10. Texas Statutes And Rules Common To Life And Health
Which of the following best describes an insurance company that has been formed under the laws of this state? ASovereign BAlien CForeign DDomestic
DDomestic A company is domestic when doing business within the state in which it is incorporated.
A license may NOT be denied, suspended, or revoked if the licensee ASubmits an unsigned insurance policy application. BEngages in fraud. CDeals with insurance outside the scope of the license. DMaterially misrepresents an insurance policy.
A license may NOT be denied, suspended, or revoked if the licensee Any type of fraud or misrepresentation is a violation that may cause a license to be denied, suspended or revoked.
When twin brothers applied for life insurance from Company A, the company found that while neither of them smoked and both had a very similar lifestyle, one of the twins was in a much stronger financial position than the other. Because of this, the company charged him a higher rate for his insurance. This practice is considered ADiscrimination. BTwisting. CControlled business. DAdverse selection.
ADiscrimination. Permitting individuals of the same class to be charged a different rate for the same insurance is the unfair trade practice of discrimination.
Circulating deceptive sales material to the public is what type of Unfair Trade Practice? AFalse advertising BDefamation CCoercion DMisrepresentation
AFalse advertising This is considered to be false, deceptive or misleading advertising
A license may NOT be denied, suspended, or revoked if the licensee ASubmits an unsigned insurance policy application. BEngages in fraud. CDeals with insurance outside the scope of the license. DMaterially misrepresents an insurance policy.
ASubmits an unsigned insurance policy application. Any type of fraud or misrepresentation is a violation that may cause a license to be denied, suspended or revoked
A license may NOT be denied, suspended, or revoked if the licensee ASubmits an unsigned insurance policy application. BEngages in fraud. CDeals with insurance outside the scope of the license. DMaterially misrepresents an insurance policy.
ASubmits an unsigned insurance policy application. Any type of fraud or misrepresentation is a violation that may cause a license to be denied, suspended or revoked.
Which of the following is NOT a licensing requirement for a corporation in the state of Texas? AAt least one officer of the corporation must be individually licensed as an agent. BThe business must be able to pay up to $50,000 in the event that it is proven to be negligent. CThe business must demonstrate financial responsibility to provide coverage for an error or omission. DThe business must be a Texas corporation, with its principal place of business in Texas.
BThe business must be able to pay up to $50,000 in the event that it is proven to be negligent. All of the above criteria are true, with the exception of the amount of money a business can afford to lose, in the event that it is proven to be negligent. A business only needs to be able to pay $25,000
No one whose license has been revoked can receive another license in Texas for A1 year. B2 years. C5 years. D6 months.
C5 years. No one whose license has been revoked can receive another license in Texas for 5 years.
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? A35 B0 C11 D24
D24 Agents must complete 24 hours of continuing education every renewal period. All CE hours must be completed during the reporting period; licensees are not allowed to carry over excess hours to the next reporting period.
Which of the following best describes the unfair trade practice of defamation? ARefusing to deal with other insurers BMaking derogatory oral statements about another insurer's financial condition CAssuming the name and identity of another person DIssuing false advertising material
BMaking derogatory oral statements about another insurer's financial condition Making oral or written statements directly or indirectly which are derogatory or maliciously critical of another insurer would be an example of the unfair trade practice of defamation.
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. The company is guilty of ARebating. BMisrepresentation. CConcealment. DUnfair claim practice.
BMisrepresentation. Issuing or circulating any sales material that is false or misleading would be considered misrepresentation and is illegal
If an agent suspects that insurance fraud is being committed, within how many days must the agent notify the Insurance Fraud Unit of the Department of Insurance? A10 days B15 days C30 days D90 days
C30 days If a person suspects that a fraudulent insurance act has been or is about to be committed in this state, the person must report the information in writing to the Insurance Fraud Unit of the Department within 30 days.
Which of the following would be required to be licensed as an insurance producer? AA salaried full-time employee who furnishes information for group insurance BAn insurance company director who performs executive, administrative and managerial duties CA salaried employee who advertises and solicits insurance DA person whose activities are limited to producing insurance advertisements
CA salaried employee who advertises and solicits insurance A person does not require an insurance producer license if he or she only advertises without intent to solicit insurance. However, once there is solicitation, a license is required.
