Questions and Answers
Which of the following groups may NOT be insured by a group life insurance policy?
When advertising, an insurance company MUST use its
legal corporate name
Credit Life insurance is
insurance issued on a debtor to cover outstanding loan balances
As a condition for a loan, a bank requires the borrower to purchase credit insurance from a specific company. What is the bank guilty of?
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During a sales presentation for a participating life insurance policy, an agent MUST
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An applicant MUST receive an Outline of Coverage when an application is taken for a(n)
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Which of the following may NOT charge fees for insurance advice?
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An example of an unfair claims settlement practice is
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With whom may an agent legally share commissions?
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The insurance commissioner must give how many days notice prior to holding a hearing regarding an agent's unfair or deceptive practice?
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An example of rebating would be
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Which of the following is NOT included in a life insurance illustration?
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Which of the following actions does the Commissioner of Insurance NOT have the power to conduct?
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In Texas, how long must a policy be in force before an insurance company must pay death benefits for suicide?
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An insurer is NOT required to provide information on fraudulent claims if requested by
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An insurance agent has a fiduciary responsibility to all of the following, EXCEPT
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___ of continuing education MUST be completed in the classroom or classroom equivalent.
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A license may be denied, suspended, or revoked if the licensee
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Which of the following statements about health coverage for newborns is NOT true?
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A plan through the Marketplace may be purchased by
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Every 12-months after the initial enrollment period, an HMO must hold an open enrollment period of
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A foreign insurance company conducting insurance business in Texas
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What is required for an agent whose license has been revoked?
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Which actions will a life insurance company most likely take if an insured dies and it is discovered that the insured's age was misstated on the application?
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A Medicare Supplement policy may be cancelled for which of the following reasons?
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Which of these provisions is NOT required in life insurance policies?
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The phrase 'transacting business' includes
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Which of these is NOT an example of doing insurance business?
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Which Unfair Trade Practice involves an agent telling a prospective client that a policy's dividends are guaranteed?
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To terminate an agent's appointment, an insurance company must
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A domestic insurance company in Texas is considered a company that
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What is the MINIMUM benefit period that must be offered by a Long-Term Care policy?
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An Evidence of Coverage form may be issued by a Health Maintenance Organization (HMO) after being approved by the
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Who owns a stock insurance company?
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Which of the following benefits is NOT required under a group health plan for drug and alcohol treatment?
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Which of the following is a valid reason for an enrollee to be cancelled by a Health Maintenance Organization (HMO) plan?
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An employee is covered under a company group life plan with a $50,000 death benefit. What is the MAXIMUM amount a spouse may be insured for under this program?
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Who is liable when an insured suffers a loss on a policy sold by an agent through an insurer not authorized to conduct business in Texas?
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How long can a cash surrender value payment be deferred by the insurance company under the Nonforfeiture Law?
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Study Notes
Group Life Insurance Restrictions
- Group life insurance policies cannot insure groups made up solely of individuals related by marriage, blood, or legal adoption.
Advertising Regulations
- Insurance companies are required to use their legal corporate name in all advertising materials.
Credit Life Insurance
- Credit Life insurance covers outstanding loan balances for debtors.
Coercion in Insurance
- Requiring borrowers to purchase specific credit insurance ties to coercion and is deemed unethical.
Participating Life Policies
- Agents must clearly inform prospects that dividends on participating life insurance policies are not guaranteed.
Medicare Supplement Policy Requirements
- Applicants must receive an Outline of Coverage when applying for a Medicare Supplement policy.
Insurance Advice Fees
- Legal reserve agents are prohibited from charging fees for providing insurance advice.
Unfair Claims Settlement Practices
- Denial of a claim without explaining the basis for denial qualifies as an unfair claims settlement practice.
Commission Sharing
- Agents may share commissions only with other agents who are licensed in the same line of insurance.
Notice for Hearings
- A minimum of 30 days notice is required by the Insurance Commissioner before holding a hearing on unfair practices.
Rebating Definition
- Rebating refers to the practice of returning part of a premium as an incentive to purchase insurance.
Life Insurance Illustrations
- A life insurance illustration is not required to include the company's mortality table.
Commissioner of Insurance Authority
- The Commissioner of Insurance cannot activate financial reserves of insurance companies.
Suicide Coverage Waiting Period
- Texas law mandates that an insurance policy must be in force for at least two years before death benefits are payable for suicide.
Fraudulent Claims Information
- Insurers are only obligated to provide fraud information to authorized government entities, not to the insured.
Agent's Fiduciary Responsibilities
- An insurance agent has a fiduciary responsibility to the insured and insurer but not to other agents.
Continuing Education Requirements
- A minimum of 50% of continuing education must be completed in a classroom setting.
License Revocation Consequences
- An individual with a revoked license must wait a minimum of five years to reapply for a new license.
Age Misstatement Consequences
- If an insured's age is misstated, the insurer will typically pay the benefits based on what the premiums would cover at the correct age.
Cancellation of Medicare Supplement Policy
- Nonpayment of premium is a valid reason to cancel a Medicare Supplement policy.
Required Provisions in Life Insurance
- Life insurance policies must include various provisions except for Extended Term, which is not required.
Transacting Insurance Business
- Collecting premiums falls under the definition of "transacting business" according to Texas law.
Selling Stock Example
- Selling shares of stock is not classified as an example of doing insurance business.
Misrepresentation in Insurance
- Misrepresentation occurs when an agent incorrectly assures a client that a policy’s dividends are guaranteed.
Termination of Agent Appointment
- To terminate an agent’s appointment, insurance companies must notify the Texas Department of Insurance.
Domestic Insurance Company Definition
- A domestic insurance company is defined as one incorporated under Texas laws.
Long-Term Care Policy Benefits
- A Long-Term Care policy must offer a minimum benefit period of 12 months.
Evidence of Coverage Approval
- Health Maintenance Organizations (HMOs) can issue an Evidence of Coverage form only after it is approved by the Commissioner of Insurance.
Ownership of Stock Insurance Companies
- Stock insurance companies are owned by stockholders.
Group Health Plan Requirements
- Transportation to treatment facilities is not a required benefit under group health plans for drug and alcohol treatment.
Cancellation of HMO Enrollment
- Nonpayment of coverage can lead to cancellation or non-renewal of an enrollee's HMO plan.
Spousal Insurance Limits in Group Life Plans
- The maximum amount of insurance for a spouse under a group life plan is capped at $25,000 when the employee's benefit is $50,000.
Liability for Unauthorized Insurers
- Agents are jointly liable with the unauthorized insurer when a loss occurs on a policy sold through an unauthorized insurer.
Cash Surrender Value Payment Deferral
- Insurers may defer cash surrender value payments for up to six months after a demand for payment is made.
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Test your knowledge on Texas laws and rules regarding group life insurance with these flashcards. Each card presents key concepts and definitions you need to understand the regulations governing insurance policies in Texas.
