11. Texas Statutes and Rules Pertinent to Life Insurance Only

All of the following are mandatory life insurance policy provisions EXCEPT APolicy backdating. BMisstatement of age. CIncontestability. DGrace period.

APolicy backdating. Policy backdating is not a mandatory provision; in fact, backdating a policy more than 6 months is prohibited.

Which of the following is TRUE about credit life insurance? ADebtor is the annuitant. BCreditor is the insured. CDebtor is the policy beneficiary. DCreditor is the policyowner.

DCreditor is the policyowner. In credit life insurance, the creditor is the policyowner and the beneficiary; the debtor is the insured. Question 13 of 15

What provision in a life or health insurance policy extends coverage beyond the premium due date? AWaiver of premium BGrace period CFree look DAutomatic premium loan

BGrace period The grace period is a mandatory provision found in all life and health insurance policies that provides coverage for a period of time after the premium becomes past due.

How long is the grace period in group policies? A10 days B21 days C31 days D90 days

C31 days Group policies also have many of the same policy provisions included in individual insurance such as a 2-year incontestability period and a 31-day grace period

Which of the following must be included in all life insurance advertisements? ANames of any parent companies BContact information for the Commissioner of Insurance CContact information for each local office of the insurer DIdentity of the actual insurer

DIdentity of the actual insurer The identity of the actual insurer must be stated in all advertisements.

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? AA cash surrender value BA paid-up nonforfeiture benefit CNothing DThe death benefit

AA cash surrender value A life insurance policy must ensure 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 (instead of a paid-up nonforfeiture benefit) if the premiums have been paid for at least 3 full years for ordinary life insurance policies, or 5 years for industrial life insurance.

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? ACost comparison methods BPolicy cost guides CConsumer price indices DPolicy cost indices

ACost comparison methods Cost comparison methods are used to compare the cost of one life insurance policy against another in order to guide prospective purchasers to policies that are competitively priced.

The initial amount of credit life insurance may NOT exceed AThe borrower's annual income. BThe amount to be repaid under the contract. CAn amount set by statute and adjusted regularly for inflation. DThe borrower's monthly income.

BThe amount to be repaid under the contract. The initial amount of credit life insurance may not exceed the total amount repayable under the contract of indebtedness. Question 15 of 15

To which of the following situations does the Replacement Regulation apply? ACoverage under a binding receipt issued by the same company BA whole life policy reissued with reduction in cash value CGroup life insurance DAn immediate annuity purchased with proceeds from an existing policy

BA whole life policy reissued with reduction in cash value Replacement means any transaction in which new life insurance or a new annuity is to be purchased and it is known or should be known to the proposing producer that by reason of the transaction, existing life insurance or annuities have been or will be converted to reduced paid-up insurance, continued as extended term insurance or otherwise reduced in value by the use of nonforfeiture benefits or other policy values. All other answer choices are also exceptions to the replacement rules.

Viatical settlements may be rescinding within what time period after the viator receives the proceeds? A15 days B30 days C90 days DIndefinitely

A15 days The viator has a right to rescind a viatical settlement within 15 days of receiving the viatical settlement proceeds

An individual covered under a group life insurance policy may convert the policy to any of the following EXCEPT A15-year level term. B20-pay life. CLife paid up at age 65. DWhole Life.

A15-year level term. Individuals and dependents insured on a group life policy may convert to an individual policy issued by the same insurer. They can convert to any individual policy except term.

How long is the incontestability period in group life insurance policies issued in Texas? A1 year B2 years C3 years DIndefinitely

B2 years Life insurance policies (individual and group) are incontestable after the policy has been in force for a period of 2 years

Which of the following types of insurance policies is most commonly used in credit life insurance? AWhole life BEquity indexed life CDecreasing term DIncreasing term

CDecreasing term 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 the debtor. It is usually written as decreasing term insurance

Which of the following CANNOT be included along with illustrations used to sell life insurance? ARating information BOriginal death benefit CVanishing premium information DName of the insurer

CVanishing premium information Illustrations used to sell life insurance cannot use the term "vanishing premium" - or any similar term - that implies the policy becomes paid up.

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? AYes, as long as no one can prove otherwise. BNo, as long as the advertisement has a disclaimer that all facts are misleading. CNo DYes; advertisements must not mislead the public in terms of financial standing

DYes; advertisements must not mislead the public in terms of financial standing. Advertisements must not mislead the public or attempt to induce a person to purchase insurance because of false advertisement.