All of the following are considered unfair or deceptive acts in connection with the sale of insurance EXCEPT ADelaying a settlement because there is other insurance that will satisfy any portion of the loss. BLacking standards for the investigation of an insured's claims. CAttempting to settle a claim in which liability is clear. DStating facts or provisions in a way that misrepresents the true nature of the policy
CAttempting to settle a claim in which liability is clear. Misrepresenting the nature of a policy, delaying a settlement solely because there is a another policy that may pay part of the loss, and lacking standards for the investigation of an insured's claim are considered unfair or deceptive acts
To become a Texas insurance agent, an individual must AHave resided in Texas for at least 1 year. BPost a $25,000 bond. CHave passed a licensing exam within the 12 months before applying. DFile a personal financial statement with the Commissioner for the previous 3 years.
CHave passed a licensing exam within the 12 months before applying. Applicants for an insurance producer license must pass a state exam, apply for a license and pay the required nonrefundable fees. Note that passing the exam does not constitute a license. Applicants cannot transact insurance until their license is issued.
Which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices? AExaggerating the benefits provided in the policy BStating that the competitors will arbitrarily increase their premiums each year CMaking comparisons between different policies DStating that the insurance policy is a share of stock
CMaking comparisons between different policies Making accurate comparisons of policies is not illegal.
A temporary license holder can receive a commission from a sale made to all of the following EXCEPT AAn accountant at a rival insurance company. BThe license holder's family doctor. CThe license holder's sister-in-law. DThe license holder's spouse's best friend
CThe license holder's sister-in-law. A temporary license holder sale to a family member or an individual the temporary license holder has an employment or business relationship with will not pay commission.
Giving a client an inducement to a sale not stated in the policy is an unlawful practice known as ATwisting. BUnlawful distribution of dividends. CCoercion. DRebating.
DRebating. Rebating is defined as any inducement offered to the insured in the sale of insurance products that is not specified in the policy. Both the offer and acceptance of a rebate are illegal.
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? A11 B24 C35 D0
B24 Agents must complete 24 hours of continuing education every renewal period. All CE hours must be completed during the reporting period; licensees are not allowed to carry over excess hours to the next reporting period. Question 7 of 15
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? A10 days B30 days C60 days D90 days
B30 days If the recipient of a Cease and Desist Order wants to contest or review the charges in court, the request must be made within 30 days of the order. Question 8 of 15
An agent's license will terminate within how many days from the due date of obligatory fees and continuing education requirements? A30 B180 C90 D60
C90 If an agent does not fulfill his or her continuing education requirements or pay the necessary fees then their license will expire within 90 days of the due date
What is the minimum percentage of a licensee's total volume of premiums in a calendar year that must come from business other than controlled business? A80% B50% C60% D25%
D25% During any calendar year, at least 25% of a licensee's total volume of premiums must be from business other than controlled business
The Insurance Commissioner may examine the affairs of any insurer as often as necessary, but not less frequently than once every AYear. B2 years. C3 years. D5 years.
D5 years. The Insurance Commissioner must examine each insurer at least once every 5 years.
An insurance agent wants for a client to replace her current annuities plan with another one. He presents the new one in an incomplete and dishonest way, which makes the new contract seem far more appealing than the original one. The policyowner ends up surrendering her original contract and replacing it with the new one. Which term best describes what the agent did? AFalse advertising BFraud CRebating DTwisting
DTwisting Twisting is an illegal act, in which an agent misrepresents the terms of an insurance or annuities contract or draws incomplete comparisons, in a way that would compel the insured to surrender the contract for the new one
Which of the following best describes the unfair trade practice of defamation? AAssuming the name and identity of another person BIssuing false advertising material CRefusing to deal with other insurers DMaking derogatory oral statements about another insurer's financial condition
DMaking derogatory oral statements about another insurer's financial condition Making oral or written statements directly or indirectly which are derogatory or maliciously critical of another insurer would be an example of the unfair trade practice of defamation.
