiums The Commissioner will suspend or revoke an existing license, or deny a new license for any of the following reasons: willful violations of state insurance laws, intentional material misstatements in the license application, and rebates of insurance premiums, among other offenses.
Which entity has the authority to grant a temporary life insurance agent's license? A. A licensed agent B. Commissioner of Insurance only C. Federal Board of Insurance Licensing D. Both the Commissioner and the Federal Board of Insurance Licensing
B. Commissioner of Insurance only The Commissioner of Insurance can issue a temporary, 90-day life insurance agent's license.
All of the following are requirements for an individual to be licensed EXCEPT A. Pay the appropriate fees. B. Provide a financial statement. C. Be at least 18 years of age. D. Pass the licensing examination.
B. Provide a financial statement. An applicant for a license must be at least 18 years old, pass the state exam (within the last 12 months), pay the appropriate fees and provide an application before a license can be issued. A financial statement of the individual is not a requirement to be licensed.
An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of? A. Twisting B. Defamation C. False advertising D. Unfair claims
C. False advertising False advertising is the illegal practice of advertising or circulating materials that are untrue, deceptive, or misleading.
An insurance company is domiciled in Montana and transacts insurance in Wyoming. Which term best describes the insurer's classification in Wyoming? A. Domestic B. Unauthorized C. Foreign D. Alien
C. Foreign A foreign insurer is domiciled in one state and transacts insurance in another. A domestic insurer transacts insurance in the domicile state (in this case, Montana). An alien insurer is domiciled in one country and transacts insurance in another.
Which of the following is NOT a possible penalty for a violation of the Insurance Code? A. An administrative penalty B. Payment of restitution C. A cease and desist order D. A fine up to $100,000
D. A fine up to $100,000 In addition to the suspension or revocation of a license, the Commissioner may impose any of all of the following penalties: issue a cease and desist order; order the payment of an administrative penalty; and order the licensee to make restitution. The penalty for a violation may not exceed $25,000.
Under Workers Compensation, an insurance carrier will pay death benefits to the legal beneficiary in an amount equal to what portion of the employee's average weekly wage? A. 75% B. 50% C. 25% D. 15%
A. 75% The amount of the death benefit is equal to 75% of the employee's average weekly wage.
All of the following are considered unfair trade practices in the business of insurance EXCEPT A. Sharing commissions. B. Boycott. C. Rebating. D. Defamation.
A. Sharing commissions. Sharing commissions is allowed as long as both producers are properly licensed. All other choices are unfair trade practices.
What percentage of continuing education hours must be in a classroom setting? A. 25% B. 50% C. 75% D. 100%
B. 50% At least 50% of all required continuing education hours must be completed in a classroom setting or a classroom equivalent setting approved by the department.
If a deceased employee is survived by a eligible spouse and 3 dependent children, what percentage of the death benefit will be paid to the spouse? A. 100% B. 75% C. 50% D. 25%
C. 50% One half of the death benefit will be paid to the spouse, and one half of the benefit will be shared equally among the children.
All of the following are considered unfair or deceptive acts in connection with the sale of insurance EXCEPT A. Delaying a settlement because there is other insurance that will satisfy any portion of the loss. B. Lacking standards for the investigation of an insured's claims. C. Attempting to settle a claim in which liability is clear. D. Stating facts or provisions in a way that misrepresents the true nature of the policy.
C. Attempting to settle a claim in which liability is clear. Misrepresenting the nature of a policy, delaying a settlement solely because there is a another policy that may pay part of the loss, and lacking standards for the investigation of an insured's claim are considered unfair or deceptive acts.
Which of the following is NOT true regarding a Certificate of Authority? A. It is equivalent to an insurance license. B. It is issued by the state department of insurance. C. It is issued to group insurance participants. D. It may be necessary for transacting business in a specific state. Before insurers may transact business in a specific state, they must apply for a license or Certificate of Authority from the state department of insurance and meet any financial (capital and surplus) requirements set down by the state.
