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TexasInsurance > TXInsurance > Flashcards

TXInsurance Flashcards

1
Q

Which of the following groups may NOT be insured by a group Life insurance policy?

Employees
Supervisors
Administrators
Individuals who are related by blood
A

Individuals who are related by blood

A group Life insurance policy may NOT insure groups consisting exclusively of persons who are related by marriage, blood or legal adoption

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2
Q

Which of following is a valid reason for an enrollee to be cancelled by a Health Maintenance Organization (HMO) plan?

Nonpayment of Coverage
Exceeding a specified number of claims
Starting a cigarette habit
Drinking alcohol
A

Nonpayment of Coverage

An enrollee of a Health Maintenance Organization (HMO) may be cancelled or nonrenewed for failure to pay for coverage

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3
Q

An example of rebating would be

returning a portion of a premium as inducement 
    to purchase insurance

advertising cheaper insurance rates than 
    competitors 

a mutual insurance company paying dividends to 
    its policyowners

an offer of rated insurance coverage
A

returning a portion of a premium as inducement to purchase insurance

Returning a portion of a premium as inducement to purchase insurance is a example of rebating

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4
Q

Which Unfair Trade Practice involves an agent telling a prospective client that a policy’s dividends are guaranteed?

Twisting
Rebating
Misrepresentation
Sliding
A

Misrepresentation

An agent who tells a client that dividends are guaranteed may be guilty of misrepresentation.

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5
Q

An insurance agent has a fiduciary responsibility to all of the following EXCEPT

applicants
insureds
insurers 
other agents
A

other agents

Because the agent handles money of the insured and insurer, he/she has a fiduciary responsibility.

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6
Q

To terminate an agent’s appointment, an insurance company must

send terminated notice to the Texas Department 
    of Insurance 

send termination notice to Governor

pay a termination fee

request a hearing before the Commissioner of 
    Insurance
A

send terminated notice to the Texas Department of Insurance

An insurance company that terminates an agent’s appointment must send notice of termination to the Texas Department of Insurance.

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7
Q

An insurance company organization under New York laws and licensed to do business in Texas is considered a(n)

reciprocal company
foreign company
alien company
export company
A

foreign company

In this situation, the company is considered to be a foreign company in Texas.

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8
Q

Which of these provisions is NOT required in life insurance policies?

Free look
Grace Period 
Extended Term
Entire contract
A

Extended Term

All of these provisions must be included in life insurance policies EXCEPT “Extended Term”.

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9
Q

During a sales presentation for a participating policy, an agent MUST

make a prospect understand that dividends are 
    NOT guaranteed

make a prospect understand that dividends ARE 
    guaranteed

offer to the prospect a minimum return of 
    investment

offer to the prospect a portion of the 
    commissions
A

make a prospect understand that dividends are NOT guaranteed

During a sales presentation for a participating life insurance policy, an agent MUST include a statement that dividends are not guaranteed.

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10
Q

Which of the following is a requirement for obtaining a Texas insurance agent’s license?

be honest, trustworthy, and reliable 
be at least 21 years old
be a college graduate
be a high school graduate
A

be honest, trustworthy, and reliable

An applicant for an agent’s license must be honest, trustworthy and reliable.

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11
Q

In Texas, how long must a policy be in force before an insurance company must pay death benefits for suicide?

6 months
1 year
2 years
3 years
A

2 years

Under the Texas insurance code, an insurance company must pay death benefits for suicide if the policy has been in force for a MINIMUM of two years.

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12
Q

A plan through the Marketplace may be purchased by

everyone over 18 years old
any legal resident (except those imprisoned)
any legal resident (including those imprisoned)
only those who might be eligible for Medicare
A

any legal resident (except those imprisoned)

Any legal resident, except those incarcerated, can purchase a plan through the Marketplace.

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13
Q

The Insurance Commissioner must give how many days motice prior to holding a hearing regarding an agent’s unfair or deceptive practice?