Which of the following would be considered false advertising? AImplying that the agent is the insurer BStating the differences in benefits between Whole Life Insurance and Term Life Insurance CStating that a policy has limitations and exclusions DFailing to include premiums in sales materials
AImplying that the agent is the insurer A person or entity cannot use a name that deceptively suggests it is an insurer. Premiums do not have to be included in sales materials because they will vary depending on the insured's age and health. Most policies have limitations and exclusions, and there is a difference between whole life and term. It is not illegal to note this for applicants.
What percentage of continuing education hours must be in a classroom setting? A25% B50% C75% D100%
B50% At least 50% of all required continuing education hours must be completed in a classroom setting or a classroom equivalent setting approved by the department
Which of the following best describes a misrepresentation? ADiscriminating among individuals of the same insuring class BIssuing sales material with exaggerated statements about policy benefits CMaking a deceptive or untrue statement about a person engaged in the insurance business DMaking a maliciously critical statement that is intended to injure another person
BIssuing sales material with exaggerated statements about policy benefits Misrepresentation is issuing, publishing or circulating any illustration or sales material that is false, misleading or deceptive as to policy benefits or terms, the payment of dividends, etc. This includes oral statements.
If an agent suspects that insurance fraud is being committed, within how many days must the agent notify the Insurance Fraud Unit of the Department of Insurance? A10 days B15 days C30 days D90 days
C30 days If a person suspects that a fraudulent insurance act has been or is about to be committed in this state, the person must report the information in writing to the Insurance Fraud Unit of the Department within 30 days
Which of the following is NOT true regarding a Certificate of Authority? AIt is issued to group insurance participants. BIt may be necessary for transacting business in a specific state. CIt is equivalent to an insurance license. DIt is issued by the state department of insurance
AIt is issued to group insurance participants. Before insurers may transact business in a specific state, they must apply for a license or Certificate of Authority from the state department of insurance and meet any financial (capital and surplus) requirements set down by the state.
Giving a client an inducement to a sale not stated in the policy is an unlawful practice known as AUnlawful distribution of dividends. BCoercion. CRebating. DTwisting.
CRebating. Rebating is defined as any inducement offered to the insured in the sale of insurance products that is not specified in the policy. Both the offer and acceptance of a rebate are illegal.
All insurers that provide life or accident and health insurance coverage in Texas must be members of what association? AFederal Association of Insurers BNAIC CThe Life and Health Insurance Guaranty Association DTexas Insurers Guild
CThe Life and Health Insurance Guaranty Association The Life and Health Insurance Guaranty Association was created to protect policyholders against an insurance company's failure to perform its contractual obligations due to impairment or insolvency. All insurers that provide life, accident and health insurance, annuities or hospital service coverage in Texas must be members of this association.
Which of the following persons is required to hold a producer license? AA person who takes messages related to claims BA person who creates insurance advertisements CA person who administers employee benefits DA person who negotiates insurance contracts
DA person who negotiates insurance contracts Persons who perform clerical tasks that are not related to soliciting or negotiating insurance contracts are not required to be licensed.
In Texas, the Commissioner of Insurance is AAppointed by the Insurance and Industry Committee of the state legislature. BElected by the state legislature's Banking and Insurance Committee. CElected by Texas voters. DAppointed by the Governor.
DAppointed by the Governor. The Commissioner is appointed to office by the Governor, with the advice and consent of the Senate, for a 2-year period. The Commissioner's appointment ends on February 1 of each odd numbered year.
A participating insurance policy may do which of the following? AProvide group coverage BPay dividends to the stockholder CRequire 80% participation DPay dividends to the policyowner
DPay dividends to the policyowner A participating insurance policy will pay dividends to the owner based upon actual mortality cost, interest earned and costs.
All of the following would be considered an insurance transaction EXCEPT AObtaining an insurance license. BSoliciting a policy. CAdvising a policyholder regarding a claim. DNegotiating coverage.
AObtaining an insurance license. An insurance transaction means the carrying on of business in insurance, which could include the solicitation of a policy, advising, negotiation, or inducement related to coverage or claims. Obtaining an insurance license is a prerequisite to transacting insurance.
Which of the following is NOT true regarding a Certificate of Authority? AIt is equivalent to an insurance license. BIt is issued by the state department of insurance. CIt is issued to group insurance participants. DIt may be necessary for transacting business in a specific state.
