Chapter 14 - State Laws

What prohibited trade practice does an agent commit when he lies about policy terms in order to convince a policyholder to cancel an existing policy in order to buy a new policy?

misrepresentation

General life, accident, and health agents must complete a minimum of ______ continuing education hours per renewal period.

24

All Medicare supplement policies must offer coverage for all of the following, except: A - The reasonable cost of the first 3 pints of blood B - Disability income C - Physicians' services D - Hospitalization

B - Disability income

The Department of Insurance must examine each insurance company at least once every ______ years.

5

An individual who was denied a license must wait to reapply for a license a minimum of:

5 years

An individual may be denied a license by the Department for all of the following reasons, except if the individual has: A - Obtained a license by fraud or misrepresentation B - Been convicted of a felony C - Actively engaged in soliciting and writing insurance for the general public D - Offered a premium rebate to an insured

C - Actively engaged in soliciting and writing insurance for the general public

Which of the following does not describe an eligible group for group life insurance? A - An employer group with at least 2 employees covered under the policy B - Creditor groups insuring its debtors C - Labor unions that insure members actively engaged in the same occupation D - A group consisting exclusively of persons related by marriage or blood

D - A group consisting exclusively of persons related by marriage or blood

Under the ACA, a catastrophic plan may be purchased by any of the following, except an individual: A - With a hardship exemption B - Unable to afford other coverage C - Under age 30 D - Enrolled in Medicaid

D - Enrolled in Medicaid

An insurance agent does NOT owe a fiduciary duty to: A - Insurance applicants B - Insureds C - Insurers D - Insurance counselors

D - Insurance counselors

Which type of insurance company is owned by its policyholders? A - Stock insurer B - Admitted insurer C - Non-admitted insurer D - Mutual insurer

D - Mutual insurer

When taking an application for a Medicare supplement policy, an agent must provide the applicant with a(n): A - Summary of Benefits B - Certificate of Authority C - Copy of the agent's insurance license D - Outline of Coverage

D - Outline of Coverage

Which of the following is not included in a Summary of Benefits and Coverage? A - Covered benefits B - Limitations C - Deductibles, copayments and coinsurance D - Premiums

D - Premiums

The Commissioner may examine the records of an insurance company for the purpose of:

Determining solvency

An agent's appointment: A - Is valid for a maximum of 2 years B - Can only be canceled if the agent fails to write new business C - Remains in force until terminated or withdrawn D - Must be renewed before the license expires

C - Remains in force until terminated or withdrawn

An individual life insurance policy must have a grace period of at least ______ days.

31

An HMO must hold an open-enrollment period at least annually for:

31 days

All of the following regarding Evidence of Coverage are correct, except: A - Health care services and benefits available must be stated B - The evidence of coverage must be delivered in writing C - The name, address, and phone number of the HMO must be included D - Approval by the Commissioner of Insurance is required before delivery

B - The evidence of coverage must be delivered in writing

Holding which of the following professional designations will exempt a person from taking the life licensing examination? A - Chartered Financial Consultant (ChFC) B - Certified Financial Analyst (CFA) C - Chartered Life Underwriter (CLU) D - Certified Insurance Consultant (CIC)

C - Chartered Life Underwriter (CLU)

A license may be suspended or revoked for which of the following? A - A licensee completed 24 continuing education hours, including 2 hours of ethics before the expiration date B - An agent obtains a nonresident license in another state C - A licensed insurance counselor charges a fee to review a policy and provide advice D - An agent is actively engaged in soliciting insurance only to family members

D - An agent is actively engaged in soliciting insurance only to family members

A licensed life insurance agent in Texas can share commissions with which of the following? A - A licensed property and casualty agent who referred the client B - An insurance counselor who charged a fee for recommending the policy C - A person holding a temporary license D - Another licensed life insurance agent in Texas who assisted with the sale