C. It is issued to group insurance participants. Before insurers may transact business in a specific state, they must apply for a license or Certificate of Authority from the state department of insurance and meet any financial (capital and surplus) requirements set down by the state.
What is the major difference between a stock company and a mutual company? A. Amount of death benefit B. Number of producers C. Types of whole life policies D. Ownership
D. Ownership Mutual companies are owned by policyholders, while stock companies are owned by stockholders.
An insurer that holds a Certificate of Authority in the state in which it transacts business is considered a/an A. Self-insurer. B. Authorized insurer. C. Local insurer. D. Certified insurer.
B. Authorized insurer. Insurers who meet the state's financial requirements and hold a Certificate of Authority to transact business in the state are considered authorized or admitted.
Who do agents represent? A. Their clients B. The insured C. The DOI D. The insurance company
D. The insurance company Any person who solicits insurance on behalf of any insurance company, takes or transmits (other than for himself or herself) an insurance application or policy, examines any risk or loss or receives, or collects or transmits any premium, is considered to be the agent of the company for which the act is done.
If an auto policy has split limits of 30/60/25, how much will the policy pay for property damage in a single accident? A. $25,000 B. $30,000 C. $60,000 D. $115,000
A. $25,000 30/60/25 limits mean $30,000 will be paid for bodily injury to one person in a single accident; $60,000 is the maximum payment for all bodily injuries per accident, and $25,000 for property damage in a single accident.
The Commissioner of Insurance issues a Cease and Desist Order and immediately receives a request for the charges to be reviewed in a hearing. Within what number of days must the hearing be held? A. 10 B. 14 C. 30 D. 60 If the recipient of a Cease and Desist Order wants to contest or review the charges in court, the request must be made within 30 days of the order. After the Commissioner receives the request, a hearing must occur within 10 days.
A. 10 If the recipient of a Cease and Desist Order wants to contest or review the charges in court, the request must be made within 30 days of the order. After the Commissioner receives the request, a hearing must occur within 10 days.
To legally transact insurance in this state, an insurer must obtain which of the following? A. Certificate of Authority B. Power of Attorney C. Business entity license D. Certificate of Insurance
A. Certificate of Authority A Certificate of Authority is required in order to transact insurance.
Which of the following best describes an insurance company that has been formed under the laws of this state? A. Domestic B. Sovereign C. Alien D. Foreign
A. Domestic A company is domestic when doing business within the state in which it is incorporated.
In insurance transactions, fiduciary responsibility means A. Handling insurer funds in a trust capacity. B. Maintaining a good credit record. C. Being liable with respect to payment of claims. D. Commingling premiums with agent's personal funds.
A. Handling insurer funds in a trust capacity. An agent's fiduciary responsibility includes handling insurer funds in a trust capacity.
If the death of an employee results from a compensable injury, the insurance carrier will pay A. Up to $2,500 for the cost of burial. B. Up to $4,000 for the cost of burial. C. Up to $10,000 for the cost of burial. D. Nothing.
C. Up to $10,000 for the cost of burial If the death of an employee results from a compensable injury, the insurance carrier will pay the lesser of the actual cost of burial or $10,000.
When doing business in this state, an insurance company that is formed under the laws of another state is known as which type of insurer? A. Nonadmitted B. Foreign C. Domestic D. Alien
B. Foreign A foreign insurer is one that is formed under the laws of another state. A nonadmitted or unauthorized insurer is an insurance company that has not applied for, or has applied and been denied a Certificate of Authority and may not transact insurance.
What is the minimum percentage of a licensee's total volume of premiums in a calendar year that must come from business other than controlled business? A. 80% B. 50% C. 60% D. 25%
D. 25% During any calendar year, at least 25% of a licensee's total volume of premiums must be from business other than controlled business.
