Chapter 10: Texas Statutes and Rules Common to Life and Health Insurance Flashcards
1
Q
The term ______ includes any of the following (by mail or any other means):
- Solicitation
- Negotiations
- Sale effectuation of a contract of insurance)
- Advising an individual concerning coverage or claims
A
Insurance Transaction
2
Q
The following acts, when performed by insurers or agents, constitute the ______ in Texas:
- Making or proposing to make an insurance contract.
- Taking or receiving an insurance application.
- Receiving or collecting any consideration for insurance, including a premium, a commission, a membership fee, an assessment, or dues.
- Issuing or delivering an insurance contract.
- Directly or indirectly acting as an agent for an insurer.
- Doing any kind of insurance business specifically recognized as constituting insurance business within the statutes of the Insurance Code.
A
Business of Insurance
3
Q
The ______ (or ______) is the company or organization that issues a policy of insurance.
A
Insurer (Principal)
4
Q
Insurance companies are classified according to the ______ (______). Regardless of where an insurance company is incorporated, it must obtain a(n) ______ before transacting insurance within the state.
A
- Location of Incorporation (Domicile)
2. Certificate of Authority
5
Q
A(n) ______ refers to the location where an insurer is incorporated, not necessarily where the insurer conducts business.
A
Domicile
6
Q
A(n) ______ insurer is an insurance company that is incorporated in this state.
A
Domestic
7
Q
A(n) ______ insurer is an insurance company that is incorporated in another state, the District of Columbia, or a territorial possession.
A
Foreign
8
Q
A(n) ______ insurer is an insurance company that is incorporated outside the United States.
A
Alien
9
Q
______ are owned by stockholders who provide the capital necessary to establish and operate the insurance company and who share in any profits or losses.
A
Stock Companies
10
Q
Traditionally, stock companies issue ______ policies, in which policyowners do not share in profits or losses. These policies do not pay dividends to policyowners but instead pay taxable dividends to stockholders.
A
Nonparticipating
11
Q
______ are owned by the policyowners and issue participating policies.
A
Mutual Companies
12
Q
With ______ policies, policyowners are entitled to dividends, which, in the case of mutual companies, are a return of excess premiums and are, therefore, ______.
A
- Participating
2. Nontaxable
13
Q
A(n) ______ is an organization formed to provide insurance benefits for members of an affiliated lodge, religious organization, or fraternal organization with a representative form of government.
A
Fraternal Benefit Society
14
Q
Before insurers may transact business in a specific state, they must apply for and be granted a license or ______ from the state department of insurance and meet any financial (capital and surplus) requirements set by the state.
A
Certificate of Authority
15
Q
Insurers who meet the state’s financial requirements and are approved to transact business in the state are considered ______ or ______ into the state as a legal insurer.
A
- Authorized
2. Admitted
16
Q
Insurers who have not been approved to do business in the state are considered ______ or ______.
A
- Unauthorized
2. Nonadmitted
17
Q
Insurers must obtain a(n) ______ prior to transacting business in Texas. The certificate remains in effect until it is revoked, canceled, or suspended.
A
Certificate of Authority
18
Q
The ______ must be a citizen of the state of Texas, be well informed and qualified in the field of insurance and insurance regulation, and have at least ______ of experience in the administration of business or government or as a practicing attorney or certified public account. This position is appointed by the Governor for a(n) ______ term.
A
- Commissioner
- 5 Years
- 2-Year
19
Q
The ______ has the following broad powers and duties:
- Regulate the internal affairs of the Department of Insurance.
- Prescribe forms and procedures to be followed in proceedings before the Department.
- Aid in the interpretation of any state insurance law.
- Issue insurance licenses and certificates of authority.
- Enforce penalties, fines, denials, suspensions, or revocations of licensees and certificates of authority.
A
Commissioner
20
Q
The Commissioner must examine all authorized insurers at least once ______. The cost of examinations is the responsibility of the insurance company being examined.
A
Every 5 Years
21
Q
If the Commissioner suspects that an insurer or its agent has committed a violation or is engaged in an unfair trade practice, the Commissioner may issue a(n) ______ and ______ for any purpose deemed necessary (within the scope of the Insurance Code).
