Texas Insurance Law Practice Test

Correct answer: From the moment of birth

Chapter 1201 requires that when a policy covers family members, coverage extends to a newborn child of the insured from the moment of birth. There is no waiting period, no underwriting of the infant, and no requirement that the child be healthy or discharged before coverage attaches.

From the free practice set Required policy provisions: newborn and chemical-dependency coverage

Correct answer: The services an enrolled population might reasonably require to be maintained in good health

Chapter 843 describes basic health care services as those services an enrolled population might reasonably require to be maintained in good health. The definition is framed around maintaining health for the enrolled population, not around a setting or a narrow service line.

From the free practice set HMO definitions and evidence of coverage

Correct answer: The policy language controls, which is precisely why the Buyer's Guide, Policy Summary and advertising must be accurate on their face

The policy is the contract. If a brochure, illustration or sales presentation says something the policy does not, the policy language governs. That is exactly why the disclosure documents and advertising must be accurate when they are delivered, since an inaccurate piece cannot enlarge the contract but can expose the producer and insurer to a violation and a complaint.

From the free practice set Life insurance marketing, advertising, and the buyer's guide

Correct answer: The order is binding unless and until it is overturned, but the producer is entitled to a hearing and to judicial review.

The subject of a commissioner's order has a right to a hearing and to judicial review, but the order operates in the meantime: the commissioner's word is not the last word, yet it is binding until overturned. Continuing the prohibited conduct invites further sanctions and license action.

From the free practice set Commissioner of Insurance: powers, records examination, and investigations

Correct answer: No later than the 31st day after the date of birth

Chapter 1201 permits the policy to require notice of the birth and payment of any required additional premium no later than the 31st day after the date of birth as a condition of continuing the newborn's coverage.

From the free practice set Required policy provisions: newborn and chemical-dependency coverage

Correct answer: It fails, because records examination is an administrative function and does not require proof of a crime

Examination of an agent's books, records, and accounts is an administrative supervisory tool under the Insurance Code's regulation of insurance professionals. No criminal allegation or proof is needed; cooperating with examination is a condition of holding a license.

From the free practice set Commissioner of Insurance: powers, records examination, and investigations

Correct answer: An unconditional right to return the policy for a full refund of premium during a stated examination period

When the disclosure documents are not provided until policy delivery, the buyer has had no chance to use them while deciding. The requirement is cured by giving the buyer an unconditional right to return the policy for a full premium refund during a stated examination period — the 'second look' that makes late disclosure meaningful.

From the free practice set Life insurance marketing, advertising, and the buyer's guide

Correct answer: Give his or her name, identify the insurer being represented, and make clear that the purpose of the contact is to solicit insurance

At first contact a producer must identify himself or herself by name, identify the insurer being represented, and make clear that the purpose of the contact is to solicit insurance. Concealing the sales purpose behind a survey, seminar or financial-planning pretext is the conduct these rules are aimed at.

From the free practice set Life insurance marketing, advertising, and the buyer's guide

Correct answer: It can still be an advertising violation, because the standard is the total impression the piece leaves on an ordinary consumer

Texas advertising standards look to the total impression the advertisement creates in the mind of an ordinary consumer. Technically true statements arranged so that the overall effect misleads still violate the standard, and calling life insurance a savings plan or deposit without clearly disclosing that it is life insurance is a classic problem area.

From the free practice set Life insurance marketing, advertising, and the buyer's guide

Correct answer: Both may proceed, because the private cause of action and the commissioner's administrative enforcement are separate tracks

Chapter 541 both empowers the commissioner to investigate and order remedies and gives an injured consumer a private cause of action. The two tracks are independent: a regulatory order is not a substitute for a lawsuit, and a lawsuit does not shield a producer from regulatory discipline. The same conduct can produce both.

From the free practice set Commissioner of Insurance: powers, records examination, and investigations

Correct answer: The requirement that the benefit be provided on the same basis as coverage for physical illness

Title 8 requires that the chemical dependency benefit be provided on the same basis as coverage for physical illness under the plan. Singling the benefit out for uniquely harsh visit limits and cost sharing conflicts with that structural rule.

From the free practice set Required policy provisions: newborn and chemical-dependency coverage

Correct answer: Trigger, examination of records, investigation, hearing, order, judicial review

The commissioner's process moves from a trigger (a complaint or other indication of a prohibited practice) to examination of books and records, then investigation, then charges and notice of hearing, then an order, and finally judicial review if the subject seeks it. Chapter 541 supplies the machinery for determining whether a prohibited practice occurred, holding a hearing, and issuing an order, and Title 13 supports examination and supervision of license holders.

From the free practice set Commissioner of Insurance: powers, records examination, and investigations

Correct answer: The producer is entitled to a hearing and to judicial review, but the order is binding until it is overturned

Chapter 541 gives the subject of the commissioner's action a right to notice and hearing and to judicial review of the resulting order. The commissioner's word is not the last word, but it is binding until overturned — so compliance is required while review is pursued.

