Chapter 5 - Texas Statutes and Rules Common to Life and Health Insurance

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What are the different reinstatement options for a license

- If expired for no more than 90 days, the license may be renewed by filing a renewal application, paying the renewal fee, and paying an additional fee (equal to one-half of the renewal fee) - If expired for more than 90 days but less than 1 year, the licensee may obtain a new license by filing a new application, paying the license fee and an additional free equal to one half of the license fee - If expired for more than one year, the license cannot be renewed. The person must go through a complete licensing process

What is the fine for willful violation of the Fair Credit Reporting Act

$2500

What is the maximum fine for violating the insurance codr

$25000

What is the maximum agent licensing fee

$50

When do continuing education requirements not apply

- Agents who have been licensed for 20 years or more as of December 31, 2002 - Agents who are licensed solely to receive residual or renewal commissions - Nonresident agents, who are subject to continuing education requirements in their home state - Retired agents - Agents who qualify for an exemption because of illness or circumstances out of their control

When can a corporation or partnership receive an agent's license

- At least one officer of the corporation or one active partner is individually licensed separately from the corporation or partnership - Each location which the corporation or partnership will engage business is registered separately with the Department - The corporation can pay up to $25000 on claim or compensation for negligent act - A member who has the ability to control the corporation of partnership has not had license suspended or revoked or been the subject of disciplinary action by financial or insurance regulator in the United States

What are all the requirements to become an insurance agent

- Is at least 18 years old - Passed the requiring licensing examination in the last 12 months - Has submitted the application, requires fees, and any other required information by required by the department - Has not committed acts for which a license may be denied

What must you have to become a commissioner in Texas

5 years of experience in the administration of business or government or as a practicing attorney or certified public accountant

How many days after license renewal date for agent to pay fees and complete CE before license expires

90 days

How long of a notice does the Commissioner provide for the suspension or revocation of a certificate of authority

A 10 day notice

What is reciprocity

A mutual interchange of rights and privileges

What are reciprocal agreements

Allows officials of the other states to waive the written examination requirements for applicants for reside in those states as long as: - The other states requires licensing applicants to pass a written examination - The other states certifies that the applicant currently holds a valid insurance license in that state - The applicant has no place of business within Texas an an insurance agent

What can an agent charge and not charge a client

An agent can charge a client for - Special delivery or postal charges - Electronic mail costs - Telephone transmission costs - Similar costs that the agent incurs on behalf of the client It is illegal for an insurer to pay an unlicensed person for performing the duties of the agent

What is an alien insurer

An insurance company that is incorporated outside the United States.

What is a foreign insurer

An insurer with a home office in another state

What is the Home Office

An insurer's headquarters, principal place of business

What is an inducement

An offer that attempts to influence the other party

What is a fraternal benefit society

An organization formed to provide insurance benefits for members of an affiliated lodge, religious organization, or fraternal organization with a representative form of government

What is advertising protection by the Life, and Health Insurance Guaranty Association considered

An unfair trade practice

What is a life and health insurance counselor

Any person who, for a free or commission, offers to examine a life, accident, or health insurance policy, an annuity, to give a recommendation or information regarding the policy's terms, conditions, benefits, coverage, or premiums

How many hours of continuing education must be completed during the reporting period

At least 24 hours and at least 2 hours must cover ethics

How many continuing education hours must be completed in the classroom

At least 50%

Insurers who are approved to conduct business in Texas are

Authorized or Admitted

Why is it illegal to be involved in boycott, coercion, or intimidation

Because it restricts fair trade and creates a monopoly

What must the commissioner do every 5 years

Examine all authorized insurers at least once every 5 years

What must an agent do if they are charging a client for a service

He must inform the client and obtain the clients written consent

When may the Commissioner issue an emergency cease and desist order?

If the Commissioner believe that an agent is engaged in an unfair method of competition or trade practice, is in hazardous financial condition, or that an unlicensed person is engaging in the sale of insurance

How do commissioners deal with complaints

If the department receives a written complaint, they will notify each party about the complaint quarterly. They must keep information about each complaint filed with the department

What is rebating

Inducement offered to the insured in the sale of insurance products that is not specified on the policy. Both the offer and acceptance of rebates are illegal

What is misrepresentation?

Information that is not true. False information.

