ch 6 texas statutes and rules pertinent to life insurance only
All advertisements are the responsibility of the A Soliciting agent. B Advertising agency. C Department of Insurance. D Insurer.
Insurer
According to the state nonforfeiture law for life insurance policies, insurers must offer at least one of the following nonforfeiture options EXCEPT A Shortened benefit period B Reduction of premium C Reduced paid-up D Extended term
Reduction of premium
Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance? A Reinstatement rule B Conversion rule C Disclosure rule D Replacement rule
Replacement rule
Which of the following types of insurance policies is most commonly used in credit life insurance? A Equity indexed life B Decreasing term C Increasing term D Whole life
Decreasing term
The usage of words or symbols that are similar to what entity is prohibited in life insurance advertisements? A Insurer B Department of Insurance C Stock D Federal government
Federal government
An individual covered under a group life insurance policy may convert the policy to any of the following EXCEPT A 15-year level term. B 20-pay life. C Life paid up at age 65. D Whole Life.
15-year level term.
Conversion to an individual whole life policy is permitted without evidence of insurability within how many days of the termination of employment? A 14 B 28 C 30 D 31
31
How long is the grace period in group policies? A 10 days B 21 days C 31 days D 90 days
31 days
When possible, what should insurers strive to eliminate from illustrations? A Footnotes and caveats B References to other products C Policy amendments more than a page long D Words they don't know
Footnotes and caveats
What provision in a life or health insurance policy extends coverage beyond the premium due date? A Free look B Automatic premium loan C Waiver of premium D Grace period
Grace period
Which of the following is correct regarding credit life insurance? A It has a maximum term of 20 years. B It insures the life of a debtor. C It is purchased on an installment basis. D It insures the life of a creditor.
It insures the life of a debtor.
If a policyowner surrenders 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 A cash surrender value B A paid-up nonforfeiture benefit C Nothing D The death benefit
A cash surrender value
What is the main purpose of the regulation on life insurance policy illustrations? A To help customers make educated decisions in buying life insurance B To compare life policies C To help producers submit proper reports to the department of insurance D To present a life policy in a visual way
To help customers make educated decisions in buying life insurance
Which of the following would be the beneficiary in credit life insurance? A Company B Borrower C Creditor D Insured
Creditor
If a person is compensated for a testimonial in an advertisement, which of the following statements should be included in the advertisement? A Commissioned advertisement B Paid endorsement C Insurer is not responsible for the contents of the testimonial D The author is the employee of the insurer
Paid endorsement
Which of the following is TRUE regarding the insurance amount in a credit life policy? A The creditor may insure the debtor for an unlimited amount of coverage. B Allowable amount of coverage is determined by the State Insurance Commissioner. C The amount of coverage can be greater than the amount owed. D The creditor can only insure the debtor for the amount owed.
The creditor can only insure the debtor for the amount owed.
Which of the following CANNOT be included along with illustrations used to sell life insurance? A Vanishing premium information B Name of the insurer C Rating information D Original death benefit
Vanishing premium information
The term "illustration" in a life insurance policy refers to A A depiction of policy benefits and guarantees. B Pictures accompanying a policy. C Charts and graphs. D A presentation of nonguaranteed elements of a policy.
A presentation of nonguaranteed elements of a policy.
Which of the following is TRUE about credit life insurance? A Debtor is the policy beneficiary. B Creditor is the policyowner. C Debtor is the annuitant. D Creditor is the insured.
Creditor is the policyowner.
How long is the incontestability period in group life insurance policies issued in Texas? A 1 year B 2 years C 3 years D Indefinitely
2 years
All of the following information must be disclosed to the viator prior to the execution of a viatical settlement contract EXCEPT A Availability of stranger-originated life insurance (STOLI). B Alternatives to the viatical settlement. C Tax consequences resulting from entering into the settlement. D The amount of compensation received by any person from the viatical settlement.
Availability of stranger-originated life insurance (STOLI).