In Texas, how is the Commissioner of Insurance placed in office? A. Appointed by the Governor for a term of 4 years B. Appointed by the Senate for a term of 2 years C. By election, at the same election when other state officials are chosen. D. Appointed by the Governor for a term of 2 years
D. Appointed by the Governor for a term of 2 years As established by the Insurance Code, the Commissioner is appointed by the Governor for a term of 2 years.
Who might receive dividends from a mutual insurer? A. Subscribers B. Stockholders C. Agents D. Policyholders
D. Policyholders A mutual insurer has no stock, and is owned by the policyholders. Since they may receive a dividend (not guaranteed), such policies are known as participating policies. Dividends received by policyholders of a mutual insurer are not taxable.
An individual licensed as an agent must notify the Texas Department of Insurance, on a monthly basis, of all of the following EXCEPT A. Any administrative action taken against the license holder by an insurance regulator of Texas, any other state, or the federal government. B. Any change in business name. C. Any change of the mailing address. D. Any felony conviction.
B. Any change in business name. Agents must notify the Department on a monthly basis of any change of the license holder's mailing address, any felony conviction of the license holder, or any administrative action taken against the license holder by a financial or insurance regulator of Texas, another state, or the United States.
A producer who fails to segregate premium monies from his own personal funds is guilty of A. Larceny. B. Embezzlement. C. Theft. D. Commingling.
D. Commingling. It is illegal for insurance producers to commingle premiums collected from the applicants with their own personal funds.
A license may NOT be denied, suspended, or revoked if the licensee A. Submits an unsigned insurance policy application. B. Engages in fraud. C. Deals with insurance outside the scope of the license. D. Materially misrepresents an insurance policy. Any type of fraud or misrepresentation is a violation that may cause a license to be denied, suspended or revoked.
A. Submits an unsigned insurance policy application. Any type of fraud or misrepresentation is a violation that may cause a license to be denied, suspended or revoked.
After filing a claim, an insured tells the insurer that there is more than one insurance policy in force. That insurer sets aside the claim until it hears what the other company will pay. The insurer's action will be classified as A. Unfair. B. Prudent. C. Coordinated. D. Proactive.
A. Unfair. Unfair settlement practices include refusing or delaying a settlement solely because there is other insurance available to partially or entirely satisfy the claim loss. The claimant who has a right to recover from more than one insurer has the right to choose the coverage from which to recover and the order in which payment is to be made.
An agent holds an insurance license in the state of Kansas and would like to transact insurance in Texas. The agent became licensed before written examinations were required. Therefore, the agent has not actually passed any kind of examination. Which of the following is true? A. If the agent has practiced for more than 30 years, the written requirement is waived. B. The written examination requirement will be waived. C. The agent will need to take either the Kansas or Texas written examination. D. The agent must take a special transition class and pass a short examination administered at the end.
B. The written examination requirement will be waived. If a currently-licensed, foreign agent obtained an insurance license before written examinations were required, and if the agent seeks to transact insurance in Texas, the written examination requirement will be waived.
The owner of a small restaurant submits a claim to his insurer after a loss due to fire. The insurer's investigation finds a police report that shows that a fire may have been of suspicious origin. The insurer can do which of the following? A. Delay an acceptance or rejection decision B. Reduce the claim amount C. Disregard the claim D. Deny the claim immediately
A. Delay an acceptance or rejection decision Insurers can delay an acceptance or rejection decision for 30 days if arson is suspected.
Which of the following would NOT be considered rebating? A. Collecting a lower premium than what's specified in a policy as a token of client appreciation B. Giving a client a $25 pen with the insurer's logo during the insurance application process C. Sending a $50 gift certificate to the insured's employee after the insurance has been effected as a thank you for the referral D. Sharing commission with the insured
B. Giving a client a $25 pen with the insurer's logo during the insurance application process In this state, promotional materials, articles of merchandise, or gifts that have a redeemable value of $25 or less are not considered "valuable consideration," and therefore, are allowed.