CIt is issued to group insurance participants. Before insurers may transact business in a specific state, they must apply for a license or Certificate of Authority from the state department of insurance and meet any financial (capital and surplus) requirements set down by the state
Rebating is an unfair trade practice and is regulated by law. All of the following would be considered to be rebating EXCEPT AAn agent offers the use of his lake house to person as an inducement to buy. BAn agent offers to share his commission with a policyholder. CAn agent offers tickets to a baseball game as an inducement to buy insurance. DAn agent misrepresents policy benefits to convince a policyowner to replace policies
DAn agent misrepresents policy benefits to convince a policyowner to replace policies. Using misrepresentation to convince a person to cancel an existing policy and buy a new one is called "twisting."
Who is considered a nonresident agent? AAn agent who does not earn commission in Texas. BAn agent who resides in another state, but is licensed to write insurance in Texas. CAn agent who is not a U.S. citizen. DAn agent whose license has been revoked.
BAn agent who resides in another state, but is licensed to write insurance in Texas. A nonresident agent is one who resides in a state other than Texas, but who has met the licensing requirements and is authorized to write insurance in the state of Texas.
An individual licensed as an agent must notify the Texas Department of Insurance, on a monthly basis, of all of the following EXCEPT AAny administrative action taken against the license holder by an insurance regulator of Texas, any other state, or the federal government. BAny change in business name. CAny change of the mailing address. DAny felony conviction.
BAny change in business name. Agents must notify the Department on a monthly basis of any change of the license holder's mailing address, any felony conviction of the license holder, or any administrative action taken against the license holder by a financial or insurance regulator of Texas, another state, or the United States
Which of the following will NOT be considered unfair discrimination by insurers? AAssigning different risk classifications to applicants based on gender identity BDiscriminating in benefits and coverages based on the insured's habits and lifestyle CCharging applicants with similar health histories different premiums based on their ethnicity DCancelling individual coverage based on the insured's marital status
BDiscriminating in benefits and coverages based on the insured's habits and lifestyle Discriminating between individuals of the same class with equal life expectancies, or by reason of race, nationality, or ethnic group would be considered unfair discrimination. Insurers are also not allowed to cancel individual coverage due to a change in marital status. Discriminating in benefits based on the insured's habits and lifestyle (such as smoking or dangerous hobbies) is acceptable.
In which of the following situations is it legal to limit coverage based on marital status? AIt is never legal to limit coverage based on marital status. BExcessive number of divorces, as defined by the Insurance Code CLegal separation during the application process DDivorce within the last six months of applying for insurance
AIt is never legal to limit coverage based on marital status. Availability of insurance benefits or coverage may not be denied based on sex or marital status. Marital status may be considered for the purpose of defining persons eligible for dependent benefits.
If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered to be AApproved. BAuthorized. CCertified. DQualified.
BAuthorized. Insurers who meet the state's financial requirements and are approved to transact business in the state are considered authorized or admitted into the state as a legal insurer.
All of the following statements apply to temporary licenses EXCEPT AThey require 40 hours of license training. BThey may be issued without a written examination. CThey are valid up to 90 days. DThey may be renewed.
DThey may be renewed. Temporary licenses may be granted up to 90 days without examination to applicants who complete a 40 hour training course before applying for the license or within 14 days after applying for the license. A temporary license cannot be renewed.
How many hours of continuing education can be carried over from one licensing period to the next? AAny excess hours B0 C2 D5
B0 All CE hours must be completed during the reporting period; licensees are not allowed to carry over excess hours to the next reporting period
An insurer must acknowledge receipt of a Notice of Claim within how many days? A5 B15 C20 D30
B15 Under state Claims Methods and Practices laws, every insurer, upon receiving a notification of a claim must acknowledge its receipt and begin an investigation within 15 working days.
All of the following are considered unfair or deceptive acts in connection with the sale of insurance EXCEPT ALacking standards for the investigation of an insured's claims. BAttempting to settle a claim in which liability is clear. CStating facts or provisions in a way that misrepresents the true nature of the policy. DDelaying a settlement because there is other insurance that will satisfy any portion of the loss.
