Life and Health Insurance Ch 10
all of the following are considered unfair or deceptive acts in connection with the sale of insurance except
attempting to settle a claim in which liability is clear
which of the following best describes an insurance company that has been formed under the laws of this state
domestic
Circulating deceptive sales material to the public is what type of Unfair Trade Practice?
false advertising
Who do agents represent?
insurance company
In the agent/insurer relationship, who is considered the principal?
insurer
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 how many days must the hearing be held
30
what percentage of continuing education hours must be in a classroom setting
50%
An agent's license will terminate within how many days from the due date of obligatory fees and continuing education requirements?
90
what is a foreign insurer
An insurer with a home office in another state
for what reason can a temporary license be issued
For continuation of business in case the licensed producer dies or becomes disabled
what is controlled business
Insurance on the producer's own life or property, or the lives or property of the producer's family or business associates
To whom may a certificate of authority be issued?
To an insurer authorized to transact business in this state
what is the purpose of a cease and desist order
To prevent a producer or insurer from further violating laws for transacting insurance
When is controlled business legal?
When the commissions from controlled business do not exceed the aggregate commissions on all the other business (specific limits may vary from state to state)
what are the most common penalties for violations of insurance statutes
a cease and desist order, a fine, and license suspension or revocation
When transacting business in this state an insurer formed under the laws of another country is known as a/an
alien insurer
who must be a member of insurance guaranty associations
all insurers authorized to write insurance within a state
who is considered to be a nonresident agent
an agent who resides in another state, but is licensed to write insurance in texas
in texas, the commissioner of insurance is
appointed by governor
in texas how is the commissioner of insurance placed in office
appointed by the governor for a term of 2 years
If an insurer holds a Certificate of Authority, it is known as what type of insurer?
authorized or admitted
What type of licensee represents the insurance company?
broker
If the Commissioner/Superintendent finds a licensee engaging in an unfair method of competition or an unfair practice, what order will be issued?
cease and desist order
Who owns stock companies?
stockholders
a temporary license holder can receive a commission from a sale made to all of the following except
the license holder's sister in law
When can the Commissioner or Director examine insurers?
whenever deemed necessary, but at least once every few years
If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered what type of insurer?
authorized
An insurer that holds a Certificate of Authority in the state in which it transacts business is considered a/an
authorized insurer
To legally transact insurance in this state, an insurer must obtain which of the following?
certificate of authority
What document is required for an insurance company to transact insurance?
certificate of authority
which of the following must an insurer obtain to transact within a given state
certificate of authority
Forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as
coercion
what are producers required to do in order to renew their license
complete continuing education hours and pay a renewal fee
if a producer makes maliciously critical statements about another insurer, what makes this illegal practice called
defamation
which of the following terms describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance
defamation
Two individuals who are in the same risk and age class are charged different rates for their insurance policies due to an insignificant factor. What is this called?
discrimination
Insurers are classified according to their domicile. What are the three types of insurers?
domestic, foreign, and alien
which of the following entities is not an insurer but an organization formed to provide insurance benefits for members of an affiliated lodge or religious organization
fraternal benefits society
In general, who can be excluded from producer licensing and examination requirements?
insurance company officers, directors, or employees who do not transact insurance and who do not receive commissions for their services
all of the following are unfair claims settlement practices Except
suggesting negotiations in settling the claim
who is responsible for the contents of insurance advertisements
the insurance company
an individual applies for a life policy. two years ago he suffered a head injury from an accident, so he cannot remember parts of his past but is otherwise competent. he has also been hospitalized for drug abuse, but does not remember this when applying for insurance. the insurer issues the policy and learns of his history one year later. What will probably happen
the policy will not be affected
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?
there is no misconduct
what is the purpose of the life insurance guaranty association
to help protect policy owners and beneficiaries against financial loss caused by the insolvency of an insurance company
What type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?
twisting
Anyone who violates the Insurance Code of Texas may be fined up to
$25,000
who is considered a nonresident agent
An agent who resides and is licensed in another state, but who is authorized to transact insurance in this state
Who can usually be granted a temporary license?
Producer's spouse or designee in case the licensed producer dies or becomes disabled
An insurer advertises a health policy that is covered by the Life and Health Insurance Guaranty Association. The advertisement includes a short list of benefits and approximate rates. The end of the advertisement includes statement that protection is provided by the Guaranty Association. Which of the following is true?
mentioning the guaranty association in advertisements is considered to be unfair trade practice
On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. What is the company guilty of?
misrepresentation
What illegal act does a producer commit when the producer represents a policy in a more favorable light than the policy really is?
misrepresentation
Can insurers advertise the existence of the guaranty association during solicitation and sale of insurance policies?
no
all of the following would be considered an insurance transaction Except
obtaining an insurance license
Who may share in the commission from the sale of a life insurance policy?
only producers properly licensed for the type of insurance transaction
A participating insurance policy may do which of the following?
pay dividends to the policy owner
An agent offers a client free tickets to a sporting event in exchange for the purchase of an insurance policy. What is the agent guilty of?
rebating
Any inducement offered to the insured in the sale of an insurance policy that is not specified in the policy is an unlawful practice known as
rebating