A
- Statement of Charges
2. Hold a Hearing
22
Q
If the Commissioner believes any licensed agent is engaged in any form of unfair method of competition or trade practice, is in a hazardous financial condition, or that an unlicensed person is engaging in the sale of insurance, the Commissioner may issue a(n) ______, served by registered or certified mail.
A
Emergency Cease and Desist Order
23
Q
Unless the person in violation requests a hearing, emergency cease and desist orders are final ______ from the date they are received.
A
31 Days
24
Q
The hearing to show cause why the emergency cease and desist order should not be affirmed or modified must be held no later than the ______ after the date the Commissioner receives the request for a hearing unless the parties mutually agree to a later date.
A
10th Day
25
On determining that a person committed a violation of the Insurance Code or the Business and Commerce Code, the Department will make written findings, and issue and serve on the person a(n) ______.
Cease and Desist Order
26
If a person refuses to comply with a subpoena, the court may punish the person's failure to obey as ______.
Contempt
27
A person who violates a cease and desist order of the Commissioner will be subject to an administrative penalty of:
1. ______ for each violation
2. ______ for all violations.
1. $1,000
| 2. $5,000
28
The department must give written notice of the report to the affected person no later than ______ after the date the report is issued. This notice must include a brief summary of the alleged violation and a statement of the amount of the recommended penalty. The notice must also inform the person that he/she has a(n) ______ on the occurrence of the violation, the amount of the penalty, or both. The person has ______ from receiving the notice to accept or request a hearing.
1. 14 Days
2. Right to a Hearing
3. 20 Days
29
Any person who solicits insurance on behalf of any insurance company, takes or transmits (other than for himself or herself) an insurance application or policy, examines any risk or loss, or receives, collects, or transmits any premium, is considered to be the ______ of the company for which the act is done.
Agent
30
A(n) ______ agent is one who resides or is domiciled in a state other than Texas. A(n) ______ can be licensed as an insurance agent if the Texas licensing requirements are met, as long as the agent's home state gives Texas residents the same privilege (reciprocity).
Nonresident
31
The Commissioner can enter into ______ with officials of other states to waive the written examination requirements for applicants who reside in those states.
Reciprocal Agreements
32
A life and health insurance ______ is any person who, for a fee or commission, offers to examine a life, accident, or health insurance policy, an annuity, or pure endowment policy, to give a recommendation or information regarding the policy's terms, conditions, benefits, coverage, or premiums.
Counselor
33
The Commissioner may issue a temporary life insurance agent's license, effective for ______, without requiring a written examination to applicants who complete a(n) ______ training course before applying for the license or within ______after applying for the license.
1. 90 Days
2. 40-Hour
3. 14 Days
34
Temporary licenses are ______ and cannot be issued more than ______ in any ______ period to the same applicant.
1. Not Renewable
2. Once
3. 6-Month
35
An agent license may be issued to a(n) ______ or ______ if it has been admitted to transact insurance in this state, and ha submitted the application and paid all the required fees.
1. Corporation
| 2. Partnership
36
An insurance agent license is not required of any officer, director, or employee of an insurer or organizations employed by insurers, provided they are not directly or indirectly involved with the actual ______ of an insurance contract and do not receive any ______.
1. Sale
| 2. Commission
37
An agent's license must be renewed every ______ on the licensee's birthday, and will continue in effect until refused, revoked, or suspended by the Commissioner.
2 Years
38
The Commissioner will send an agent whose license is about to expire a notice of such expiration at least ______ before that day.
30 Days
39
If an agent allowed his or her license to expire, the following reinstatement rules apply:
1. If expired for no more than ______, the license may be renewed by filing a renewal application, paying the renewal fee, and paying an additional fee.
2. If expired for more than ______ but less than ______, the licensee may obtain an ew license by filing a new application, paying the license fee, and paying an additional fee.
3. If expired for more than ______, the license cannot be renewed and the person must go through a complete licensing process as required by Texas.