After filing a claim, an insured tells the insurer that there is more than one insurance policy in force. That insurer sets aside the claim until it hears what the other company will pay. The insurer's action will be classified as A. Proactive. B. Unfair. C. Prudent. D. Coordinated.
B. Unfair. Unfair settlement practices include refusing or delaying a settlement solely because there is other insurance available to partially or entirely satisfy the claim loss. The claimant who has a right to recover from more than one insurer has the right to choose the coverage from which to recover and the order in which payment is to be made.
The Commissioner has full power and authority to do all of the following EXCEPT A. Issue Certificates of Authority. B. Enforce the Insurance Code. C. Issue cease and desist orders. D. Draft insurance laws.
D. Draft insurance laws. The Commissioner enforces the Insurance Code, but does not write insurance laws.
On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are A. Paid at a fixed rate every year. B. Taxable as ordinary income. C. Guaranteed. D. Not taxable since the IRS treats them as a return of a portion of the premium paid.
D. Not taxable since the IRS treats them as a return of a portion of the premium paid. With participating policies, policyowners are entitled to dividends, which, in the case of mutual companies, are nontaxable because they are considered a return of excess premiums.
Which of the following will NOT be considered unfair discrimination by insurers? A. Assigning different risk classifications to applicants based on gender identity B. Discriminating in benefits and coverages based on the insured's habits and lifestyle C. Charging applicants with similar health histories different premiums based on their ethnicity D. Cancelling individual coverage based on the insured's marital status
B. Discriminating in benefits and coverages based on the insured's habits and lifestyle Discriminating between individuals of the same class with equal life expectancies, or by reason of race, nationality, or ethnic group would be considered unfair discrimination. Insurers are also not allowed to cancel individual coverage due to a change in marital status. Discriminating in benefits based on the insured's habits and lifestyle (such as smoking or dangerous hobbies) is acceptable.
Which of the following best describes the unfair trade practice of defamation? A. Assuming the name and identity of another person B. Issuing false advertising material C. Refusing to deal with other insurers D. Making derogatory oral statements about another insurer's financial condition
D. Making derogatory oral statements about another insurer's financial condition Making oral or written statements directly or indirectly which are derogatory or maliciously critical of another insurer would be an example of the unfair trade practice of defamation.
No one whose license has been revoked can receive another license in Texas for A. 5 years. B. 6 months. C. 1 year. D. 2 years.
A. 5 years. No one whose license has been revoked can receive another license in Texas for 5 years.
Which of the following persons is required to hold a producer license? A. A person who takes messages related to claims B. A person who creates insurance advertisements C. A person who administers employee benefits D. A person who negotiates insurance contracts
D. A person who negotiates insurance contracts Persons who perform clerical tasks that are not related to soliciting or negotiating insurance contracts are not required to be licensed.
All of the following statements are true regarding the relationship among the amounts of insurance EXCEPT A. The recovery may not exceed the ACV at the time of loss or the policy limit, whichever is smaller. B. The recovery may not exceed the ACV at the time of loss or the amount necessary to replace the property, whichever is smaller. C. The recovery may not exceed the ACV of the property at the time of loss. D. All property losses under the basic form are settled on a replacement cost basis.
D. All property losses under the basic form are settled on a replacement cost basis. All property losses under the basic form are settled on an actual cash value (ACV) basis.
In Texas, the Commissioner of Insurance is A. Appointed by the Insurance and Industry Committee of the state legislature. B. Elected by the state legislature's Banking and Insurance Committee. C. Elected by Texas voters. D. Appointed by the Governor.
D. Appointed by the Governor. The Commissioner is appointed to office by the Governor, with the advice and consent of the Senate, for a 2-year period. The Commissioner's appointment ends on February 1 of each odd numbered year.
According to the Texas Financial Responsibility Law, operating a motor vehicle without the required liability insurance is considered a/an A. Felony. B. Misdemeanor. C. Crime. D. Offense of the first degree.