D - Another licensed life insurance agent in Texas who assisted with the sale

A corporation applying for an agency license must meet which of the following requirements? A - Only the home office of the business entity being licensed as an agency must be registered with the Department B - All employees must be licensed individually in the same line of authority as the agency C - The company must be incorporated for at least 5 years prior to applying for the license D - At least one officer or active partner are individually licensed in the same line of authority as the agency

D - At least one officer or active partner are individually licensed in the same line of authority as the agency

The Texas Department of Insurance requires all licensees to: A - Complete 40 hours of prelicensing education B - Obtain a Certificate of Authority C - Engage in the business of insurance for the sole purpose of transacting insurance with family members D - Be honest, trustworthy, and reliable

D - Be honest, trustworthy, and reliable

A Certificate of Authority is issued to an insurer for which of the following reasons? A - It certifies the insurer has passed a market conduct exam in this state B - It recognizes the insurer for excellence in handling claims C - It certifies the agent is authorized to transact insurance in this state D - It certifies the insurer is authorized to transact insurance in this state

D - It certifies the insurer is authorized to transact insurance in this state

Which of the following is not a duty of the Commissioner? A - Enforce state insurance laws B - Issue an insurance license for a producer C - Handle insurance-related consumer complaints D - Make state insurance laws

D - Make state insurance laws

Who is NOT eligible for an agent license in this state? A - A 17-year-old who passed the licensing exam 6 months ago B - An applicant intending to solicit insurance to the general public C - An applicant intending to be actively engaged in the business of insurance D - A 43-year-old who submitted the appropriate application and fees 1 month ago

A - A 17-year-old who passed the licensing exam 6 months ago

The Commissioner is authorized to perform all of the following duties, except: A - Adopt reasonable rules and regulations to enforce insurance laws B - Suspend insurance licenses for up to 5 years C - Issue cease and desist orders D - Conduct investigations

B - Suspend insurance licenses for up to 5 years

A licensed agent is required to obtain which of the following before transacting insurance in Texas? A - A CLU designation B - A Certificate of Authority C - An appointment from an insurer D - An insurance counselor's license

C - An appointment from an insurer

With respect to advertising requirements, all of the following are allowable unless the insurer: A - Advertises preferred rates to classes of policyholders based on certain qualifications B - Solicits nonpaid testimonials representing the personal opinion of the author C - Includes the terms investment, savings plan, or profit sharing D - Uses the term "invitation to contract"

C - Includes the terms investment, savings plan, or profit sharing

An enrollee may have coverage cancelled or nonrenewed by an HMO for which of the following? A - Failing to quit smoking B - Excessive claims C - Nonpayment of premium D - Being diagnosed with heart disease

C - Nonpayment of premium

To terminate an agent's appointment, the insurer must: A - Require the agent to cancel the license with the Texas Department of Insurance B - Notify the Texas Department of insurance to cancel the license C - Notify the Texas Department of Insurance of the termination of appointment D - Request a hearing through the Department of Insurance

C - Notify the Texas Department of Insurance of the termination of appointment

Which of the following is not a prohibited claims settlement practice? A - Refusing to pay a claim without reasonably investigating it B - Denying a claim without providing the basis for the denial C - Requiring a claimant's income tax return while investigating a fire D - Misrepresenting a material fact to a claimant

C - Requiring a claimant's income tax return while investigating a fire

Under Nonforfeiture Law, a cash surrender payment may be deferred up to:

6 months

Which of the following statements about continuing education is true? A - At least 50% of continuing education hours must be completed in a classroom or classroom equivalent setting B - Every licensee must complete 3 continuing education hours on the topic of ethics C - Licensees must complete 24 continuing education hours for each license held D - Continuing education hours must be completed after the expiration date of the license

A - At least 50% of continuing education hours must be completed in a classroom or classroom equivalent setting

If an insurer requires an individual to be tested for the AIDS virus, all of the following are required, if applicable, except: A - Gather statistical information that identifies the applicant to share with other insurers B - Obtain notice of the requirement to test and written authorization from a parent or guardian of a proposed insured C - Notice to the proposed insured of the requirement prior to testing D - Written authorization from the applicant on a Notice of Consent form