Which of the following is NOT allowed in credit life insurance? A Creditor requiring that a debtor buys insurance from a certain insurer B Creditor having a collateral assignment on the policy C Creditor requiring that a debtor has a life insurance D Creditor becoming a policy beneficiary
Creditor requiring that a debtor buys insurance from a certain insurer
Viatical settlements may be rescinding within what time period after the viator receives the proceeds? A 15 days B 30 days C 90 days D Indefinitely
15 days
How must a replacing producer respond to an applicant wishing to replace existing life insurance? A The producer must request the permission of the existing insurer. B The producer has no specific duties. C The producer must provide the applicant with a Notice Regarding Replacement. D The producer must collect the existing policies and turn them over to the replacing insurer.
The producer must provide the applicant with a Notice Regarding Replacement.
Upon the submission of a death claim under a life insurance policy, when must the insurer pay the policy benefit? A Immediately after receiving written proof of loss B On the next anniversary of the policy C Within 30 days D Within 2 months
Within 2 months
Which of the following must be included in all life insurance advertisements? A Identity of the actual insurer B Names of any parent companies C Contact information for the Commissioner of Insurance D Contact information for each local office of the insurer
Identity of the actual insurer
Which of the following documents must be provided to the policyowner or applicant during policy replacement? A Notice Regarding Replacement B Disclosure Authorization Form C Buyer's Guide and Policy Summary D Policy illustrations
Notice Regarding Replacement
During replacement of life insurance, a replacing insurer must do which of the following? A Guarantee a replacement for each existing policy B Designate a new producer for a replaced policy C Send a copy of the Notice Regarding Replacement to the Department of Insurance D Obtain a list of all life insurance policies that will be replaced
Obtain a list of all life insurance policies that will be replaced
Is it illegal for an insurance company to advertise that it is the leader of the financial industry and therefore pays the most claims each year? A No, as long as the advertisement has a disclaimer that all facts are misleading. B No C Yes; advertisements must not mislead the public in terms of financial standing. D Yes, as long as no one can prove otherwise.
Yes; advertisements must not mislead the public in terms of financial standing.
The type of insurance sold to a debtor and designed to pay the amount due on a loan if the debtor dies before the loan is repaid is called A Credit health. B Decreasing whole life. C Multiple Protection insurance. D Credit life.
Credit life.
The initial amount of credit life insurance may NOT exceed A The borrower's annual income. B The amount to be repaid under the contract. C An amount set by statute and adjusted regularly for inflation. D The borrower's monthly income.
The amount to be repaid under the contract.
All of the following are requirements for life insurance illustrations EXCEPT A They must differentiate between guaranteed and projected amounts. B They must be part of the contract. C They may only be used as approved. D They must identify nonguaranteed values.
They must be part of the contract.
All of the following are mandatory life insurance policy provisions EXCEPT A Incontestability. B Grace period. C Policy backdating. D Misstatement of age.
Policy backdating.
An insured in a group policy has misstated his age on the insurance application. As a result, the insurer will most likely A Issue an amended policy. B Adjust the premium. C Cancel the coverage. D Impose a fine on the insured.
Adjust the premium.
An advertisement must accurately represent which of the following? A The insurer's assets B The insurer's corporate structure C The insurer's financial standing D All of the above
All of the above
All of the following statements are correct regarding credit life insurance EXCEPT A Benefits are paid to the borrower's beneficiary. B The amount of insurance permissible is limited per borrower. C Premiums are usually paid by the borrower. D Benefits are paid to the creditor.
Benefits are paid to the borrower's beneficiary.
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? A Cost comparison methods B Policy cost guides C Consumer price indices D Policy cost indices
Cost comparison methods
Which of the following is NOT required on an illustration used in the sale of a life insurance policy? A Underwriting or rating classification upon which the illustration is based B The name of the primary and secondary beneficiaries C Generic name of policy D Name of insurer
The name of the primary and secondary beneficiaries