BAttempting to settle a claim in which liability is clear. Misrepresenting the nature of a policy, delaying a settlement solely because there is a another policy that may pay part of the loss, and lacking standards for the investigation of an insured's claim are considered unfair or deceptive acts
When a producer was reviewing a potential customer's coverage written by another company, the producer made several remarks that were maliciously critical of that other insurer. The producer could be found guilty of ANothing, unless the remarks were in writing BDefamation. CMisrepresentation. DDiscrimination.
BDefamation. A producer or broker who makes oral or written statements intended to injure another producer or insurer is guilty of the unfair trade practice of defamation.
Which of the following will NOT be considered unfair discrimination by insurers? AAssigning different risk classifications to applicants based on gender identity BDiscriminating in benefits and coverages based on the insured's habits and lifestyle CCharging applicants with similar health histories different premiums based on their ethnicity DCancelling individual coverage based on the insured's marital status
BDiscriminating in benefits and coverages based on the insured's habits and lifestyle Discriminating between individuals of the same class with equal life expectancies, or by reason of race, nationality, or ethnic group would be considered unfair discrimination. Insurers are also not allowed to cancel individual coverage due to a change in marital status. Discriminating in benefits based on the insured's habits and lifestyle (such as smoking or dangerous hobbies) is acceptable
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? AAdverse selection BDiscrimination CLaw of large numbers DMisrepresentation
BDiscrimination Permitting individuals of the same class to be charged a different rate for the same insurance is the unfair trade practice of discrimination.
All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT AAn offer to share in commissions generated by the sale. BDividends from a mutual insurer. CAn offer of employment. DStocks, securities, or bonds.
BDividends from a mutual insurer. Dividends paid to policyholders of a mutual insurer are not considered to be a rebate because the policy specifies that they might be paid.
Which of the following insurance providers must be nonprofit and sell insurance only to its members? AReciprocal BFraternal CService DMutual
BFraternal To be characterized as a fraternal benefit society, the organization must be nonprofit, have a lodge system that includes ritualistic work and maintain a representative form of government with elected officers. Insurance may only be sold to members of the society
All of the following would be considered an insurance transaction EXCEPT ANegotiating coverage. BObtaining an insurance license. CSoliciting a policy. DAdvising a policyholder regarding a claim.
BObtaining an insurance license. An insurance transaction means the carrying on of business in insurance, which could include the solicitation of a policy, advising, negotiation, or inducement related to coverage or claims. Obtaining an insurance license is a prerequisite to transacting insurance.
All of the following are true regarding rebates EXCEPT ADividends are not considered to be rebates. BRebates are allowed if it's in the best interest of the client. CRebates are only allowed if specifically stated in the policy. DRebating can be anything of economic value, given as an inducement to buy.
BRebates are allowed if it's in the best interest of the client. A rebate is an illegal act which involves returning something of value to the client as an inducement to buy, such as the commission. Rebates are only allowed if specifically stated in the policy. Insurance dividends are not considered rebates as the IRS considers it as a return of overpaid premium.
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? AIf the agent has practiced for more than 30 years, the written requirement is waived. BThe written examination requirement will be waived. CThe agent will need to take either the Kansas or Texas written examination. DThe agent must take a special transition class and pass a short examination administered at the end.