B. Misdemeanor. Operating a motor vehicle without the required insurance is a misdemeanor punishable by a fine and potentially license suspension.
It would be considered unfair discrimination to ask an insurance applicant about which of the following and then use that information as a rating factor to determine insurability? A. Age B. Gender C. Address D. Sexual orientation
D. Sexual orientation It would be considered unfair discrimination to ask an applicant for their sexual orientation, as well as using sexual orientation as a rating factor to determine insurability.
In Texas, an employee injured on the job will NOT receive loss of time benefits unless the disability lasts longer than A. 1 week. B. 1 month. C. 1 year. D. 3 days.
A. 1 week. Loss of time benefits are not payable for those injuries causing a disability that lasts less than a week.
An applicant for a license in Texas must include a statement with his application that provides information about all the following EXCEPT A. Intending to apply for another license. B. Being refused a license. C. Having held a license before. D. Having had a license revoked.
A. Intending to apply for another license. A statement with an application must contain information as to whether the individual has ever been refused a license, held a license or has had a license revoked. The intent to apply for another license is not required.
All of the following are unfair claims settlement practices EXCEPT A. Failing to acknowledge pertinent communication pertaining to a claim. B. Suggesting negotiations in settling the claim. C. Refusing to pay claims without conducting a reasonable investigation. D. Failing to adopt and implement reasonable standards for settling claims.
B. Suggesting negotiations in settling the claim. When settling claims, negotiation can come into play.
A risk manager's license is good for how many years? A. 4 B. 3 C. 2 D. 5
C. 2 A risk manager's license is good for 2 years from the date it was issued and may be renewed before its expiration by filling an application for renewal and paying the renewal fee.
Which of the following is the closest term to an authorized insurer? A. Certified B. Licensed C. Legal D. Admitted
D. Admitted Insurers who meet the state's financial requirements and are approved to transact business in the state are considered authorized or admitted into the state as a legal insurer.
An employee who refuses services or refuses to cooperate with services provided by the Rehabilitation Commission will A. Lose death and burial benefits. B. Continue to receive supplemental income benefits. C. Lose entitlement to supplemental income benefits. D. Lose medical expense benefit.
C. Lose entitlement to supplemental income benefits An employee who refuses services or refuses to cooperate with the Rehabilitation Commission loses entitlement to supplemental income benefits.
All of the following statements about the continuing education requirement in this state are true EXCEPT A. All licensed agents must comply by January 1 of even-numbered years. B. It does not allow excess credit hours to be carried forward to the next reporting period. C. Hours may be completed using independent self-study courses or classroom study. D. It requires satisfactory completion of 24 hours of approved training every 2 years.
A. All licensed agents must comply by January 1 of even-numbered years. Continuing education reporting period coincides with the license renewal date every 2 years.
All of the following would be considered an insurance transaction EXCEPT A. Obtaining an insurance license. B. Soliciting a policy. C. Advising a policyholder regarding a claim. D. Negotiating coverage.
A. Obtaining an insurance license. An insurance transaction means the carrying on of business in insurance, which could include the solicitation of a policy, advising, negotiation, or inducement related to coverage or claims. Obtaining an insurance license is a prerequisite to transacting insurance.
An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy? A. Mutual B. Reciprocal C. Nonprofit service organization D. Stock
A. Mutual Funds not paid out after paying claims and other operating costs are returned to the policy owners in the form of a dividend. If all funds are paid out, no dividends are paid.
An insurance agent wants for a client to replace her current annuities plan with another one. He presents the new one in an incomplete and dishonest way, which makes the new contract seem far more appealing than the original one. The policyowner ends up surrendering her original contract and replacing it with the new one. Which term best describes what the agent did? A. False advertising B. Fraud C. Rebating D. Twisting Twisting is an illegal act, in which an agent misrepresents the terms of an insurance or annuities contract or draws incomplete comparisons, in a way that would compel the insured to surrender the contract for the new one.