5
    7
    10
    30
A

30

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14
Q

How long does an insurance company appointment remain in force?

One year
Two years
Three years
Until terminated
A

Until terminated

Insurance company agent appointment remain in force until terminated or withdrawn

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15
Q

How long can a cash surrender value payment be deferred by the insurance company under the Nonforfeiture Law?

1 month
4 months
6 months
9 months
A

6 months

A company shall reserve the right to defer payment of any cash surrender value for a period of six months after demand for payment of the cash surrender value and surrender of the policy.

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16
Q

What is the MINIMUM benefit period that must be offered by a Long-Term Care policy?

12 months
18 months
36 months
48 months
A

12 months

A Long-Term Care policy mut offer a MINIMUM benefit period of 12 months.

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17
Q

A Medicare Supplement policy may be cancelled for which of the following reasons?

An insurer’s claims were higher than expected for 
    the fiscal year
The premium has not been paid by the insured
The insurer’s AM Best rating has dropped
The insured’s credit rating has dropped 
    significantly
A

The premium has not been paid by the insured

Failing to pay the premium would cause a Medicare Supplement policy to be cancelled.

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18
Q

Which of the following actions does the Commissioner of Insurance NOT have the power to conduct?

Active insurance companies’ financial reserves
Administer the worker’s compensation system in 
    this state
Issue insurance licenses
Regulate the business of insurance in this state
A

Active insurance companies’ financial reserves

The Commissioner of Insurance has the power and duty to take all of these actions EXCEPT activate insurance companies’ financial reserves.

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19
Q

The phrase ‘transacting business” includes

obtaining an insurance license
collecting premiums
setting insurance rates
advertising a new product in a trade journal
A

collecting premiums

Under Texas insurance law, the term “transacting business” includes collecting premiums.

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20
Q

A license may be denied, suspended, or revoked if the license

engages in replacement of a existing policy
is found guilty of misrepresenting in obtaining the 
    license
files for bankruptcy
fails to meet a sales quota
A

is found guilty of misrepresenting in obtaining the license

The Commissioner of insurance may suspend, revoke, or refuse to renew the license of an agent who is guilty of misrepresentation or fraud in obtaining the license.

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21
Q

A new agent must complete at LEAST _____ hours of continuing education within 24 months of initial licensure.

12
16
20
24
A

24

A newly licensed agent must complete a MINIMUM of 24 hours of continuing education within 24 months after initial licensure.

22
Q

Which of the following benefits is NOT required under a group health plan for drug and alcohol treatment?

Inpatient treatment
Transportation to and from a treatment facility
Group therapy
Outpatient treatment
A

Transportation to and from a treatment facility

Benefits for drug and alcohol treatment under a group health policy must include all of these services EXECPT transportation to and from a treatment facility

23
Q

What is required for an agent whose license has been revoked?

Wait at least five years before applying for a new 
    license 
Wait at least ten years before applying for a new 
    license
Submit a letter of apology to the Insurance 
    Commissioner along with a $500 fine.
Obtain a personal $500,000 E&O policy
A

Wait at least five years before applying for a new license

An individual whose license has been denied or revoked cannot apply again for an agent’s license for at least 5 years.

24
Q

A temporary agent’s license issued by the Commissioner of Insurance is valid for up to ____ days.

60
90
120
180
A

90

The Commissioner may issue a temporary insurance agent license for 90 days to an applicant for license who is being considered for appointment as an agent.

25
Q

ABC Insurance Company is actively engaging in boycott, coercion, and intimidation that results in the unreasonable restraint of trade. ABC is committing a prohibited act under Texas insurance laws covering

twisting
false advertising
rebating
unfair methods of competition
A

unfair methods of competition

Boycott, coercion, and intimidation that result in the unreasonable restraint of trade are prohibited under the Texas Insurance Code covering unfair methods of competition.

26
Q

Which of these is NOT an example of doing insurance business?

