CHAPTER 5: TEXAS STATUTES AND RULES COMMON TO

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CHAPTER 5: TEXAS STATUTES AND RULES COMMON TO

LIFE AND HEALTH INSURANCE EXAM QUESTIONS

Qs and Ans - Expert- Explanation - ing score -36 Questions and Answers

-Format: Multiple-choice / Flashcard

Question 1: Licensing Requirements:

Answer:

• General Provisions

• Process

• Types of Licenses

• Maintenance and Durations

• Disciplinary Actions
• Summary of Producer Regulations

Question 2: Marketing Practices: Commissions and Fees

Answer:

-must have valid licensed to get commission Question 3: Marketing Practices: Unfair/Prohibited Trade Practices

Answer:

Misrepresentations:

-false, misleading, deceptive as to policy benefits or terms

False Advertising:

-untrue, deceptive, misleading statements

-false/misrepresentation on -terms,benefits, conditions, advantages of any policy -any dividends to be received from policy or previously paid out -financial condition of any person or insurance company -true purpose of assignment or loan against policy

Defamation of Insurer:

-intended to injure a person -maliciously critical of financial condition -oral or written statements

Rebating:

-offer and acceptance of rebates (bribes) are illegal -some examples -rebates of premiums payable to policy -special favors or services -advantages in the dividends or other benefits -stocks, bonds, securities, and their dividends profits

Question 4: Commissioner

Answer:

the head of the State Department of Insurance

Question 5: Transacting Insurance

Answer:

Insurance transactions can be done by mail or other means:

-solicitation -negotiations -sale (effectuation of a contract of insurance) -advising an individual of coverage or a claim

Question 6: Insolvent

Answer:

unable to meet financial obligations

Question 7: Licensing Requirements: Process

Answer:

-application -nonrefundable fee with commissioner -name, age, occupation, place of residence & business for PAST 5 YEARS

Exemption/Exceptions:

-insurance license is not required as long as they are not directly or indirectly involved in the sale& DO

NOT GET COMMISSION

-entity that administers or operates an employee benefits programs (not involved IN the SALE) -all the entities or individuals that do more of the administrative or operative work rather than the field/selling side

Agent Appointment:

-agent appointed by an authorized insurer

Question 8: Statute

Answer:

a formal written law enacted by legislature; insurance statutes can be found in the state insurance code Question 9: Commissioner of Insurance: Investigations, Hearings, and Penalties (contd.2)

Answer:

-commissioner makes decision of if violation occurred or not -that notice given to person to review and has right to judicial review -person has NO LATER THAN 30 DAYS to petition for judicial review

department can:

-deny app for original license -suspend,revoke,deny renewal -place on probation if license suspended -assess admin penalty -reprimand license holder Question 10: Licensing Requirements: General provisions

Answer:

-agents -any person who solicits insurance on behalf of any insurance company

Question 11: Exempt

Answer:

not subject to an obligation

Question 12: Continuing Education (contd.)

Answer:

-if you want to sell, solicit, negotiate ANNUITY contracts, must complete 4hr training related to annuities before any transactions -producers that sell have to do the 4hr annually

Question 13: Inducement

Answer:

an offer that attempts to influence the other party Question 14: License Requirements: Maintenance and Duration (contd.)

Answer:

Continuing Education (CE):

-established to PROTECT THE PUBLIC -must complete 24hrs of continuing ed EVERY RENEWAL PERIOD -out of the 24hrs...TWO HRS of that must cover ETHICS -ALL hours must be completed WITHIN REPORTING PERIOD -if not done by license expiration date ->> you have 90 days to complete remaining incomplete hours along w paying a $50 fine per HOUR -if neither one is complete before expiration date you will have to apply for a NEW LICENSE -AT LEAST 50% of hours have to be in a classroom setting (can also be online) approved by the Department -producers keep records of hours for 4yrs from date of completion

CE hours DO NOT APPLY if agent:

-has been continuously licensed for 20+ years -are licensed to receive residual or renewal commissions -are nonresidents if their home state exercised reciprocity (allows the same privilege in their state) -has illness, medical disability, circumstances beyond their control -are retired Question 15: Marketing Practices: Unfair/Prohibited Trade Practices (contd.)

Answer:

Boycott, Coercion and Intimidation:

-illegal if intended to restrict fair trade or create a monopoly -unfair behavior

Fraud:

-intentional misrep or concealment -to influence another party to make or refrain from making a contract or to deceive/cheat a party -grounds for voiding an insurance contract