1. 90 Days
2. 90 Days
3. 1 Year
4. 1 Year
40
Licensees must complete ______ of continuing education every renewal period before the expiration date of the license, unless otherwise exempt. At least 2 of CE hours must cover ______.
1. 24 Hours
| 2. Ethics
41
All CE hours must be completed during the ______; licensees are not allowed to carry over excess hours to the next *______.
Reporting Period
42
If a licensee does not complete the 24 hours of CE before the expiration date of the license, the licensee will have ______ to complete the deficient number of hours and pay a fine of ______ per deficient hour. If these two conditions are not met, the license will be inactivated, and the licensee will have to apply for a new license.
1. 90 Days
| 2. $50
43
At least ______ of all required continuing education hours must be completed in a(n) ______ or a(n) ______ setting approved by the Department.
1. 50%
2. Classroom
3. Classroom Equivalent
44
Producers must maintain records of completion of continuing education courses for ______ from the date of the course completion.
4 Years
45
To be certified as a(n) ______ course, the course must be designed to enhance the student's knowledge, understanding, and professional competence regarding specified subjects for an insurance product. There are also specific requirements for ______ courses, such as Medicare-related or long-term care.
1. Continuing Education
| 2. Product Certification
46
Producers who transact Medicare and Medicare Supplement insurance must complete a(n) ______ Medicare-related product certification course as part of their CE requirement. To retain the specialty certification, an individual must complete at least ______ of department certified Medicare-related products continuing education in all the following reporting periods.
1. 8-Hour
| 2. 4 Hours
47
Resident agents who intend to sell, solicit, or negotiate annuity contracts must complete a(n) ______ training related to annuities prior to any transactions. Producers who continue to sell annuities must complete ______ of annuity related continuing education annually.
1. 4-Hour
| 2. 4 Hours
48
An individual licensed as an agent must notify the Texas Department of Insurance (TDI) on a(n) ______ basis of any of the following:
1. A change of the mailing address.
2. A felony conviction.
3. An administrative action taken against the licensee by a financial or insurance regulator of Texas, another state, or the United States.
Monthly
49
A corporation or partnership must notify the Department of Insurance no later than ______ after the date of:
1. A felony conviction of a licensed agent.
2. The addition or removal of an officer, director, partner, member, or manager.
30 Days
50
An agent must maintain all ______ (including all records relating to customer complaints) separate from the records of any other business of the agent.
Insurance Records
51
The ______ of an agent's license to the insurance department will not negate any offense committed before the ______'s effective date.
Surrender
52
No one whose license has been revoked can apply for another license in Texas for ______.
5 Years
53
In the state of Texas, at least ______ of a licensee's total volume of premiums in a calendar year must be from business other than ______ (from persons other than the applicant and from property other than that on which the applicant controls the placing of insurance through ownership, mortgage, sale, family relationship, or employment).
1. 25%
| 2. Controlled Business
54
Insurers and insurance producers may not engage in any trade practice that is defined as, or determined to be, a(n) ______ or a(n) ______ in the business of insurance.
1. Unfair Method of Competition
| 2. Unfair or Deceptive Act or Practice
55
It is illegal to issue, publish, or circulate any illustration or sales material that is false, misleading, or deceptive as to policy benefits or terms, the payment of dividends, etc. This also refers to oral statements. Committing this illegal act is called ______.
Misrepresentation
56
It is an unfair method of competition or an unfair or deceptive act or practice in the business of insurance to ______ an insurance policy by:
1. Making an untrue statement of material fact.
2. Failing to state a material fact necessary to make other statements made not misleading.
3. Making a statement in a manner that would mislead a reasonably prudent person to a false conclusion of a material fact.
4. Making a material misstatement of law.
5. Failing to disclose a matter as required by law.
Misrepresent
57
Advertisements cannot include any untrue, deceptive, or misleading statements that apply to the business of insurance or anyone who conducts it. The violation of this rule is called ______.
