Texas Statutes and Rules Common to Life
and Health Insurance Exam Questions
with complete Solutions
Cease and desist - Answer to stop or discontinue
Coercion - Answer forceful act or threat aimed to influence a person to act against his or her will; an
unfair trade practice in which an agent uses physical or mental force with the intent of inducing an
applicant to purchase insurance
Commission - Answer payment to the agent by the insurance company for placing insurance, usually
percentage of the policy premium
Commissioner - Answer the head of the State Department of Insurance
Except - Answer not subject to an obligation
Home office - Answer insurer's headquarters, principal place of business
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, honesty or good
morals
Reciprocity - Answer a mutual interchange of rights and privileges; a situation in which two parties
provide the same help or advantages to each other (for example, Producer A living in State A can
transact business as a nonresident in State B if State B's resident producers can transact business in
State A)
, Restitution - Answer restoration to the original condition or repayment
Statute - Answer a formal written law enacted by legislature; insurance statutes can be found in the
state Insurance Code
Transacting Insurance - Answer includes any of the following (by mail or any other means):
- Solicitation
- Negotiations
- Sale (effectuation of the contract of insurance)
- Advising an individual concerning coverage or claims
Location of incorporation - Answer Insurance companies are classified according to this (domicile);
regardless of where an insurance company is incorporated, it must obtain a Certificate of Authority
before transacting insurance within the state
Domestic insurer - Answer an insurance company that is incorporated n this state; in most cases, the
company's home office is in the state in which it was formed (the domicile); for instance, a company
chartered in Pennsylvania would be considered a Pennsylvania domestic company
Foreign insurer - Answer an insurance company that is incorporated in another state or territorial
possession (such as Puerto Rico, Guam or American Samoa); for example, a company chartered in
California would be a foreign company within the state of New York
Alien insurer - Answer an insurance company that is incorporated outside of the United States
Stock Companies - Answer owned by the stockholders who provide the capital necessary to establish
and operate the insurance company and who share in any profits or losses; officers are elected by the
stockholders and manage stock insurance companies; traditionally they issue nonparticipating policies,
in which policy owners do not share in profits or losses
Nonparticipating (stock) policy - Answer does not pay dividends to policy owners; taxable dividends are
paid to stockholders
and Health Insurance Exam Questions
with complete Solutions
Cease and desist - Answer to stop or discontinue
Coercion - Answer forceful act or threat aimed to influence a person to act against his or her will; an
unfair trade practice in which an agent uses physical or mental force with the intent of inducing an
applicant to purchase insurance
Commission - Answer payment to the agent by the insurance company for placing insurance, usually
percentage of the policy premium
Commissioner - Answer the head of the State Department of Insurance
Except - Answer not subject to an obligation
Home office - Answer insurer's headquarters, principal place of business
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, honesty or good
morals
Reciprocity - Answer a mutual interchange of rights and privileges; a situation in which two parties
provide the same help or advantages to each other (for example, Producer A living in State A can
transact business as a nonresident in State B if State B's resident producers can transact business in
State A)
, Restitution - Answer restoration to the original condition or repayment
Statute - Answer a formal written law enacted by legislature; insurance statutes can be found in the
state Insurance Code
Transacting Insurance - Answer includes any of the following (by mail or any other means):
- Solicitation
- Negotiations
- Sale (effectuation of the contract of insurance)
- Advising an individual concerning coverage or claims
Location of incorporation - Answer Insurance companies are classified according to this (domicile);
regardless of where an insurance company is incorporated, it must obtain a Certificate of Authority
before transacting insurance within the state
Domestic insurer - Answer an insurance company that is incorporated n this state; in most cases, the
company's home office is in the state in which it was formed (the domicile); for instance, a company
chartered in Pennsylvania would be considered a Pennsylvania domestic company
Foreign insurer - Answer an insurance company that is incorporated in another state or territorial
possession (such as Puerto Rico, Guam or American Samoa); for example, a company chartered in
California would be a foreign company within the state of New York
Alien insurer - Answer an insurance company that is incorporated outside of the United States
Stock Companies - Answer owned by the stockholders who provide the capital necessary to establish
and operate the insurance company and who share in any profits or losses; officers are elected by the
stockholders and manage stock insurance companies; traditionally they issue nonparticipating policies,
in which policy owners do not share in profits or losses
Nonparticipating (stock) policy - Answer does not pay dividends to policy owners; taxable dividends are
paid to stockholders