D. Twisting Twisting is an illegal act, in which an agent misrepresents the terms of an insurance or annuities contract or draws incomplete comparisons, in a way that would compel the insured to surrender the contract for the new one.
The following are all causes for the Insurance Commissioner to suspend or impose conditions upon the continuance of an agent's license EXCEPT A. The applicant has been shown to be a poor personal credit risk. B. Misappropriation or illegal withholding of the policyholder's money. C. Obtaining a license through fraud. D. Conviction of a felony involving moral turpitude.
A. The applicant has been shown to be a poor personal credit risk. Being a poor personal credit risk is not a cause for suspension or revocation of a license.
An insurer must acknowledge receipt of a Notice of Claim within how many days? A. 5 B. 15 C. 20 D. 30
B. 15 Under state Claims Methods and Practices laws, every insurer, upon receiving a notification of a claim must acknowledge its receipt and begin an investigation within 15 working days.
The Commissioner of Insurance issues a Cease and Desist Order to an agent. If the agent wishes to contest the charges in court, how many days after the order was issued does the agent have to make the request? A. 10 days B. 30 days C. 60 days D. 90 days
B. 30 days If the recipient of a Cease and Desist Order wants to contest or review the charges in court, the request must be made within 30 days of the order.
Which of the following would be required to be licensed as an insurance producer? A. An insurance company director who performs executive, administrative and managerial duties B. A salaried employee who advertises and solicits insurance C. A person whose activities are limited to producing insurance advertisements D. A salaried full-time employee who furnishes information for group insurance
B. A salaried employee who advertises and solicits insurance A person does not require an insurance producer license if he or she only advertises without intent to solicit insurance. However, once there is solicitation, a license is required.
What is a foreign insurer? A. An insurer with licensed agents who are citizens in more than one country B. An insurer with a home office in another state C. An insurer with a home office in another country D. An insurer with licensed agents doing business in other countries
B. An insurer with a home office in another state A domestic insurer's home office is in this state, a foreign insurer's is in another state, and an alien insurer's is in another country.
Pertaining to insurance, what is the definition of a fiduciary responsibility? A. Offering additional coverage to clients B. Promptly forwarding premiums to the insurance company C. Helping insureds to file claims D. Performing reviews of insured's coverage
B. Promptly forwarding premiums to the insurance company Fiduciary refers to a position of trust. When an agent is handling the premiums that belong to an insurance company, they are acting in a fiduciary capacity.
An agent explains the details of a life insurance policy to a client. The agent does not realize, however, that the state has recently rewritten two of the provisions. As a result, the agent inadvertently misrepresents the policy, making it more attractive than it really is. What best describes this situation? A. Deceptive claim settlement practice B. There is no misconduct C. Fraud D. Misrepresentation
B. There is no misconduct Although the agent misrepresented the insurance policy, in order to be charged with conducting a deceptive claim settlement, the agent would have had to misrepresent knowingly and/or chronically.
How many hours of continuing education can be carried over from one licensing period to the next? A. 5 B. Any excess hours C. 0 D. 2
C. 0 All CE hours must be completed during the reporting period; licensees are not allowed to carry over excess hours to the next reporting period.
What is the maximum portion of the state average weekly wage that workers compensation will pay for impairment income benefits? A. 35% B. 50% C. 70% D. 75% When an employee reaches the status of "maximum medical improvement," he or she is entitled to impairment income benefits. This is typically equivalent to 70% of the state average weekly wage. The employee will receive benefits for a period of time that is consistent with his or her impairment rating
C. 70%
All of the following must be true of an individual before a license can be issued EXCEPT that the A. Applicant passed the required licensing examination in the last 12 months. B. Candidate has paid the required fees to the department. C. Applicant submitted his or her most recent tax return to the department. D. Individual is at least 18 years old.