BThe written examination requirement will be waived. If a currently-licensed, foreign agent obtained an insurance license before written examinations were required, and if the agent seeks to transact insurance in Texas, the written examination requirement will be waived
An agent completed a CE course in 2014. Until what year must the agent keep the records of completion? A2015 B2016 C2018 D2024
C2018 Producers must maintain records of completion of continuing education courses for 4 years from the date of the course completion. Question 9 of 15
Which of the following is NOT a possible penalty for a violation of the Insurance Code? APayment of restitution BA cease and desist order CA fine up to $100,000 DAn administrative penalty
CA fine up to $100,000 In addition to the suspension or revocation of a license, the Commissioner may impose any of all of the following penalties: issue a cease and desist order; order the payment of an administrative penalty; and order the licensee to make restitution. The penalty for a violation may not exceed $25,000
Which of the following best describes a misrepresentation? AMaking a maliciously critical statement that is intended to injure another person BDiscriminating among individuals of the same insuring class CIssuing sales material with exaggerated statements about policy benefits DMaking a deceptive or untrue statement about a person engaged in the insurance business
CIssuing sales material with exaggerated statements about policy benefits Misrepresentation is issuing, publishing or circulating any illustration or sales material that is false, misleading or deceptive as to policy benefits or terms, the payment of dividends, etc. This includes oral statements
In which of the following situations is it legal to limit coverage based on marital status? ALegal separation during the application process BDivorce within the last six months of applying for insurance CIt is never legal to limit coverage based on marital status. DExcessive number of divorces, as defined by the Insurance Code
CIt is never legal to limit coverage based on marital status. Availability of insurance benefits or coverage may not be denied based on sex or marital status. Marital status may be considered for the purpose of defining persons eligible for dependent benefits.
Which of the following best describes the unfair trade practice of defamation? AIssuing false advertising material BRefusing to deal with other insurers CMaking derogatory oral statements about another insurer's financial condition DAssuming the name and identity of another person
CMaking derogatory oral statements about another insurer's financial condition Making oral or written statements directly or indirectly which are derogatory or maliciously critical of another insurer would be an example of the unfair trade practice of defamation.
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? AThe advertisement must also include the contact information of the Commissioner of Insurance. BMentioning the Guaranty Association is mandatory when advertising insurance in the state of Texas. CMentioning the Guaranty Association in advertisements is considered to be unfair trade practice. DThe advertisement must also include the contact information of the association
CMentioning the Guaranty Association in advertisements is considered to be unfair trade practice. It is considered an unfair trade practice to advertise protection by the Insurance Guaranty Association when selling any product that is covered by the association.
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. The company is guilty of AUnfair claim practice. BRebating. CMisrepresentation. DConcealment.
CMisrepresentation. Issuing or circulating any sales material that is false or misleading would be considered misrepresentation and is illegal.
During a sales presentation a producer intentionally makes a statement which may mislead the insurance applicant. This describes ATwisting. BCoercion. CMisrepresentation. DDefamation.
CMisrepresentation. Making false or misleading statements with the intent to defraud another is misrepresentation
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? AThe insurer will sue the insured for committing fraud. BBecause the insured is currently not a drug user, his policy will not be affected. CThe policy will not be affected. DThe policy will be voided.
CThe policy will not be affected. In insurance, fraud is the intentional misrepresentation of material information that is crucial when deciding whether or not to write a contract for an applicant. If an insurer finds that an applicant has committed fraud, it can void the contract, provided that the discovery occurs within the first two years of the effective policy date. In this particular instance the applicant did not commit intentional fraud.
Which of the following actions is NOT in violation of the Unfair Claims Settlement Practices Act? ARefusing to pay claims without conducting a reasonable investigation BFailure to respond promptly on claims communications CDelaying a settlement because there is an additional insurance policy on a loss DDenying an unsubstantiated claim Correct! Incorrect! Insurers do not have to pay unsubstantiated claims, which means that the claimant failed to submit the required proof of loss.
DDenying an unsubstantiated claim Insurers do not have to pay unsubstantiated claims, which means that the claimant failed to submit the required proof of loss.
During a sales presentation a producer intentionally makes a statement which may mislead the insurance applicant. This describes ADefamation. BTwisting. CCoercion. DMisrepresentation.
DMisrepresentation. Making false or misleading statements with the intent to defraud another is misrepresentation.
All of the following are true regarding rebates EXCEPT ARebates are only allowed if specifically stated in the policy. BRebating can be anything of economic value, given as an inducement to buy. CDividends are not considered to be rebates. DRebates are allowed if it's in the best interest of the client
DRebates are allowed if it's in the best interest of the client. A rebate is an illegal act which involves returning something of value to the client as an inducement to buy, such as the commission. Rebates are only allowed if specifically stated in the policy. Insurance dividends are not considered rebates as the IRS considers it as a return of overpaid premium.
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? AThe policy will be voided. BThe insurer will sue the insured for committing fraud. CBecause the insured is currently not a drug user, his policy will not be affected. DThe policy will not be affected.