False Advertising
58
It is prohibited to advertise or circulate any materials that are untrue, deceptive, or misleading. False or deceptive ______ specifically includes ______ any of the following:
1. Terms, benefits, conditions, or advantages of any insurance policy.
2. Any dividends to be received from the policy, or previously paid out.
3. Financial condition of any person or the insurance company.
4. The true purpose of an assignment or loan against a policy.
1. Advertising
| 2. Misrepresenting
59
______ occurs when an oral or written statement is made that is intended to injure a person engaged in the insurance business. This also applies to statements that are ______ of the financial condition of any person or a company.
1. Defamation
| 2. Maliciously Critical
60
______ 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.
Rebating
61
______ may include, but are not limited to, the following:
1. Rebates of premiums payable on the policy.
2. Special favors or services.
3. Advantages in the dividends or other benefits.
4. Stocks, bonds, securities, and their dividends or profits.
Rebates
62
The state regulations do not prohibit agents from giving or providing promotional materials, educational items, articles of merchandise, or traditional courtesy commonly extended to consumers valued at ______.
$25 or less
63
It is illegal to be involved in any activity of ______, ______, or ______ that is intended to restrict fair trade or to create a monopoly.
1. Boycott
2. Coercion
3. Intimidation
64
______ is to require, as a condition to a loan, that the applicant purchase insurance from a specific insurer.
Coercion
65
Because agents/producers handle the funds of the insured and the insurer, they have ______. A(n) ______ is someone in a position of trust.
1. Fiduciary Responsibility
| 2. Fiduciary
66
______ in rates, premiums, or policy benefits for persons within the ______ or with the same life expectancy is illegal.
1. Discrimination
| 2. Same Class
67
______ is the intentional misrepresentation of intentional concealment of a material fact used to induce another party to make or refrain from making a contract, or to deceive or cheat a party. ______ is grounds for voiding an insurance contract.
Fraud
68
A(n) ______ insurance act is any illegal act that has been:
1. Committed in the business of insurance.
2. Committed as a part of or in support of an insurance transaction.
3. A part of an attempt to defraud an insurer.
Fraudulent
69
If a person suspects that a fraudulent insurance act has been or is about to be committed in this state, the person must ______ the information in writing to the Insurance Fraud Unit of the Department within ______.
1. Report
| 2. 30 Days
70
The Texas Department of Insurance has a(n) ______ to enforce laws relating to fraudulent insurance acts and develop fraud prevention educational programs.
Insurance Fraud Unit
71
It is ______ for an insurer or agent to pay an unlicensed person for performing the duties of an agent. This includes a rebate of premiums payable, a commission, employment, a contract for service, or any other inducement that is not specified in the insurance policy.
Illegal
72
The Texas Department of Insurance (TDI) may require an insurer to file ______ based on complaints of unfair settlement practice.
Periodic Reports
73
Claims must be settled promptly. No later than the ______ following receipt of a notice of claim, the insurer must do the following:
1. Acknowledge receipt of claim.
2. Begin an investigation of the claim.
3. Request all statements, forms, and items that the insurer believes will be required from the claimant.
15th Business Day
74
No later than the ______ after the insurer receives all requested items, forms, and statements, the insurer must notify the claimant in writing of its acceptance or rejection of the claim.
15th Business Day
75
Once a claim is approved, the insurer must pay the claim within ______ after the insurer notifying the claimant that a claim will be paid.
5 Business Days
76
If an insurer delays payment of a claim later than ______ from receiving the required statements and forms from the insured, the insurer must pay the claim with an additional interest of ______ per year, including any potential attorney's fees as a result of the delay.
1. 60 Days
| 2. 18%
77
The ______ was created to protect policyowners, insured, beneficiaries, and anyone entitled to payment under an insurance policy from the incompetence and insolvency of insurers.
Texas Life and Health Insurance Guaranty Association
78
The ______ is a nonprofit legal entity subject to the applicable provisions of the state Insurance Code and laws and the immediate supervision of the Commissioner.
Texas Life and Health Insurance Guaranty Association
79
The Texas Life and Health Insurance Guaranty Association is funded by its members through ______, and all ______ must be members of the Association.
1. Assessment
| 2. Authorized Insurers
80
It is considered a(n) ______ to advertise protection by the Life and Health Insurance Guaranty Association when selling any product that is covered by the Association.
