TEXAS STATUTES AND RULES
COMMON TO LIFE AND HEALTH
INSURANCE EXAM QUESTIONS WITH
CORRECT ANSWERS
Cease and desist - Answer-to stop or discontinue
Coercion - Answer-forceful act of threat aimed to influence a person to act against their
will
Commission - Answer-payment to the agent by the insurance company for placing
insurance, usually a percentage of the policy premium
Commissioner - Answer-the head of the State Department of Insurance
Exempt - Answer-not subject to an obligation
Home office - Answer-insurers headquarters, principal place of busines
Inducement - Answer-an offer that attempts to influence the other party
Insolvent - Answer-unable to meet financial obligations
Moral turpitude - Answer-conduct that is contrary to community standards of justice,
honest or good morals
Reciprocity - Answer-a mutual interchange of rights and prvileges
Statute - Answer-a formal written law enacted by legislature; insurance statutes can be
found in the state insurance code
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
Types of Insurers: - Answer-Insurer (principal) is the company or organization that
ISSUES a policy of insurance and can be classified by:
-Ownership
-Location of corporation (domicile)
-Authority to transact
, Types of Insurers: Ownership - Answer-Stock Companies:
-owned by stockholders who provide the capital to establish and operate an insurance
company; share profits/losses
-officers are elected by stockholders
-issue NONPARTICIPATING policies (policyowners do not share the profits/losses)
-taxable dividends are paid to STOCKHOLDERS
Mutual Companies
-owned by the policyowner
-issue PARTICIPATING pollicies
-policyowner is entitled to dividends
-return of excess premium not taxable
-dividends NOT GUARANTEED
Types of Insurers: Location of Corporation (Domicile) - Answer-Domestic: incorporated
IN THIS STATE
-home office in the state in which the company was formed
Foreign: incorporated in ANOTHER STATE or TERRITORIAL POSSESSION (Puerto
Rico, Guam, American Samoa)
Alien: incorporated OUTSIDE THE U.S.
Types of Insurers: Certificate of Authority - Answer--needed before any business
transaction can be made in a specific state
-must apply and be granted certificate
-and meet any financial requirements set by state
-AUTHORIZED/ADMITTED = approved
-UNAUTHORIZED/NONADMITTED = not approved
Commissioner of Insurance: General Powers and Duties - Answer-Commissioner is the
chief executive and administrative officer of the state Department of Insurance
-must be citizen of Texas
-well informed and qualified in insurance industry
-at least 5 years of experience in administration of business or government or as
practicing attorney or CPA
-APPOINTED BY GOVERNOR for a 2 year term ENDING on Feb 1st of EVERY ODD-
NUMBERED YEAR
Powers and Duties:
-regulate internal affairs
-prescribe forms and procedures to be followed
-aid in the interpretation of any state insurance law
-issues insurance licenses and certificates of authority
COMMON TO LIFE AND HEALTH
INSURANCE EXAM QUESTIONS WITH
CORRECT ANSWERS
Cease and desist - Answer-to stop or discontinue
Coercion - Answer-forceful act of threat aimed to influence a person to act against their
will
Commission - Answer-payment to the agent by the insurance company for placing
insurance, usually a percentage of the policy premium
Commissioner - Answer-the head of the State Department of Insurance
Exempt - Answer-not subject to an obligation
Home office - Answer-insurers headquarters, principal place of busines
Inducement - Answer-an offer that attempts to influence the other party
Insolvent - Answer-unable to meet financial obligations
Moral turpitude - Answer-conduct that is contrary to community standards of justice,
honest or good morals
Reciprocity - Answer-a mutual interchange of rights and prvileges
Statute - Answer-a formal written law enacted by legislature; insurance statutes can be
found in the state insurance code
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
Types of Insurers: - Answer-Insurer (principal) is the company or organization that
ISSUES a policy of insurance and can be classified by:
-Ownership
-Location of corporation (domicile)
-Authority to transact
, Types of Insurers: Ownership - Answer-Stock Companies:
-owned by stockholders who provide the capital to establish and operate an insurance
company; share profits/losses
-officers are elected by stockholders
-issue NONPARTICIPATING policies (policyowners do not share the profits/losses)
-taxable dividends are paid to STOCKHOLDERS
Mutual Companies
-owned by the policyowner
-issue PARTICIPATING pollicies
-policyowner is entitled to dividends
-return of excess premium not taxable
-dividends NOT GUARANTEED
Types of Insurers: Location of Corporation (Domicile) - Answer-Domestic: incorporated
IN THIS STATE
-home office in the state in which the company was formed
Foreign: incorporated in ANOTHER STATE or TERRITORIAL POSSESSION (Puerto
Rico, Guam, American Samoa)
Alien: incorporated OUTSIDE THE U.S.
Types of Insurers: Certificate of Authority - Answer--needed before any business
transaction can be made in a specific state
-must apply and be granted certificate
-and meet any financial requirements set by state
-AUTHORIZED/ADMITTED = approved
-UNAUTHORIZED/NONADMITTED = not approved
Commissioner of Insurance: General Powers and Duties - Answer-Commissioner is the
chief executive and administrative officer of the state Department of Insurance
-must be citizen of Texas
-well informed and qualified in insurance industry
-at least 5 years of experience in administration of business or government or as
practicing attorney or CPA
-APPOINTED BY GOVERNOR for a 2 year term ENDING on Feb 1st of EVERY ODD-
NUMBERED YEAR
Powers and Duties:
-regulate internal affairs
-prescribe forms and procedures to be followed
-aid in the interpretation of any state insurance law
-issues insurance licenses and certificates of authority