A - Gather statistical information that identifies the applicant to share with other insurers

Which of the following is considered false advertising? A - An agent misrepresents a policy provision relating to coverage at the time of issue B - An insurer exaggerates its dividends in statements published in a newspaper C - An insurance applicant misrepresents material information on an application for a license D - A counselor charges a fee for advice in addition to commission for the sale of a policy

B - An insurer exaggerates its dividends in statements published in a newspaper

All of the following are required to be included in a life insurance illustration, except: A - Rating classification upon which the illustration is based B - Company specific mortality tables C - Initial death benefit D - Proposed insured's name

B - Company specific mortality tables

A long-term care policy issued in Texas must, at a minimum, be offered as: A - Optionally renewable B - Guaranteed renewable C - Conditionally renewable D - Noncancellable

B - Guaranteed renewable

A small employer health insurer may not offer coverage to an eligible employee unless the employee has: A - Satisfied a pre-existing condition waiting period of 6 months B - Satisfied the applicable waiting period C - Paid 100% of the first year's premium to the employer D - Been eligible for at least 6 months

B - Satisfied the applicable waiting period

Which of the following is considered false advertising? A - An insurance applicant misrepresents material information on an application for a license B - A counselor charges a fee for advice in addition to commission for the sale of a policy C - An insurer exaggerates its dividends in statements published in a newspaper D - An agent misrepresents a policy provision relating to coverage at the time of issue

C - An insurer exaggerates its dividends in statements published in a newspaper

All of the following statements about life insurance policy provisions are correct, except: A - Suicide may not be used as a defense to deny payment after the second year B - If it is discovered that an insured's age is misstated at the time of a loss, the amount payable is based on the amount of coverage the premiums paid would have purchased at the correct age C - If a policy lapses due to unpaid premiums, it may only be reinstated up to 2 years after lapse D - An individual may assign up to 100% of policy ownership

C - If a policy lapses due to unpaid premiums, it may only be reinstated up to 2 years after lapse

Which of the following is NOT an unfair claims practice? A - Misrepresenting pertinent policy facts or provisions to claimants B - Failing to attempt, in good faith, to promptly, fairly, and equitably settle a claim in which the insurer's liability has become reasonably clear C - Promptly acknowledging communications pertinent to a claim D - Requiring an insured to sue by offering less than the amount due

C - Promptly acknowledging communications pertinent to a claim

Which of the following is NOT transacting insurance? A - Delivering an insurance contract B - Collecting an insurance payment C - Selling stocks, bonds, and mutual funds D - Indirectly acting as an agent

C - Selling stocks, bonds, and mutual funds

Coverage for newborns must begin:

at birth

Which of the following is a method used by an HMO to compensate a physician or provider for providing a defined set of health care services and is based on a predetermined payment per enrollee:

capitation

Producer A tells his clients, falsely, that a rival insurer does not pay claims in a timely fashion. This is an example of what Unfair Trade Practice?

defamation

Publishing or circulating information that is maliciously derogatory to the financial condition of an insurance company with the intent to injure is known as:

defamation

According to the Texas Insurance Code, an insurance company incorporated in New Mexico is a(n):

foreign insurer

Which of the following statements regarding the suicide clause is correct? A - Death by suicide must be covered immediately after the policy is issued B - The suicide clause relates specifically to Accidental Death and Dismemberment policies C - Suicide may not be a defense against payment after the second year the policy is issued D - The insurance company may deny a claim at any time they can prove death was the result of suicide

C - Suicide may not be a defense against payment after the second year the policy is issued

What prohibited trade practice is committed if an agent provides misleading information regarding guaranteed dividends, terms, advantages, or disadvantages of a policy? A - Rebating B - Defamation C - False advertising D - Misrepresentation

D - Misrepresentation