Unfair Trade Practice
81
Department of Insurance Regulations:
______: Commissioner's term of office
______: Administration, attorney, or CPA experience required before applying to become the Commissioner
______: For agent to request a hearing after receiving a cease and desist order
______: After receiving the request for Commissioner to hold the hearing
______: Commissioner must conduct annual examinations of authorized insurers
1. 2 Years
2. 5 Years
3. 30 Days
4. 10 Days
5. 5 Years
82
Licensing and Appointment Requirements:
______: Minimum required age for licensing
______: Results of the licensing examination are valid
______: Maximum duration of temporary licenses
______: No more than one temporary license issued per person
______: Duration of reporting period
______: After license revocation or denial before another license application can be filed
______: After felony conviction for breach of fiduciary duty before another license application can be filed
______: Duration of agent's license
1. 18
2. 12 Months
3. 90 Days
4. 6 Months
5. 2 Years
6. 5 Years
7. 5 Years
8. 2 Years
83
Miscellaneous Producer Regulations:
______: After license renewal date for agents to pay fees and complete CE before license expires
______: CE to be completed during each reporting period
______: Minimum requirement for ethics training
1. 90 Days
2. 24 Hours
3. 2 Hours
84
Important Dollar Amounts:
______: Maximum agent licensing fee
______: Maximum fine for violating the Insurance Code
______: Fine for willful violation of the Fair Credit Reporting Act
1. $50
2. $25,000
3. $2,500
85
A(n) ______ involves the solicitation, negotiation, sale, and advisement of insurance products.
Insurance Transaction
86
______ insurers are those incorporated in the state of Texas.
Domestic
87
A(n) ______ insurer means an insurer with home office in another state, that has obtained a license from this state's Insurance Commissioner.
Foreign
88
A(n) ______ insurer is a company based in another country that has obtained a Certificate of Authority admitting it to do business in Texas.
Alien
89
An incorporated insurer owned by shareholders is known as a(n) ______.
Stock Insurer
90
______ insurers sell nonparticipating policies and pay dividend to policyholders.
Stock
91
______ insurers issue participating policies, which might pay a dividend.
Mutual
92
______ insurers may pay dividends to policyholders; however, dividends are never guaranteed.
Mutual
93
______ are a return of excess premiums in participating policies.
Dividends
94
A fraternal benefit society provides ______ for members of affiliated lodges, religious organizations, or fraternal organization with a representative form of government.
Insurance Benefits
95
A(n) ______ is a license issued by the Insurance Commissioner to insurers who meet the requirements to do business in a state.
Certificate of Authority
96
The main duty of the ______ is to enforce state insurance rules and regulations for the protection of the public.
Commissioner
97
The Insurance Commissioner issues ______ to insurers, allowing them to legally do business in a specified state.
Certificates of Authority
98
The Commissioner is appointed by the Governor for ______.
2 Years
99
The Commissioner must audit all authorized insurers no less frequently than once every ______.
5 Years
100
The Commissioner is responsible for determining if an insurance company is ______, meaning unable to pay benefits.
Insolvent
101
A(n) ______ may be issued without a prior hearing.
Cease and Desist Order
102
______ become final 31 days after they are received.
Emergency Cease and Desist Orders
103
Upon receiving a cease and desist order from the Commissioner, the aggrieved party may request a hearing within ______ of the order.
30 Days
104
Hearings must be held no more than ______ from a hearing request.
10 Days
105
The Commissioner must provide either enforce or annul the cease and desist order within ______ of a hearing.
30 Days
106
After a hearing, the Commissioner may ______, ______, ______, or ______ a licensee who has violated the Insurance Code.
1. Revoke
2. Suspend
3. Refuse to Renew
4. Place on Probation
107
The maximum penalty for violating a cease and desist order is ______ per violation not to exceed ______ for all violations.
1. $1,000
| 2. $5,000
108
The maximum penalty for violation of the Insurance Code is ______.
$25,000
109
A(n) ______ is a licensed person who sells, solicits, or negotiates insurance contract on behalf of an insurer.