From the free practice set Commissioner of Insurance: powers, records examination, and investigations

Correct answer: The Buyer's Guide is generic consumer education about kinds of life insurance and how to compare costs; the Policy Summary is specific to the proposed policy and its figures.

The Buyer's Guide is the same for every applicant: it explains term, whole life, and other permanent forms, how premiums and cash values behave, and how to compare costs among similar policies. The Policy Summary is the policy-specific document, naming the insurer, the producer and the producer's business address, the policy and riders proposed, and the premiums, death benefits, cash values, dividends, and surrender charges for that contract. Buyer's Guide teaches how to shop; Policy Summary describes what is in the cart.

From the free practice set Life insurance marketing, advertising, and the buyer's guide

Correct answer: On the same basis as coverage for physical illness under the plan

Title 8 requires that the necessary care and treatment of chemical dependency be covered on the same basis as coverage provided for physical illness, so the plan cannot single chemical dependency out for uniquely harsh terms.

From the free practice set Required policy provisions: newborn and chemical-dependency coverage

Correct answer: Failing to produce the records and furnishing altered records are each independent grounds for disciplinary action against his license.

Cooperating with examination is a condition of holding a license. Refusing or failing to produce required records is itself grounds for discipline, and producing altered records compounds the problem — it is a separate basis for action independent of whatever the underlying transactions showed. "I can't find it" is not a defense.

From the free practice set Commissioner of Insurance: powers, records examination, and investigations

Correct answer: Both the failure to produce records and the altered records are themselves grounds for discipline

Cooperating with examination is a condition of holding a license. Refusing or failing to produce records, and producing altered records, are independently grounds for discipline — separate from whatever the underlying transactions may show.

From the free practice set Commissioner of Insurance: powers, records examination, and investigations

Correct answer: Both tracks may proceed: the private suit does not shield the producer from regulatory discipline, and a regulatory order does not substitute for the consumer's lawsuit.

Chapter 541 provides an injured consumer a private cause of action that runs on a separate track from the commissioner's administrative enforcement. A regulatory order does not substitute for a lawsuit, and a lawsuit does not shield a producer from regulatory discipline. The same conduct can produce both consequences.

From the free practice set Commissioner of Insurance: powers, records examination, and investigations

Correct answer: Ordering the producer to cease and desist the conduct, imposing sanctions, and acting against the license

Chapter 541 authorizes the commissioner, after charges and a hearing, to issue an order directing a person to stop prohibited conduct, to impose sanctions or penalties, and to take action against a license. Those are administrative remedies, not criminal punishment or civil damage awards.

From the free practice set Commissioner of Insurance: powers, records examination, and investigations

Correct answer: Evidence of coverage

Chapter 843 defines evidence of coverage as the certificate, agreement, policy, or contract issued to an enrollee stating the coverage to which the enrollee is entitled. It fills the role a policy fills in the indemnity world.

From the free practice set HMO definitions and evidence of coverage

Correct answer: Taking testimony under oath and compelling production of documents in an investigation of a prohibited practice

Chapter 541 gives the commissioner the investigative machinery: determining whether a person has engaged in a prohibited practice, bringing charges and giving notice of hearing, taking testimony under oath, and compelling production of documents. Paying covered claims and assessing members are association functions under Chapter 463, and damage awards belong to the courts through the private cause of action.

From the free practice set Commissioner of Insurance: powers, records examination, and investigations

Correct answer: The statute's newborn child protections reach an adopted child and a child for whom the insured is a party to a suit seeking adoption

Chapter 1201 extends the newborn protections beyond biological children: they reach an adopted child and a child for whom the insured is a party to a suit seeking adoption, so a child being adopted is not left uninsured during placement.

From the free practice set Required policy provisions: newborn and chemical-dependency coverage

Correct answer: Taking testimony under oath and compelling the production of documents

Chapter 541 supplies the machinery for enforcement: determining whether a person has engaged or is engaging in a prohibited practice, bringing charges and giving notice of a hearing, taking testimony under oath, compelling the production of documents, and issuing an order.

From the free practice set Commissioner of Insurance: powers, records examination, and investigations

Correct answer: Title 13, on regulation of professionals

Title 13 of the Insurance Code is the regulation-of-professionals title: it governs who may be licensed, what a license holder must do to maintain the license, and how the commissioner supervises license holders — including the authority supporting examination of an agent's books, records, and accounts.

From the free practice set Commissioner of Insurance: powers, records examination, and investigations

Correct answer: The mandated chemical dependency benefit must be provided on the same basis as coverage for physical illness

Title 8 requires that the chemical dependency benefit be provided on the same basis as coverage for physical illness under the plan. Singling chemical dependency out for a shorter benefit period, higher deductible, and lower maximum does exactly what the mandate forbids.

From the free practice set Required policy provisions: newborn and chemical-dependency coverage