Texas Prearranged FuneralAgent License Exam Review

Welcomes You

Texas

Funeral Prearranged

Life Insurance Agent

License

Study Materials Manual

Power Point Presentation Produced By

SNL

We are here for one main reason:

To Pass The Test

“Training” discussion will be held to

a minimum.

The maximum amount of a prearranged funeral contract using this license is unlimited (just needs to match theGoods and Services.

• Your supervisor is not required to have any years experience nor is he/she required to be a legal reserve life agent.

5

6

An agent’s license will be revoked if the agent fails to renew the license.

(Renewal includes completed Application Form and Renewal Fee).

The GPL must include:

• GENERAL PRICE LIST (bold, all caps)

• Provider’s Name, Address and Phone• Effective Date

(Note: The Seller’s Permit Numberis not required to be on the GPL) …

The GPL must be given to the customer to keep …

(It is not a loan) …

Required disclosures for the GPL must use the identical wording given in the FTC Funeral Rule …

A GPL must disclose that there are

alternative containers available for

cremation.

The General Price List must price each item or service separately.

• A copy of the General Price List must be kept on file for a period of One Year after distribution to a customer.

The basic services of the funeral director cannot be declined by the purchaser.

14

How long must a funeral provider keep a copy of a price list on file after its last distribution to a purchaser? (1 year) …

During a sales presentation it is unlawful

(and unethical) to lie to a potential customer

hoping to induce that customer to make a

purchase. Doing so is called

“misrepresentation.”

Conversely, neglecting to share

(or omitting ) a material fact with that customer is called,

“unfair trade practice.”

There are three types of authority involved with our study:

• Expressed (is written)

• Implied (is unwritten)

• Apparent (obvious)

17

The “Facts about Funerals” pamphlet from the Texas Funeral Service Commission should be given to the purchaser at the time of the sale of a funeral prearrangement.

18

Selling a prearranged funeral to someone who cannot afford it can end up in loss of business to the funeral home.

19

An agent is a representative …

Under the law of agency, the company (insurer) is bound by the acts of its agents.

20

A life insurance policy summary is a

summary of:

The policy benefits and costs.

21

While it is illegal and unethical to misrepresent a material fact to a prospective customer, it is permissible to give an illustration which illustrates hypothetical results of the policy.

22

An advertisement may not use a potentially misleading title.

23

Prepaid funeral benefits contract forms must be approved by the Texas Department of Banking.

24

Individuals with the same life expectancy cannot legally be charged different life insurance rates …

25

Define “Rebating”

and discuss …

(Sharing portion of “pay” or commission with the applicant) …

26

Whole Life Insurance gets its name from “whole or entire life.”

Whole Life insurance considers a “whole life” to be 100 years.

27

Continuous Premium Whole Life: Premium payable to age 100.

Reduced Paid-up Whole Life: Policyowner may surrender whole life policy for lesser amount of permanent insurance coverage on which no more premiums are due.

28

Define “Beneficiary”

Primary –

Contingent/Secondary –

Irrevocable –

29

Define “Rider” of a Policy:

“Rider” = “Attached” or “Add on”

Accidental Death – Auto accident …

Waiver of Premium – Total disability …

Suicide Clause – in first two years of policy, refund of total premiums paid in …

30

Free Look: Is just that … a “free look.” Policy must be delivered before the free look can begin.

31

The complete insurance contract usually consists of the policy and the attached application.

32

A whole life insurance policy owner may surrender that policy for a cash payment equal to the net cash value.

What is Cash Value?

33

A life insurance underwriter most often relies on information from the Completed Application.

If further information is required the insurance company may go back to the

Agent.

34

All changes made on an application of insurance must be initialed by the applicant…

35

Conditional Receipt … ??

Conditional upon customer being approved as insurable. If customer proves not to be insurable then premium must be refunded.

36

Statement of Good Health…

When policy is delivered, customer is required to sign this statement assuring the company that health has not failed while awaiting the policy.

If customer refuses to sign the Statement of Good Health, then the agent must refund any premiums paid and return policy to the company.

37

When the Texas Commissioner of Insurance suspects an agent of committing fraud, the commissioner must report the information to a prosecuting attorney or to a law-enforcement agency.