Producer
110
______ only need a license in the state they reside in and any state they conduct insurance business in.
Producers
111
To obtain a license, an applicant must be ______, pass the ______, and pay the necessary ______, as well as provide a complete set of ______ upon request from the Department of Insurance.
1. 18
2. Licensing Exam
3. Licensing Fees
4. Fingerprints
112
A(n) ______ between Texas and other states allow Texas resident producers to obtain nonresident licenses in those states without the need of passing a state exam.
Reciprocal Agreement
113
A(n) ______ is a person who, for a fee, offers advice about the advantages or disadvantages of any insurance policy issued in this state.
Insurance Counselor
114
______ are available for up to 90 days without requiring a written examination.
Temporary Licenses
115
______ may be issued to corporations of eligibility requirements are met.
Agent Licenses
116
Officers, directors, or employees who are not involved in or compensated for the selling of insurance are not required to receive a(n) ______.
Producer License
117
Salaried full-time employees who counsel or provide advice on the purchase of insurance are not required to be ______, as long as they do not receive ______ from sale of insurance.
1. Licensed
| 2. Commissions
118
A(n) ______ may not appoint any person to act as their agent unless they are licensed.
Insurer
119
Insurance licenses expire every ______, on the licensee's birthday.
2 Years
120
applicants whose license has been expired for less than ______ may obtain a new license without exam.
1 Year
121
Agents must earn ______ of continuing education credits every ______, including ______ of ethics.
1. 24 Hours
2. 2 Years
3. 2 Hours
122
Agents must maintain records of completed continuing education courses for at least ______.
4 Years
123
______ must notify the ______ on a monthly basis of any change in address, felony conviction, or adverse administration action taken against them in another state.
1. Producers
| 2. Commissioner
124
Examples of actions which warrant license ______, ______, or ______ include, but are not limited to, felony convictions, intentional misstatements on a license application, and rebates on premiums.
1. Suspension
2. Revocation
3. Probation
125
A licensee whose license has been revoked must wait ______ to file a new license application.
5 Years
126
Agents can only ______ with other agents who are licensed for the same lines of insurance.
Share Commissions
127
Insurers must acknowledge, request statements, forms, and items, and begin an investigation within no more than ______ from a receipt of notice of a claim.
15 Business Days
128
______ is considered to be an unfair trade practice, including making misleading statements, illustrations or advertisements, and/or the guarantee of future dividends.
Misrepresentation
129
Agents may be subject to license suspension or revocation for ______.
Misrepresentation
130
Circulating deceptive sales material to the public is considered to be ______, ______, or ______ advertising, which is an unfair trade practice.
1. False
2. Deceptive
3. Misleading
131
False advertising is a form of ______.
Misrepresentation
132
______ is defined as making oral or written statements that are false or maliciously critical of the financial condition of an insurer or agent.
Defamation
133
______ is defined as the giving of something of value in order to induce the client to purchase an insurance policy, usually part of the premium paid or the commission received.
Rebating
134
Providing promotional materials, education items, articles of merchandise, or traditional courtesy is not considered ______ if the materials are provided to all applicants or insureds and do not exceed ______ in value.
1. Rebating
| 2. $25
135
Combining premiums collected from insurers with an agent's personal funds is considered ______.
Commingling
136
______ is considered to be a restraint of trade and is illegal.
Coercion
137
Refusing to make available coverage for persons of the same class would be considered a(n) ______.
Unfair Discrimination
138
The availability or amount of coverage may not be denied or reduced based upon ______.
Marital Status
139
______ is defined as an intentional misrepresentation or concealment used to induce a party.
Fraud
140
An agent must report suspected insurance fraud to the ______ of the ______ within ______.
1. Insurance Fraud Unit
2. Department of Insurance
3. 30 Days
141
The ______ is designed to protect consumers in the event an insurance company is unable to fulfil contractual obligations as a result of insolvency.
Insurance Guaranty Association
142
All insurers are required to be members of the ______.
Insurance Guaranty Association
143
Insurers are prohibited from making statements that an insurer's policies are guaranteed by the existence of the ______.
Insurance Guaranty Association
