Chapter 10: Texas Statutes and Rules Common to Life and Health Insurance Flashcards
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
Insurance Transaction
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.
Business of Insurance
The ______ (or ______) is the company or organization that issues a policy of insurance.
Insurer (Principal)
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.
- Location of Incorporation (Domicile)
2. Certificate of Authority
A(n) ______ refers to the location where an insurer is incorporated, not necessarily where the insurer conducts business.
Domicile
A(n) ______ insurer is an insurance company that is incorporated in this state.
Domestic
A(n) ______ insurer is an insurance company that is incorporated in another state, the District of Columbia, or a territorial possession.
Foreign
A(n) ______ insurer is an insurance company that is incorporated outside the United States.
Alien
______ are owned by stockholders who provide the capital necessary to establish and operate the insurance company and who share in any profits or losses.
Stock Companies
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.
Nonparticipating
______ are owned by the policyowners and issue participating policies.
Mutual Companies
With ______ policies, policyowners are entitled to dividends, which, in the case of mutual companies, are a return of excess premiums and are, therefore, ______.
- Participating
2. Nontaxable
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.
Fraternal Benefit Society
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.
Certificate of Authority
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.
- Authorized
2. Admitted
Insurers who have not been approved to do business in the state are considered ______ or ______.
- Unauthorized
2. Nonadmitted
Insurers must obtain a(n) ______ prior to transacting business in Texas. The certificate remains in effect until it is revoked, canceled, or suspended.
Certificate of Authority
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.
- Commissioner
- 5 Years
- 2-Year
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.
Commissioner
The Commissioner must examine all authorized insurers at least once ______. The cost of examinations is the responsibility of the insurance company being examined.
Every 5 Years
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).
- Statement of Charges
2. Hold a Hearing
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.
Emergency Cease and Desist Order
Unless the person in violation requests a hearing, emergency cease and desist orders are final ______ from the date they are received.
31 Days
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.
10th Day
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
If a person refuses to comply with a subpoena, the court may punish the person’s failure to obey as ______.
Contempt
A person who violates a cease and desist order of the Commissioner will be subject to an administrative penalty of:
- ______ for each violation
- ______ for all violations.
- $1,000
2. $5,000
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.
- 14 Days
- Right to a Hearing
- 20 Days
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
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
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
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
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.
- 90 Days
- 40-Hour
- 14 Days
Temporary licenses are ______ and cannot be issued more than ______ in any ______ period to the same applicant.
- Not Renewable
- Once
- 6-Month
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.
- Corporation
2. Partnership
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 ______.
- Sale
2. Commission
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
The Commissioner will send an agent whose license is about to expire a notice of such expiration at least ______ before that day.
30 Days
If an agent allowed his or her license to expire, the following reinstatement rules apply:
- 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.
- 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.
- If expired for more than ______, the license cannot be renewed and the person must go through a complete licensing process as required by Texas.
- 90 Days
- 90 Days
- 1 Year
- 1 Year
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 ______.
- 24 Hours
2. Ethics
All CE hours must be completed during the ______; licensees are not allowed to carry over excess hours to the next *______.
Reporting Period
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.
- 90 Days
2. $50
At least ______ of all required continuing education hours must be completed in a(n) ______ or a(n) ______ setting approved by the Department.
- 50%
- Classroom
- Classroom Equivalent
Producers must maintain records of completion of continuing education courses for ______ from the date of the course completion.
4 Years
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.
- Continuing Education
2. Product Certification
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.
- 8-Hour
2. 4 Hours
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.
- 4-Hour
2. 4 Hours
An individual licensed as an agent must notify the Texas Department of Insurance (TDI) on a(n) ______ basis of any of the following:
- A change of the mailing address.
- A felony conviction.
- An administrative action taken against the licensee by a financial or insurance regulator of Texas, another state, or the United States.
Monthly
A corporation or partnership must notify the Department of Insurance no later than ______ after the date of:
- A felony conviction of a licensed agent.
- The addition or removal of an officer, director, partner, member, or manager.
30 Days
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
The ______ of an agent’s license to the insurance department will not negate any offense committed before the ______’s effective date.
Surrender
No one whose license has been revoked can apply for another license in Texas for ______.
5 Years
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).
- 25%
2. Controlled Business
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.
- Unfair Method of Competition
2. Unfair or Deceptive Act or Practice
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
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:
- Making an untrue statement of material fact.
- Failing to state a material fact necessary to make other statements made not misleading.
- Making a statement in a manner that would mislead a reasonably prudent person to a false conclusion of a material fact.
- Making a material misstatement of law.
- Failing to disclose a matter as required by law.
Misrepresent
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
