Texas Statutes and Rules Common to Life and Health Insurance

What percentage of continuing education hours must be in a classroom setting? A) 25% B) 50% C) 75% D) 100%

B) 50% Correct! 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.

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

B) Draft insurance laws. Correct! The Commissioner enforces the Insurance Code, but does not write insurance laws.

Which of the following occupations would NOT directly help to qualify someone for the office of Commissioner of Insurance? A) Practicing attorney B) Insurance agent C) Certified public account D) Executive in business administration

B) Insurance agent Correct! The Commissioner must have at least 5 years of experience in one of the following occupations: an executive in the administration of business or government, a practicing attorney, or a certified public accountant.

A temporary license holder can receive a commission from a sale made to all of the following EXCEPT A) The license holder's family doctor. B) The license holder's sister-in-law. C) The license holder's spouse's best friend. D) An accountant at a rival insurance company.

B) The license holder's sister-in-law. Correct! 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.

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

C) 90 Correct! If an agent does not fulfill his or her continuing education requirements or pay the necessary fees then their license will expire within 90 days of the due date.

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) Nonprofit service organization B) Stock C) Mutual D) Reciprocal

C) Mutual Correct! Funds not paid out after paying claims and other operating costs are returned to the policyowners in the form of a dividend. If all funds are paid out, no dividends are paid.

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 Correct! Persons who perform clerical tasks that are not related to soliciting or negotiating insurance contracts are not required to be licensed.

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

D) Admitted Correct! 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.

Which of the following would NOT be considered rebating? A) Sending a $50 gift certificate to the insured's employee after the insurance has been effected as a thank you for the referral B) Sharing commission with the insured C) Collecting a lower premium than what's specified in a policy as a token of client appreciation D) Giving a client a $25 pen with the insurer's logo during the insurance application process

D) Giving a client a $25 pen with the insurer's logo during the insurance application process Correct! 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.

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

D) Policyholders Correct! 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.

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

A) 10 Correct! 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.

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) 25% B) 80% C) 50% D) 60%

A) 25% Correct! During any calendar year, at least 25% of a licensee's total volume of premiums must be from business other than controlled business.

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) There is no misconduct B) Fraud C) Misrepresentation D) Deceptive claim settlement practice

A) There is no misconduct Correct! 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.

What is the purpose of the Life Insurance Guaranty Association? A) To help protect policyowners and beneficiaries against financial loss caused by the insolvency of an insurance company B) To encourage life insurers to write substandard business C) To allow agents to continue to solicit insurance, even if the company they represent is financially impaired D) To protect the reputation of the Insurance Department if they issue a Certificate of Authority to a company that becomes insolvent

A) To help protect policyowners and beneficiaries against financial loss caused by the insolvency of an insurance company Correct! All admitted insurers must be a member of the Insurance Guaranty Association as a condition of their license. The Insurance Guaranty Association is in existence to protect policyowners and beneficiaries against losses caused by the insolvency of an insurance company.

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 Correct! 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.