C. Applicant submitted his or her most recent tax return to the department. A license cannot be issued to an individual who has not passed the required licensing examination in the last 12 months, not paid the required fees to the department or is under the age of 18. Tax information of the applicant is not a requirement for licensing
Circulating deceptive sales material to the public is what type of Unfair Trade Practice? A. Coercion B. Misrepresentation C. False advertising D. Defamation
C. False advertising This is considered to be false, deceptive or misleading advertising.
A temporary license holder can receive a commission from a sale made to all of the following EXCEPT A. An accountant at a rival insurance company. B. The license holder's family doctor. C. The license holder's sister-in-law. D. The license holder's spouse's best friend.
C. The license holder's sister-in-law. A temporary license holder sale to a family member or an individual the temporary license holder has an employment or business relationship with will not pay commission.
The Insurance Commissioner may examine the affairs of any insurer as often as necessary, but not less frequently than once every A. Year. B. 2 years. C. 3 years. D. 5 years.
D. 5 years. The Insurance Commissioner must examine each insurer at least once every 5 years.
Words or terms that appear in an insurance policy in bold face print include A. Specific definitions as to their meaning as used in the policy. B. Dual definitions. C. Standard definitions. D. All of the above.
A. Specific definitions as to their meaning as used in the policy. Insurance companies define words used in the policy by printing them in bold face and including a specific definition as to their meaning in the contract.
The commission will refer an employee who is receiving supplemental income benefits to the Rehabilitation Commission if it determines that rehabilitation and training will A. Allow the commission to reduce the supplemental benefit. B. Return the employee to work earlier. C. Satisfy a court order. D. Reduce the cost of claim.
B. Return the employee to work earlier. The commission will refer the employee who is receiving supplemental income benefits to rehabilitation if it is determined that rehab and training will return the employee to work earlier.
Which of the following is an example of a producer being involved in an unfair trade practice of rebating? A. Making deceptive statements about a competitor B. Telling a client that his first premium will be waived if he purchases the insurance policy today C. Inducing the insured to drop a policy in favor of another one when it is not in the insured's best interest D. Charging a client a higher premium for the same policy as another client in the same insuring class
B. Telling a client that his first premium will be waived if he purchases the insurance policy today Rebating is defined as offering any inducement in the sale of insurance products that is not specified in the policy, including money, reductions in commissions, promises, and personal services. Both the offer and acceptance of a rebate are illegal.
When a producer was reviewing a potential customer's coverage written by another company, the producer made several remarks that were maliciously critical of that other insurer. The producer could be found guilty of A. Discrimination. B. Nothing, unless the remarks were in writing C. Defamation. D. Misrepresentation.
C. Defamation. A producer or broker who makes oral or written statements intended to injure another producer or insurer is guilty of the unfair trade practice of defamation.
When twin brothers applied for life insurance from Company A, the company found that while neither of them smoked and both had a very similar lifestyle, one of the twins was in a much stronger financial position than the other. Because of this, the company charged him a higher rate for his insurance. This practice is considered A. Controlled business. B. Adverse selection. C. Discrimination. D. Twisting.
C. Discrimination. Permitting individuals of the same class to be charged a different rate for the same insurance is the unfair trade practice of discrimination.
On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. The company is guilty of A. Unfair claim practice. B. Rebating. C. Misrepresentation. D. Concealment.
C. Misrepresentation. Issuing or circulating any sales material that is false or misleading would be considered misrepresentation and is illegal.
An Insurance Service Representative may perform any of the assigned duties in the office of a property and casualty agent, EXCEPT A. Quote insurance premium rates. B. Issue binders with the express approval of an agent. C. Solicit applications for insurance. D. Explain insurance coverages of a policy.
C. Solicit applications for insurance. An insurance service representative cannot solicit applications for insurance policies.