DThe policy will not be affected. In insurance, fraud is the intentional misrepresentation of material information that is crucial when deciding whether or not to write a contract for an applicant. If an insurer finds that an applicant has committed fraud, it can void the contract, provided that the discovery occurs within the first two years of the effective policy date. In this particular instance the applicant did not commit intentional fraud.
Which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices? AMaking comparisons between different policies BStating that the insurance policy is a share of stock CExaggerating the benefits provided in the policy DStating that the competitors will arbitrarily increase their premiums each year
AMaking comparisons between different policies Making accurate comparisons of policies is not illegal.
For which of the following actions can an agent's license be suspended or revoked? ARebates of premiums BMisdemeanors CUnintentional violations of state laws DMisstatements on the application
ARebates of premiums The Commissioner will suspend or revoke an existing license, or deny a new license for any of the following reasons: willful violations of state insurance laws, intentional material misstatements in the license application, and rebates of insurance premiums, among other offenses.
Which members of a corporation or partnership are required to obtain an individual insurance agent's license in order for the association to be licensed? ANone of the partners are required to have a license if the partnership is associated with a licensed insurance agent. BAt least one officer or partner and any other person acting as an agent COnly members who plan on transacting insurance DOfficers or partners only
BAt least one officer or partner and any other person acting as an agent At least one officer of the corporation or one active partner of the partnership and all other persons performing any acts of an agent on behalf of the corporation or partnership in this state must be individually licensed separately from the corporation or partnership.
Which of the following is a TRUE statement about a temporary license issued in this state? AIt allows the producer to sell replacement policies. BIt requires a written examination. CIt can be renewed after the first term. DIt can only be issued once in any 6-month period
DIt can only be issued once in any 6-month period. Temporary licenses are not renewable and cannot be issued more than once in any 6-month period to the same applicant. A written examination is not required. Temporary licensees cannot sell insurance that replaces an existing individual life insurance policy or annuity contract that is in force
All of the following are true regarding rebates EXCEPT ARebates are allowed if it's in the best interest of the client. BRebates are only allowed if specifically stated in the policy. CRebating can be anything of economic value, given as an inducement to buy. DDividends are not considered to be rebates.
ARebates are allowed if it's in the best interest of the client. A rebate is an illegal act which involves returning something of value to the client as an inducement to buy, such as the commission. Rebates are only allowed if specifically stated in the policy. Insurance dividends are not considered rebates as the IRS considers it as a return of overpaid premium.
All of the following statements apply to temporary licenses EXCEPT AThey may be renewed. BThey require 40 hours of license training. CThey may be issued without a written examination. DThey are valid up to 90 days.
AThey may be renewed. Temporary licenses may be granted up to 90 days without examination to applicants who complete a 40 hour training course before applying for the license or within 14 days after applying for the license. A temporary license cannot be renewed
An insurance professional advises a client regarding the benefits of her life insurance policy, in exchange for a fee. Which of the following terms best describes this type of insurance professional? AAdvisor BCounselor CAgent DProducer
BCounselor A life insurance counselor is someone who, for a fee or commission, offers to examine a life insurance, an annuity, or pure endowment policy and gives advice, recommendations or information regarding the policy's terms, conditions, benefits, coverage or premium.
All of the following are true regarding rebates EXCEPT ARebates are only allowed if specifically stated in the policy. BRebating can be anything of economic value, given as an inducement to buy. CDividends are not considered to be rebates. DRebates are allowed if it's in the best interest of the client.
DRebates are allowed if it's in the best interest of the client. A rebate is an illegal act which involves returning something of value to the client as an inducement to buy, such as the commission. Rebates are only allowed if specifically stated in the policy. Insurance dividends are not considered rebates as the IRS considers it as a return of overpaid premium.
For which of the following actions can an agent's license be suspended or revoked? AMisdemeanors BUnintentional violations of state laws CMisstatements on the application DRebates of premiums
DRebates of premiums The Commissioner will suspend or revoke an existing license, or deny a new license for any of the following reasons: willful violations of state insurance laws, intentional material misstatements in the license application, and rebates of insurance premiums, among other offenses.
