Texas Statutes and Rules Common to Life and Health Insurance

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 what number of days must the hearing be held?

10 days

An insurer must acknowledge receipt of a Notice of Claim within how many days?

15 days

If an agent has completed 35 hours of continuing education in one renewal period, how many CE hours will the agent have to complete in the next renewal period?

24

The Commissioner of Insurance issues a Cease and Desist Order to an agent. If the agent wishes to contest the charges in court, how many days after the order was issued does the agent have to make the request?

30 days

The Insurance Commissioner may examine the affairs of any insurer as often as necessary, but not less frequently than once every A. year B. 2 years C. 3 years D. 5 years

5 years

An agent's license will terminate within how many days from the due date of obligatory fees and continuing education requirements?

90

Which of the following is NOT a possible penalty for a violation of the Insurance Code? A. A fine up to $100,000 B. An administrative penalty C. Payment of restitution D. A cease and desist order

A fine up to $100,000 (fines must not exceed $25,000)

Which of the following individuals could legally receive commissions from the sale of a life insurance policy? A. A licensed insurance consultant B. An employee for a life insurance company who is not licensed C. A life and health insurance counselor D. A licensed life insurance agent

A licensed life insurance agent

Which of the following is the closest term to an authorized insurer? A. Certified B. Licensed C. Legal D. Admitted

Admitted

When transacting business in this state an insurer formed under the laws of another country is known as a/an

Alien insurer

Who is considered a nonresident agent?

An agent who resides in another state, but is licensed to write insurance in Texas.

In Texas, how is the Commissioner of Insurance placed in office?

Appointed by the Governor for a term of 2 years.

All of the following are considered unfair or deceptive acts in the connection with the sale of insurance EXCEPT A. Lacking standards for the investigation of an insured's claims. B. Attempting to settle a claim in which liability is clear. C. Stating facts or provisions in a way that misrepresents the true nature of the policy. D. Delaying a settlement because there is other insurance that will satisfy any portion of the loss

Attempting to settle a claim in which liability is clear.

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

Which of the following must an insurer obtain in order to transact insurance within a given state? A. Certificate of authority B. Producer's certificate C. Business entity license D. Insurer's license

Certificate of authority

The Commissioner has full power and authority to do all of the following EXCEPT A. Draft insurance laws B. Issue Certificates of Authority C. Enforce the Insurance Code D. Issue cease and desist orders

Draft insurance laws

Circulating deceptive sales material to the public is what type of Unfair Trade Practice?

False advertising

When doing business in this state, an insurance company that is formed under the laws of another state is known as which type of insurer?

Foreign

An insurance company is domiciled in Montana and transacts insurance in Wyoming. Which term best describes the insurer's classification in Wyoming?

Foreign.

An insurer publishes intimidating brochures that portray the insurer's competition as financially and professionally unstable. Which of the following best describes this act? A. Legal, provided that the information can be verified B. Illegal until endorsed by the Guaranty Association C. Legal, provided that the other insurers are paid royalties for the usage of their names D. Illegal under any circumstances

Illegal under any circumstances

Which of the following occupations would NOT directly help to qualify someone for the office of Commissioner of Insurance? A. Practicing attorney B. Insurance agent C. Certified public account D. Executive in business administration

Insurance agent

Which of the following is a TRUE statement about a temporary license issued in this state? A. It allows the producer to sell replacement policies. B. It requires a written exam. C. It can be renewed after the first term. D. It can only be issued once in any 6-month period.

It can only be issued once in any 6-month period.

Which of the following is NOT true regarding a Certificate of Authority? A. It may be necessary for transacting business in a specific state. B. It is equivalent to an insurance license. C. It is issued by the state department of insurance. D. It is issued to group insurance participants.

It is issued to group insurance participants.

Which of the following best describes the unfair trade practice of defamation? A. Refusing to deal with other insurers B. Making derogatory oral statements about another insurer's financial condition C. Assuming the name and identity of another person D. Issuing false advertising material

Making derogatory oral statements about another insurer's financial condition

On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are A. Guaranteed B. Not taxable since the IRS treats them as a return of a portion of the premium paid C. Paid at a fixed rate every year D. Taxable as ordinary income

Not taxable since the IRS treats them as a return of a portion of the premium paid.

A participating insurance policy may do which of the following? A. Pay dividends to the stockholder B. Require 80% participation C. Pay dividends to the policyowner D. Provide group coverage

Pay dividends to the policyowner

Who might receive dividends from a mutual insurer?

Policyholders

An 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

All of the following are considered unfair trade practices in the business of insurance EXCEPT A. Rebating B. Defamation C. Sharing commissions D. Boycott

Sharing commissions

Which of the following insurers are owned by stockholders? A. Reciprocal B. Fraternal C. Stock D. Mutual

Stock

Who do agents represent?

The insurance company

An agent holds an insurance license in the state of Kansas and would like to transact insurance in Texas. The agent became licensed before written examinations were required. Therefore, the agent has not actually passed any kind of examination. Which of the following is true? A. The written examination requirement will be waived. B. The agent will need to take either the Kansas or Texas written examination. C. The agent must take a special transition class and pass a short examination administered at the end. D. If the agent has practiced for more than 30 years, the written requirement is waived.

The written examination requirement will be waived.

In Texas, the Commissioner of Insurance is

appointed by the Governor

An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy? mutual, reciprocal, nonprofit service organization, stock

mutual

All of the following would be considered an insurance transaction EXCEPT A. Advising a policyholder regarding a claim B. Negotiating coverage C. Obtaining and insurance license. D. Soliciting a policy

obtaining an insurance license

All of the following are true regarding rebates EXCEPT A. Dividends are not considered to be rebates. B. Rebates are allowed if it's in the best interest of the client. C. Rebates are only allowed if specifically stated in the policy. D. Rebating can be anything of economic value, given as an inducement to buy.

Rebates are allowed if it's in the best interest of a client.

What is the purpose of the Life Insurance Guaranty Association? A. To encourage life insurers to write substandard business B. To allow agents to continue to solicit insurance, even if the company they represent is financially impaired C. To protect the reputation of the Insurance Department if they issue a Certificate of Authority to a company that becomes insolvent D. To help protect policyowners and beneficiaries against financial loss caused by the insolvency of an insurance company

To help protect policyowners and beneficiaries against financial loss caused by the insolvency of an insurance company

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 the protection is provided by the Guaranty Association. Which of the following is true? A. Mentioning the Guaranty Association in advertisements is considered to be unfair trade practice B. The advertisement must also include the contact information of the association C. The advertisement must also include the contact information of the Commissioner of Insurance D. Mentioning the Guaranty Association is mandatory when advertising insurance in the state of Texas

Mentioning the Guaranty Association in advertisements is considered to be unfair trade practice.

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? A. Defamation B. Undercutting C. Twisting D. Slandering

Defamation

Two individuals are in the same risk and age class; yet, they are charged different rates for their insurance policies due to an insignificant factor. What is this called?

Discrimination

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? A. Stock company B. Reciprocal association C. Fraternal benefit society D. Mutual company

Fraternal benefit society

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 a statement that protection is provided by the Guaranty Association. Which of the following is true? A. Mentioning the Guaranty Association in advertisements is considered to be unfair trade practice. B. The advertisement must also include the contact information of the association. C. The advertisement must also include the contact information of the Commissioner of Insurance. D. Mentioning the Guaranty Association is mandatory when advertising insurance in the state of Texas.

Mentioning the Guaranty Association in advertisements is considered to be unfair trade practice.