Selling shares of stock
Receiving an insurance application
Collecting insurance premium
Delivering an insurance policy
A

Selling shares of stock

All of these are examples of doing insurance business EXCEPT selling shares of stock.

27
Q

Which of the following is a valid reason for an enrollee to be cancelled by a Health Maintenance Organization (HMO) plan?

Nonpayment of coverage
Exceeding a specified number of claims
Starting a cigarette habit
Drinking alcohol
A

Nonpayment of coverage

An enrollee of a Health Maintenance Organization (HMO) may be cancelled or nonrenewed for coverage

28
Q

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?

The insured
The agent and the insured
The agent and the company
The Commissioner of insurance
A

The agent and the company

Any agent that sells a n insurance policy for an unauthorized insurer runs the risk of being responsible for unpaid claims if the unauthorized insurer does not pay.

29
Q

If an insured’s age was misstated on a life insurance contract, the Misstatement of Age provision requires that any death benefit payable would be

	reduced by 50%
	an amount that the premiums paid would have 
        purchased at the current age
	contested in front of an arbitrator
	forfeited
A

an amount that the premiums paid would have purchased at the current age

The Misstatement of Age provision requires that if the age of the insured is misstated, then any amount payable is an amount that the premiums paid would have purchased at the current age or ages.

30
Q

An insurer is NOT required to provide information on fraudulent claims if requested by

the Texas department of Insurance
the Attorney General
the Commissioner
an insured
A

an insured

On the written request of an authorized government entity (such as the Commissioner, Attorney General, or a local law enforcement agency), an insurer will provide to that entity any relevant information or material relating to a fraudulent matter under investigation.

31
Q

Why would the Insurance Commissioner examine the records of an insurance company?

To determine the solvency of the company
To set insurance rates for the company
To assist in underwriting
To assess the company’s value
A

To determine the solvency of the company

The Insurance Commissioner may examine the records of an insurance company in order to determine the solvency of the company.

32
Q

An Evidence of Coverage form may be issued by a Health Maintenance Organization (HMO) after being approved by the

Attorney General
NAIC	
 	Commissioner
National HMO Association
A

Commissioner

A Health Maintenance Organization (HMO) may issue an Evidenace of Coverage form after it has been approved by the Commissioner of Insurance.

33
Q

An application MUST receive an Outline of Coverage when an application is taken for a(n)

Endowment
   Annuity
   Medicare Supplement policy
   University life policy
A

Medicare Supplement policy

An agent MUST give a prospective insured an Outline of Coverage when taking an application for a Medicare Supplement policy.

34
Q

An example of false advertising would be

Paid testimonials from celebrity endorsements

An insurer exaggerating its dividends in a 
    magazine advertisement

A producer spending mor than $25on marketing 
    gifts for a client

An insurer advertising in an insurance trade 
    journal
A

An insurer exaggerating its dividends in a magazine advertisement

An insurance company may be judged guilty of false advertising if it exaggerates its dividends in a magazine advertisement.

35
Q

Who owns a stock insurance company?

Board of Directors
Stockholders
Agents
 	Policyowners
A

Stockholders

A stock insurance company is owned by it’s stockholders.

36
Q

Credit life insurance is

illegal in this state

insurance issued on a debtor to cover 
    outstanding loan balances

not regulated in this state

insurance issued to creditor to cover outstanding 
    loan balances
A

insurance issued on a debtor to cover outstanding loan balances

Credit Life insurance can be best described as insurance issued on a debtor to cover outstanding loan balances.

37
Q

Which of the following is NOT a required provision in group life policies?

Free look
Incontestable
Conversion
Right to Loan
A

Right to Loan

Group life policies MUST include all of the following provisions EXCEPT Right to Loan Proceeds.

38
Q

Which of the following statements about health coverage for newborns is NOT true?