Which of the following insurers are owned by stockholders? A. Reciprocal B. Fraternal C. Stock D. Mutual
C. Stock Only stock insurance companies are owned and controlled by stockholders.
An individual applies for a life policy. Two years ago he suffered a head injury from an accident, so he cannot remember parts of his past, but is otherwise competent. He has also been hospitalized for drug abuse, but does not remember this when applying for insurance. The insurer issues the policy and learns of his history one year later. What will probably happen? A. The insurer will sue the insured for committing fraud. B. Because the insured is currently not a drug user, his policy will not be affected. C. The policy will not be affected. D. The policy will be voided.
C. The policy will not be affected. In insurance, fraud is the intentional misrepresentation of material information that is crucial when deciding whether or not to write a contract for an applicant. If an insurer finds that an applicant has committed fraud, it can void the contract, provided that the discovery occurs within the first two years of the effective policy date. In this particular instance the applicant did not commit intentional fraud.
An insurer may cancel a personal auto policy if the policy has been in effect for at least how many days? A. 10 days B. 20 days C. 30 days D. 60 days
D. 60 days An auto policy may be cancelled for various reasons after it has been in effect for at least 60 days.
Which of the following individuals could legally receive commissions from the sale of a life insurance policy? A. A licensed insurance consultant B. An employee for a life insurance company who is not licensed C. A life and health insurance counselor D. A licensed life insurance agent
D. A licensed life insurance agent To receive commissions, agents must be licensed in the line of insurance being sold
Which of the following is a requirement for eligibility for coverage in the Texas Automobile Insurance Plan? A. The applicant must be rejected by at least two insurers in the normal market. B. The applicant must have a valid driver's license. C. The applicant must be able to pay the premium. D. All of the above.
D. All of the above. All are requirements for eligibility for coverage in the Texas Automobile Insurance Plan
All of the following would be considered rebating EXCEPT A. An agent offers the use of his lake house to a client as an inducement to buy an insurance policy from him. B. An agent offers to share his commission with a policyholder. C. An agent offers tickets to a baseball game as an inducement to buy insurance. D. An agent misrepresents policy benefits to convince a policyowner to replace policies. Rebating occurs when an insured is offered something of value in order to induce the sale of an insurance product. Both the offer and acceptance of a rebate are illegal.
D. An agent misrepresents policy benefits to convince a policyowner to replace policies. Rebating occurs when an insured is offered something of value in order to induce the sale of an insurance product. Both the offer and acceptance of a rebate are illegal.
A producer who fails to segregate premium monies from his own personal funds is guilty of A. Larceny. B. Embezzlement. C. Theft. D. Commingling. It is illegal for insurance producers to commingle premiums collected from the applicants with their own personal funds.
D. Commingling. It is illegal for insurance producers to commingle premiums collected from the applicants with their own personal funds.
Circulating deceptive sales material to the public is what type of Unfair Trade Practice? A. Defamation B. Coercion C. Misrepresentation D. False advertising
D. False advertising This is considered to be false, deceptive or misleading advertising.
Which of the following best describes a misrepresentation? A. Making a deceptive or untrue statement about a person engaged in the insurance business B. Making a maliciously critical statement that is intended to injure another person C. Discriminating among individuals of the same insuring class D. Issuing sales material with exaggerated statements about policy benefits
D. Issuing sales material with exaggerated statements about policy benefits Misrepresentation is issuing, publishing or circulating any illustration or sales material that is false, misleading or deceptive as to policy benefits or terms, the payment of dividends, etc. This includes oral statements.
An applicant properly notifies her insurer of a straightforward claim, but the insurer waits an exceedingly long time to process it. Which of the below terms best describes the behavior of the insurer? A. There is nothing wrong with this incident; there is not a specified deadline for insurers to process a claim. B. Misrepresentation C. Fraud D. Unfair claims settlement practice
D. Unfair claims settlement practice If an insurer knowingly or frequently commits an act that neglects or deceives an insured, its behavior falls under the category of unfair claim settlement practice. In this instance, there is no reason why the insurer was warranted in waiting to process the claim.