38

A copy of an insurance-funded funeral benefits contract must be provided to the purchaser within 30 days …

Premiums collected must be remitted to the insurance company within 30 days …

39

The Federal Waiver of Cancellation Form is not needed when purchase is made at the funeral home.

40

If you advertise an insurance policy, you must obtain prior approval from the company …

41

An annuity is a contract between an individual and a life insurance company.

Immediate –

Deferred --

42

When an annuity advertisement includes a variable current interest rate, it must also include the guaranteed interest rate.

43

Surrender charges gradually grow smaller and eventually disappear altogether …

Surrender charges … ??

44

Discuss:

Fixed Annuity –

Variable Annunity –

Fixed, flexible premium deferred annuity --

45

Level premium deferred annuities must have a fixed premium schedule …

*******************************

Who bears the investment risk in a fixed annuity?

46

A single premium deferred annuity contract will not have a purchase payment schedule.

47

In a flexible premium deferred annuity the annuitant’s age will directly effect the amount of the annuity benefit payments.

48

The amount paid to a beneficiary because of the insured’s death is, as a rule, free from federal income taxation …

***************************

The tax exempt status of proceeds of an insurance policy may be lost if the policy is sold to a new owner …

49

The person who controls the annuity contract is the owner …

50

Annuitize or Annuitization: When periodic payments of money begin …

Accumulation Period: While money is accumulating (Premium Payments and/or Interest) …

51

An insurable interest means the applicant has more to gain by the insured’s continued life.

Or … the applicant will suffer a financial and/or emotional loss if the insured dies …

(Do not confuse with “insurance claim”).

52

Settlement Options

Lump Sum –

Life Income –

Fixed Amount Installments –

**********************************

Dividends Only is not a settlement option …

53

The term, “single premium” equals the term, “Cash Sale in Full.”

Annuities and life insurance policies share the important benefit of “Tax Deferral.”

54

In a fixed annuity contract, the guaranteed interest rate is specified in the annuity contract and remains unchanged …

55

How late in the evening may a solicitor call on the telephone seeking business?

9:00 PM

56

Define “Defamation”:

Publishing and/or making a false statement about a competitor …

(It is OK to compare plans of a competitor with our company’s plans … just do not “run down” the competition) …

57

Once the insurance company accepts the application, the applicant’s health cannot be questioned.

If the application is taken without a premium payment (down payment) the coverage will not become effective until the agent delivers the policy and collects the initial premium.

58

If the application for insurance is denied for any reason except failure to pass the exam, the applicant may not re-apply for minimum of 60 months …

59

If an insurance agent finds out that a fraudulent act has been committed, that agent must report it within 30 days to avoid disciplinary action.

60

Limited Pay Whole Life states a specific period of time during which premiums are payable and will have a shorter premium paying period than than a whole life policy with premiums payable for life.

(But the premium amount will be more per month for the Limited Pay) …

61

Single premium whole life insurance provides 100% immediate protection up front, and provides a cash surrender value from day one, regardless of the insured’s age.

62

If the company’s earning performance improves while the contract is in force, the owner of the policy may pay lower premiums for the same benefits. This is called, “Interest-sensitive whole life insurance.”

63

Deferred whole life insurance has a lower death benefit in the earlier years of the policy. As time passes, the death benefit increases.

64

The FTC requires the GPL to use the identical wording provided in the Funeral Rule.

Specifically, the GPL must disclose that alternaive containers are available for cremation and that embalming is not required when the burial is immediate.

65

When requested, if the seller fails to provide evidence of premiums paid, the result could be loss of the seller’s permit.

(Keep all of your receipts) …

66

The assets in the general account of an insurance company back the guarantees of that company’s fixed annuities.

67

Annuities and life insurance policies share the important benefit of Tax Deferral (as long as the money remains in the contract).

As well, the interest earned during the accumulation period of a deferred annuity is Tax Deferred.

68

Incontestable Clause: After a period of two years, the insurance company cannot contest the policy for any reason (usually).

Suicide Exclusion: Provision stating that the insurance company will not pay for death of insured by suicide in the first two years (usually will refund premiums paid to beneficiary).

Remember that once health has been accepted, it cannot later be questioned …