Coverage includes treatment of congenital 
    defects

Coverage continues after the first 31 days upon 
    payment of first premium

Coverage is limited to only congenital defects

Coverage begins at moment of birth
A

Coverage is limited to only congenital defects

All of these statements about health coverage for newborns are correct EXCEPT “coverage is limited to congenital defects”.

39
Q

Every 12-months after the initial enrollment period, an HMO must hold an open enrollment period of

10 days
31 days
45 days
60 days
A

31 days

Fully insured group health plans and HMO’s must have at least one 31-day open enrollment period each year.

40
Q

Which of these is NOT an example of doing insurance business?

Selling shares of stock
Receiving an insurance application
Collecting insurance premium
Delivering an insurance policy
A

Selling shares of stock

All of these are examples of doing insurance business EXCEPT selling shares of stock.

41
Q

____ of continuing education MUST be completed in the classroom or classroom equivalent

20%
50%
80%
100%
A

50%

50% of continuing education requirement must be spent in a classroom setting.

42
Q

How often must an insurance agent license normally be renewed?

Every six months
Each year
Every two years
Every three years
A

Every two years

Insurance agent license normally must be renewed every 2 years.

43
Q

A certificate of ______ permits an insurance company to transact business in Texas.

authenticity
admission
permission
authority
A

authority

A certificate of authority permits an insurance company to transact business in Texas.

44
Q

An insured may assign up to ____ of policy ownership under an individual life insurance policy.

25%
50%
75%
100%
A

100%

Under an individual life insurance policy, an insured may assign a maximum of 100% of policy ownership.

45
Q

With whom may an agent legally share commissions?

The insured
The applicant
The beneficiary 
Another agent with the same line of insurance
A

Another agent with the same line of insurance

An agent may legally share commissions only with another agent who is licensed in the same line of insurance.

46
Q

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?

$10,000
$25,000
$40,000
$50,000
A

$25,000

Group life insurance on an employee’s spouse may not exceed ½ of the amount of insurance on the life of the insured employee under the group policy.

47
Q

A domestic insurance company in Texas is considered a company that

own real estate in Texas
write insurance on risks located only in Texas
is incorporated and formed in Texas
honors the charter of the National Association of 
    Insurance Commissioners (NAIC)
A

is incorporated and formed in Texas

In Texas, a domestic insurance company is defined as a company that is incorporated and formed in Texas.

48
Q

In Texas, which of these statements regarding the Suicide clause is TRUE?

An insurer may not use suicide as a defense 
    against payment after the first year

An insurer must always pay a death benefit when 
    the cause of death was suicide

    An insurance company may only deny a suicide 
    death claim if an exclusionary rider is attached to 
    the policy

    An insurer may not use suicide as a defense 
   against payment after the second year
A

An insurer may not use suicide as a defense against payment after the second year

49
Q

Which of the following is NOT included in a life insurance illustration?

Underwriting classification upon which the 
    illustration is based

Insurer’s name

Amount of death benefit

Company’s mortality table
A

Company’s mortality table

A life insurance illustration is NOT required to include the company’s mortality table.

50
Q

What is an organization that solicits insurance only to its members?

Domestic society
Singular company 
Limited liability company
Fraternal benefit society
A

Fraternal benefit society

An organization that solicits insurance only among its members is known as a fraternal benefit society.

51
Q

B the insurance agent tells his clients that their rights may be impaired if they fail to complete a release form within a given period of time. B may be found guilty of

boycotting
rebating
coercion
discrimination
A

coercion

In this situation, the agent is guilty of coercion.

52
Q

All of these statement about the Commissioner of Insurance are true EXCEPT

The Commissioner must be elected
The Commissioner regulates the business of 
     Insurance in this state
The Commissioner ensures that Texas insurance 
     laws are executed
The Commissioner protects and ensures the fair 
     treatment of consumers
A

The Commissioner must be elected

The governor appoints the Commissioner to a two-year term.

TexasInsurance (1 decks)

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