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Life & Health Insurance - General & Texas Specific > Chapter 11: Texas Statutes and Rules Pertinent to Life Insurance Only > Flashcards

Chapter 11: Texas Statutes and Rules Pertinent to Life Insurance Only Flashcards

1
Q

Advertising must be ______ and not ______ the facts.

A
  1. Accurate

2. Misrepresent

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2
Q

The ______ whose policies are advertised is ______ for all its advertisements, regardless of who wrote, created, presented, or distributed them.

A
  1. Insurer

2. Responsible

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3
Q

Insurers marketing policies in Texas must maintain a system of control over the content, form, and method of dissemination of all ______ on their policies.

A

Advertisements

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4
Q

Before using an advertisement, an agent must file its contents with the home office of the ______, and receive ______.

A
  1. Insurer

2. Written Approval

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5
Q

The term ______ means a presentation or depiction that includes nonguaranteed elements of a life insurance policy over a period of years.

A

Illustration

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6
Q

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.

A

Regulation

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7
Q

______ must distinguish between guaranteed and projected amounts, and clearly disclose the following information:

  1. ______ - must clearly state that it is not part of the insurance contract.
  2. ______ - those values that are not guaranteed must be identified as such.
A
  1. Illustrations
  2. Not Part of Contract
  3. Values not Guaranteed
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8
Q

______ 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.

A

Interest-Adjusted Net Cost

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9
Q

Two versions of the interest-adjusted method are the ______ and the ______.

A
  1. Surrender Cost Index

2. Net Payment Cost Index

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10
Q

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.

A

Comparative Interest Rate (CIR)

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11
Q

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).

A

Less

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12
Q

In Texas, all statements of the insured are deemed ______ and not ______.

A
  1. Representations

2. Warranties

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13
Q

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.

A
  1. Reinstatement

2. 3 Years

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14
Q

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 ______.

A

2 Months

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15
Q

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.

A
  1. Free-Look Period

2. 15 Calendar Days

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16
Q

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.

A
  1. Free-Look Period

2. 20 Calendar Days

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17
Q

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.

A
  1. Grace Period

2. One Month

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18
Q

In Texas, a life insurance policy must allow the policyowner to take out a(n) ______ from the policy’s cash value as long as:

  1. The policy is in force.
  2. The premiums have been paid for at least 3 full years.
  3. The policy is properly assigned.
A

Policy Loan

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19
Q

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.

A

2 Years

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20
Q

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).

A
  1. 6 Months

2. Backdating

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21
Q

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.

A

Face Amount

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22
Q

In Texas, nonforfeiture benefits are built into the policy and provide a guarantee that they cannot be ______ by the policyowner.

A

Forfeited

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23
Q

In Texas, all insurers must offer at least one of the following nonforfeiture options:

  1. ______
  2. ______
  3. ______
A
  1. Reduced Paid-Up
  2. Extended Term
  3. Shortened Benefit Period
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24
Q

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.

A
  1. 60 Days

2. Cash Surrender Value

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25
Q

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.

A

2 Employees

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26
Q

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.

A
  1. 5 Years
  2. Insurability
  3. 31 Days
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27
Q

In Texas, the amount of the individual policy coverage after termination cannot exceed the lesser of the amount of the ______, or ______.

A
  1. Prior Group Coverage

2. $2,000

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28
Q

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.

A

Assign

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29
Q

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).

A
  1. Premium
  2. Benefit
  3. Benefit
30
Q

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 ______.

A

2 Years

31
Q

______ 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.

A

Credit Insurance

32
Q

Credit life is usually written as ______, and it may be written as an individual policy or as a group plan.

A

Decreasing Term Insurance

33
Q

With credit insurance, the ______ is the owner and the beneficiary of the policy although the premiums are generally paid by the ______ (or the ______).

A
  1. Creditor
  2. Borrower
  3. Debtor
34
Q

______ cannot pay out more than the balance of the debt so that there is no financial incentive for the death of the insured.

A

Credit Life Insurance

35
Q

______ cannot pay out more than the balance of the debt.

A

Credit Life Insurance

36
Q

______ 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:

  1. Lapsed, forfeited, surrendered, or otherwise terminated.
  2. Reissued with any reduction in cash value.
  3. Reduced in value by the use of nonforfeiture benefits.
  4. Amended so as to affect a reduction in benefits.
A

Replacement

37
Q

With replacement, the ______ is the company that issues the new policy and the ______ is the company whose policy is being replaced.