What is commingling

Insurance producers are prohibited from commingling premiums collected from the applicants with there own personal funds

How often must an agent license be renewed

It has to be renewed every 2 years and the agent will send an agent that license is about to expire 30 days before that date

What will a surrender of a license not do

It will not keep the agent from getting punished

What is Discrimination in Insurance

No discrimination must be made on the basis of an individual's martial status, race, national origin, gender identity, sexual orientation, creed, or ancestry

When must claims be settled

No later than the 15th business day following the receipt of a notice of a claim

Do nonparticipating policies pay dividends to policyowners

No they don't

What is defamation

Oral or written statement that is intended to injure a person engaged in the insurance of business. Also apply to statements to a critical of the financial condition of any person or company

What are stock companies

Owned by stockholders who provide the capital necessary to establish and operate the insurance company and who share any profits or losses

What is domicile

Refers to the location where an insurer is incorporated, not necessarily where the insurer conducts business

What is an insurance transaction

Solicitation, Negotiation, Sale, and Advising an individual concerning coverage or claims

How long is the term for commissioner

The Commissioner is appointed by the governor for a 2-year term ending on February 1 of each odd-numbered year

Who regulates insurers and companies that conduct insurance in Texas

The Texas Department of Insurance

What is the difference between an emergency cease and desist order and a cease and desist order

The cease and desist order comes after the hearing

What can the commissioner do if he suspects that an insurer is engaged in an unfair trade practice

The commissioner may issue a statement of charges and hold a hearing for any purpose deemed necessary

What is a coercion

The forceful act or threat to influence a person to act against their will

Who is the commisioner

The head of the Texas Department of Insurance

What happens if an insurer delays a claim later than 60 days

The insurer must pay an interest of 18% per year

What is fraud

The intentional misrepresentation or intentional concealment of a material fact used to induce another party to make or refrain from making a contract, or to deceive or cheat a party. Fraud is grounds for voiding an insurance contract

What is a commision

The payment to the agent by the insurance company for placing insurance, usually a percentage of the policy premium

What is Restitution

The restoration to the original condition or repayment

What are policyowners entitled to in participating policies

They are entitled to dividends but they are no guaranteed

What are mutual companies

They are owned by policyowners and issue participating policies

What are continuing education rules

They are rules established by the public by maintaining high standards of professional competence in the insurance industry

What are continuation requirements for people who transact Medicare and Medicare supplement insurance

They must complete an 8 hour Medicare related-product certification course and 4 hours of department certified Medicare-related products continuing education

What must insurers have in order to conduct business in Texas

They must have a certificate of authority

What can a person do to challenge and emergency cease and desist order

They must request a hearing for the order within 30 days of the emergency cease and desist order. The hearing must be held no later than 10 days after the commissioner received the request

What does it mean to be insolvent

To be unable too meet financial obligations

What does it mean to be exempt

To not be subject to an obligation

What is cease and desist?

To stop or discontinue

When are emergency cease and desist orders final

Unless the person in violation requests a hearing, emergency cease and desists orders are final 31 days from the date they are received

What is false advertising

Untrue, deceptive, misleading statements that apply to the business of insurance or anyone that conducts

What are nonparticipating policies

Usually stock companies. The policyowners do not share in profits or loss

What is the Texas Life and Health Insurance Guaranty Association

Was created to protect policyowners, insured, beneficiaries, and anyone entitled to payment under an insurance policy from the incompetence and insolvency of insurers

When is an insurance agent license not required for an officer, director, or employee of insurance comoany

When they are not directly or indirectly involved with the sale of an insurance contract and don't receive commission

How long must it take for the insurer to pay a claim

Within 5 business days

What is statute

Written law. Insurance statutes can be found in the state Insurance Code

How can someone obtain a temporary license

You must complete a 40-hour training course before applying for a license or within 14 days of applying for a license. They last for 90 days and cannot be gotten more than once in a 6 month period. Temporary licenses cannot replace an existing life insurance policy or an annuity contract

What is fiduciary responsibility

a requirement that the insurer act in the best interest of the client

What constitutes the business of insurance in Texas

- Making or proposing to make an insurance contract - Taking or receiving an insurance application - Issuing or delivering an insurance contract - Receiving or collecting any consideration for insurance - Directly or indirectly acting as an agent for an insurer - Doing any kind of insurance business

When may a commissioner discipline a license holder or deny application to anyone

- Violated any provision of the Texas Insurance Code - Intentionally made a material misstatement in the licensing application - Been convicted of a felony - Been guilty of fraudulent or dishonest practices

When can an agent get their license revoked

- Willful violations of state insurance laws - Intentional material misstatements in a license application - Rebates of insurance premiums - Felony conviction

How long does it take to reapply for a license after it's been revoked

5 years

How much Continuing Education (CE) may be carried over to the next renewal period?

0

How long are licensing examination results valid

12 months

What is the duration of the reporting period

2 years

How much of a licensee total volume of premiums must be from business other than controlled business

25%

What are continuing education requirements for resident agents who sell, solicit or negotiate annuity contracts

4 hours

How long must producers maintain records of completion of continuing education requirement courses for

4 years

What is a domestic insurer

an insurance company that is incorporated in this state

What is moral turpitude

conduct contrary to honesty, good morals, justice, or accepted custom


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