Chapter 11: Texas Statutes and Rules Pertinent to Life Insurance Only Flashcards
Advertising must be ______ and not ______ the facts.
- Accurate
2. Misrepresent
The ______ whose policies are advertised is ______ for all its advertisements, regardless of who wrote, created, presented, or distributed them.
- Insurer
2. Responsible
Insurers marketing policies in Texas must maintain a system of control over the content, form, and method of dissemination of all ______ on their policies.
Advertisements
Before using an advertisement, an agent must file its contents with the home office of the ______, and receive ______.
- Insurer
2. Written Approval
The term ______ means a presentation or depiction that includes nonguaranteed elements of a life insurance policy over a period of years.
Illustration
The purpose of the life insurance illustrations ______ is to establish standards for formats, content, and disclosure of illustrations that will protect consumers and foster consumer education.
Regulation
______ must distinguish between guaranteed and projected amounts, and clearly disclose the following information:
- ______ - must clearly state that it is not part of the insurance contract.
- ______ - those values that are not guaranteed must be identified as such.
- Illustrations
- Not Part of Contract
- Values not Guaranteed
______ method considers the time value of money (or investment return on the insurance premium had it been invested elsewhere) by applying an interest adjustment to yearly premiums and dividends.
Interest-Adjusted Net Cost
Two versions of the interest-adjusted method are the ______ and the ______.
- Surrender Cost Index
2. Net Payment Cost Index
The _______ is the rate of return that must be earned on a hypothetical “side fund” in a buy-term-invest-the-difference plan, so that the value of the side fund will equal the illustrated cash surrender value of the higher-premium policy at a designated point in time.
Comparative Interest Rate (CIR)
The higher the comparative interest rate (CIR), the ______ expensive the higher-premium policy (e.g., whole life) relative to the alternative plan (e.g., term plus side fund).
Less
In Texas, all statements of the insured are deemed ______ and not ______.
- Representations
2. Warranties
In Texas, a policyowner may request ______ of a lapsed policy within ______ of such a lapse by paying the back premiums, with interest, and proving insurability.
- Reinstatement
2. 3 Years
In Texas, upon receipt of a written proof of death and the right of the claimant to the proceeds, the insurer must pay death claims within ______.
2 Months
In Texas, if a buyer’s guide and disclosure document are not provided to the applicant at or before the time of application, the applicant must be allowed a(n) ______ of at least ______ during which the applicant may return the policy for an unconditional refund without penalty.
- Free-Look Period
2. 15 Calendar Days
In Texas, purchasers of a fixed annuity must be provided a(n) ______ of at least ______, in which premiums and contract fees must be returned to the applicant.
- Free-Look Period
2. 20 Calendar Days
In Texas, a consumer must be provided a(n) ______ of at least ______ for the payment of each premium during which the policy remains in force.
- Grace Period
2. One Month
In Texas, a life insurance policy must allow the policyowner to take out a(n) ______ from the policy’s cash value as long as:
- The policy is in force.
- The premiums have been paid for at least 3 full years.
- The policy is properly assigned.
Policy Loan
In Texas, a life insurance policy may not include a provision that limits the time during which a lawsuit may be filed to a period of less than ______ after the cause of action.
2 Years
In Texas, a life insurance policy may not contain a provision under which the policy is issued on a date more than ______ before the date of the application (______) if it causes the insured to rate at an age that is younger than the insured’s age on the date of the application).
- 6 Months
2. Backdating
In Texas, the life insurance policy may not contain a provision for a settlement at maturity that is less than the ______ of the policy plus the amount of any dividend additions to the policy minus any debt owed to the company and any premium that may be deducted from the settlement.
Face Amount
In Texas, nonforfeiture benefits are built into the policy and provide a guarantee that they cannot be ______ by the policyowner.
Forfeited
In Texas, all insurers must offer at least one of the following nonforfeiture options:
- ______
- ______
- ______
- Reduced Paid-Up
- Extended Term
- Shortened Benefit Period
In Texas, upon surrender of a life insurance policy no later than ______ after the due date of a premium payment, the company will pay a(n) ______ (instead of a paid-up nonforfeiture benefit) if the premiums have been paid for at least 3 full years for ordinary life insurance policies, or 5 years for industrial life insurance.
- 60 Days
2. Cash Surrender Value
A group policy issued in Texas must cover at least ______ on the date of its issue. If the insured employees do not pay any part of the premium, the policy must insure all eligible employees.
2 Employees
In Texas, eligible individuals who have been covered under a group policy for at least ______ may apply for an individual policy (without evidence of ______) and pay the first premium to the insurer within ______ after the date of termination.
- 5 Years
- Insurability
- 31 Days
In Texas, the amount of the individual policy coverage after termination cannot exceed the lesser of the amount of the ______, or ______.
- Prior Group Coverage
2. $2,000
In Texas, the insured may ______ all rights and benefits under the policy to any individual, firm, corporation, association, trust, or other legal entity, other than the insured’s employer.
Assign
In group insurance, if the insured participant misstated his or her age, the insurer will adjust the ______ and/or the ______ to the correct age (in individual insurance only the ______ is adjusted).
- Premium
- Benefit
- Benefit
Group life insurance policies are prohibited from including any provision that reduces the time period during which an action may be started under the policy to less than ______.
2 Years
______ is a special type of coverage written to insure the life of the debtor and pay off the balance of a loan in the event of the death of the debtor.
Credit Insurance
Credit life is usually written as ______, and it may be written as an individual policy or as a group plan.
Decreasing Term Insurance
With credit insurance, the ______ is the owner and the beneficiary of the policy although the premiums are generally paid by the ______ (or the ______).