A
  1. Replacing Insurer

2. Existing Insurer

38
Q

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.

A

Notice Regarding Replacement

39
Q

Policy Replacement

Existing policy lapses or terminates: ______

Existing policy reissued as: ______

Existing policy converted to: ______ or ______

A
  1. New Policy
  2. Reduction in Cash Value
  3. Reduced Paid-Up
  4. Extended Term Insurance
40
Q

Texas Life Insurance Policy Provisions

Free-Look Period: \_\_\_\_\_\_
Grace Period: \_\_\_\_\_\_
Policy Loans: \_\_\_\_\_\_
Backdating: \_\_\_\_\_\_
Legal Action: \_\_\_\_\_\_
Payment of Claims: \_\_\_\_\_\_
A
  1. 15 Calendar Days
  2. One Month
  3. After 3 Full Years in Cash Value Policies
  4. 6 Months
  5. Within 2 Years After Loss
  6. Within 2 Months of Claim
41
Q

Texas Group Life Insurance Policy Provisions

Incontestability Period: ______
Grace Period: ______
Misstatement of Age: ______

A
  1. 2 Years
  2. 31 Days
  3. Insurer adjusts premium AND benefits
42
Q

What does this describe? ______

  1. Third Party Contracts.
  2. Viator receives a percentage of the policy’s face amount.
  3. May be rescinded within ______ of the payment.
A
  1. Viatical Settlements

2. 15 Days

43
Q

Insurers are responsible for the content of their ______, regardless of who created them.

A

Advertisements

44
Q

The name of the insurer, agency, or agent must be clearly identified in all ______.

A

Advertisements

45
Q

______ is defined as a presentation or depiction which includes nonguaranteed elements of a policy.

A

Illustrations

46
Q

______ cannot represent the policy as anything other than life insurance.

A

Illustrations

47
Q

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.

A

Comparative Interest Rate (CIR)

48
Q

Newly issued life insurance policies are contestable for ______ from the date of issue, and incontestable thereafter.

A

2 Years

49
Q

Both individual and group life insurance policies must contain a(n) ______ ______, during which the death benefit is payable.

A
  1. 31-day

2. Grace Period

50
Q

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.

A
  1. Cash Value

2. 3 Years

51
Q

If a buyer’s guide and disclosure are not provided before the time of application, the applicant must be allowed a(n) ______ ______.

A
  1. 15-Day

2. Free-Look Period

52
Q

______ may rescind a viatical settlement within ______ of receiving proceeds.

A
  1. Viators

2. 15 Days

53
Q

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.

A

2 Years

54
Q

Policies cannot be ______ for more than ______ before the date of the application.

A
  1. Backdated

2. 6 Months

55
Q

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 ______.

A

Nonforfeiture Benefit

56
Q

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 ______.

A
  1. 60 Days

2. 3 Full Years

57
Q

Group life coverage must include all ______.

A

Eligible Employees

58
Q

Group life requires a minimum of ______ as of date of issue.

A

2 Employees

59
Q

If the group policy is terminated, anyone affected who has been insured for at least ______ may convert to an individual policy without evidence of ______.

A
  1. 5 Years

2. Insurability

60
Q

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 ______.

A
  1. 31 Days
  2. Insurability
  3. Current Age
61
Q

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.

A

Face Amount

62
Q

Coverage under a group life policy may be extended to the insured’s ______ and eligible ______.

A
  1. Spouse

2. Children

63
Q

Most credit life policies are written as ______.

A

Decreasing Term

64
Q

The ______ is the owner and beneficiary of the credit life insurance policy.

A

Creditor

65
Q

______ cannot pay more than the balance of debt.

A

Credit Life

66
Q

______ cannot require a(n) ______ to buy insurance through a specific insurer.

A
  1. Creditors

2. Debtor

67
Q

______ 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.

A

Replacement

68
Q

A(n) ______ is the insurance company who issues a new policy.

A

Replacing Insurer

69
Q

A(n) ______ is an insurance company whose policy is replaced.

A

Existing Insurer

70
Q

Agents must give applicants a(n) ______ at time of application for a replacement.

A

Notice Regarding Replacement

71
Q

Both the ______ and the ______ must sign the Notice Regarding Replacement.

A
  1. Agent

2. Customer

72
Q

______ must produce a list of policies being replaced and send a written communication to the ______ of the insured’s intent to replace.

A
  1. Replacing Insurers

2. Existing Insurer

Life & Health Insurance - General & Texas Specific (15 decks)

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