- Creditor
- Borrower
- Debtor
______ cannot pay out more than the balance of the debt so that there is no financial incentive for the death of the insured.
Credit Life Insurance
______ cannot pay out more than the balance of the debt.
Credit Life Insurance
______ means any transaction in which new life insurance or a new annuity is purchased and, as a result, the existing life insurance or annuity has been or will be any of the following:
- Lapsed, forfeited, surrendered, or otherwise terminated.
- Reissued with any reduction in cash value.
- Reduced in value by the use of nonforfeiture benefits.
- Amended so as to affect a reduction in benefits.
Replacement
With replacement, the ______ is the company that issues the new policy and the ______ is the company whose policy is being replaced.
- Replacing Insurer
2. Existing Insurer
The replacing producer must present to the applicant a(n) ______ that is signed by both the applicant and the producer. A copy must be left with the applicant.
Notice Regarding Replacement
Policy Replacement
Existing policy lapses or terminates: ______
Existing policy reissued as: ______
Existing policy converted to: ______ or ______
- New Policy
- Reduction in Cash Value
- Reduced Paid-Up
- Extended Term Insurance
Texas Life Insurance Policy Provisions
Free-Look Period: \_\_\_\_\_\_ Grace Period: \_\_\_\_\_\_ Policy Loans: \_\_\_\_\_\_ Backdating: \_\_\_\_\_\_ Legal Action: \_\_\_\_\_\_ Payment of Claims: \_\_\_\_\_\_
- 15 Calendar Days
- One Month
- After 3 Full Years in Cash Value Policies
- 6 Months
- Within 2 Years After Loss
- Within 2 Months of Claim
Texas Group Life Insurance Policy Provisions
Incontestability Period: ______
Grace Period: ______
Misstatement of Age: ______
- 2 Years
- 31 Days
- Insurer adjusts premium AND benefits
What does this describe? ______
- Third Party Contracts.
- Viator receives a percentage of the policy’s face amount.
- May be rescinded within ______ of the payment.
- Viatical Settlements
2. 15 Days
Insurers are responsible for the content of their ______, regardless of who created them.
Advertisements
The name of the insurer, agency, or agent must be clearly identified in all ______.
Advertisements
______ is defined as a presentation or depiction which includes nonguaranteed elements of a policy.
Illustrations
______ cannot represent the policy as anything other than life insurance.
Illustrations
The ______ is the rate of return that must be earned on a hypothetical “side fund” in a buy-term-invest-the-difference plan, so that the value of the side fund will equal the illustrated cash surrender value of the higher-premium policy at a designated point in time.
Comparative Interest Rate (CIR)
Newly issued life insurance policies are contestable for ______ from the date of issue, and incontestable thereafter.
2 Years
Both individual and group life insurance policies must contain a(n) ______ ______, during which the death benefit is payable.
- 31-day
2. Grace Period
A policyowner has the right to borrow ______ from a policy, as long as the policy has been in force for ______ and no premium defaults have occured.
- Cash Value
2. 3 Years
If a buyer’s guide and disclosure are not provided before the time of application, the applicant must be allowed a(n) ______ ______.
- 15-Day
2. Free-Look Period
______ may rescind a viatical settlement within ______ of receiving proceeds.
- Viators
2. 15 Days
Life insurance policies cannot limit the time in which an insured may file a lawsuit against the insurer to less than ______ after the cause of action.
2 Years
Policies cannot be ______ for more than ______ before the date of the application.
- Backdated
2. 6 Months
Life insurance policies must provide that in the event of the policy owner’s default in premium payments, the insurer will allow a paid-up ______ and that a cash surrender benefit may be paid in lieu of the ______.
Nonforfeiture Benefit
With the surrender of an ordinary life policy, an insurer must pay a cash surrender value no later than ______ after the premium due date, as long as premiums have been paid for ______.
- 60 Days
2. 3 Full Years
Group life coverage must include all ______.
Eligible Employees
Group life requires a minimum of ______ as of date of issue.
2 Employees
If the group policy is terminated, anyone affected who has been insured for at least ______ may convert to an individual policy without evidence of ______.
- 5 Years
2. Insurability
Upon termination of employment, group term life insurance must be convertible for ______ to an individual life insurance policy, without evidence of ______, at the insured’s ______.
- 31 Days
- Insurability
- Current Age
If an insured misstates his or her age on an application for group life insurance the ______ of the policy will be adjusted to what the premium paid would have purchased if the correct age was known.
Face Amount
Coverage under a group life policy may be extended to the insured’s ______ and eligible ______.
- Spouse
2. Children
Most credit life policies are written as ______.
Decreasing Term
The ______ is the owner and beneficiary of the credit life insurance policy.
Creditor
______ cannot pay more than the balance of debt.
Credit Life
______ cannot require a(n) ______ to buy insurance through a specific insurer.
- Creditors
2. Debtor
______ is defined as any transaction in which a new life insurance policy or annuity is purchased, while an existing policy has been forfeited, lapsed, surrendered, or terminated.
Replacement
A(n) ______ is the insurance company who issues a new policy.
Replacing Insurer
A(n) ______ is an insurance company whose policy is replaced.
Existing Insurer
Agents must give applicants a(n) ______ at time of application for a replacement.
Notice Regarding Replacement
Both the ______ and the ______ must sign the Notice Regarding Replacement.
- Agent
2. Customer
______ must produce a list of policies being replaced and send a written communication to the ______ of the insured’s intent to replace.
- Replacing Insurers
2. Existing Insurer
