Chapter 15- California Ethics and Laws- A.D Banker
Upon receiving a request for records, insurers and/or agents must deliver the records to the Commissioner within ____ days. A 30 B 60 C 10 D 7
A 30 Upon receiving a request for records, insurers and/or agents must deliver the records to the Commissioner within 30 days. If the requested files cannot be immediately furnished, on request the agent will be given an additional 60 days to provide the information.
Under most circumstances, within how much time is an insurer expected to affirm or deny a claim? A 40 days B 30 days C 10 days D 20 days
A 40 days Although it may need more time to determine the amount of a loss and pay a claim, an insurer must normally accept responsibility for or deny a claim within 40 days of an insured's or claimant's notice of claim.
The California Insurance Code requires all producers who meet with prospective clients age 65 and older in their homes for the purpose of transacting life insurance, annuities, or disability insurance products to first provide a written notice of the first meeting which producers must retain a copy of in their files for a minimum of ______ years. A 5 B 3 C 4 D 2
A 5
Under the California Long-term Care Education Requirements newly licensed agents who intend to market Long-Term Care insurance must complete a(n) _____-hour course in Long-Term Care insurance in each of their first 4 years of licensing (two terms). A 8 B 10 C 6 D 12
A 8 Under the California Long-term Care Education Requirements newly licensed agents who intend to market Long-Term Care insurance must complete an 8-hour course in Long-Term Care insurance in each of their first 4 years of licensing (two terms).
Which statement is false of the California Life and Health Guarantee Association? A The maximum amount that will be paid to a covered person on behalf of an admitted insolvent insurer is $500,000 per life B Annuity benefits cannot exceed $250,000 in present value C The Association establishes a mechanism to pay claims that are unpaid as a result of the insolvency of a member insurer D Member insurers are those that are admitted to transact insurance in California and are required to participate
A The maximum amount that will be paid to a covered person on behalf of an admitted insolvent insurer is $500,000 per life The maximum amount payable for a life insurance death benefit per life is $300,000.
Engaging in an unfair method of competition unwillingly subjects an agent to a civil penalty up to _______ per violation. A $50,000 B $5,000 C $500 D $1,500
B $5,000 A first violation invites a fine of up to $5,000.
How much time does a licensee have to respond to the Department of Insurance after receiving an inquiry concerning a claim? A 15 calendar days B 21 calendar days C 10 business days D Not more than 72 hours, excluding weekends and holidays
B 21 calendar days If the licensee is initially unable to provide the requested information within 21 calendar days, an extension of time must be requested within 21 days, which indicates the amount of additional time that will be needed.
All licensed producers must complete how many hours of CE to renew their license? A 16 B 24 C 32 D 8
B 24 All licensed producers must complete a minimum of 24 hours of continuing education prior to each license renewal.
In the event that an organizational license terminates, the organization may continue to transact insurance under the former license if a new application for an organizational license is submitted within: A 90 days B 30 days C 60 days D 45 days
B 30 days
An agent's license remains in active status as long as all of the following conditions are met, except: A Renewal fees are paid B Commission income equals or exceeds $25,000 C At least one active Notice of Appointment is on file with the Commissioner D Continuing education requirements have been met
B Commission income equals or exceeds $25,000
A person will be deemed to be transacting insurance when the person advertises on the internet, and does any of the following, except: A Provides an insurance premium quote to a California resident B Communicates an invitation to inquire C Accepts an application for coverage from a California resident D Communicates with a California resident regarding one or more terms of an agreement to provide insurance on an insurance policy
B Communicates an invitation to inquire Under the California Insurance Code, a person will be deemed to be transacting insurance when the person advertises on the internet, and provides an insurance premium quote to a California resident, accepts an application for coverage from a California resident, or communicates with a California resident regarding one or more terms of an agreement to provide insurance on an insurance policy.
Temporary authority can be granted to an unlicensed person to handle the affairs of an agent on active military service, to do all of the following, except: A Provide administrative assistance to existing clients B Mail out any claim payments due to clients C Transmit premiums to the insurer which are sent to the agent's office D Transact new business in that agent's name
D Transact new business in that agent's name Under the California Insurance Code, temporary authority can be granted to an unlicensed person to handle the affairs of an agent on active military service, but may NOT transact new business in that agent's name.
When a producer, agent, or broker makes a false statement about the benefits or the nature of an insurance policy, the person is guilty of: A Twisting B Defamation C Intimidation D Misrepresentation
D Misrepresentation Making any statement that misrepresents the benefits or true nature of an insurance policy is known as Misrepresentation.
What is it called when a producer, agent, or broker makes a false statement about an insurer's financial condition? A Twisting B Rebating C Defamation D Misrepresentation
D Misrepresentation Misrepresentation includes making any statement misrepresenting the terms of any policy, using any name or title misrepresenting the true nature of any policy, misrepresenting the financial condition of any insurer, or making any misrepresentation to a policyholder insured by any company for the purpose of inducing the policyholder to lapse, forfeit, or surrender a policy.
Funds controlled by the Guarantee Association are used to: A Subsidize investment income losses B Subsidize state premium taxes C Subsidize insurer reserves D Pay claims of insolvent insurers
D Pay claims of insolvent insurers
Which of the following statements is incorrect? A Insurance producers must be aware of both the Insurance Code and the Code of Regulations B Ethics are based on an accepted standard of right and wrong behaviors C The Insurance Code identifies many ethical situations which may arise D The Insurance Code identifies all possible ethical issues which may arise
D The Insurance Code identifies all possible ethical issues which may arise The Insurance Code and Code of Regulations do not provide a complete guide to ethical behavior.
Any licensed agent who has committed any offense denounced by the Code may have an insurance license suspended by the Commissioner for up to: A 3 years B 18 months C 1 year D 2 years
A 3 years
Errors and Omissions (E&O) policies are typically offered with a minimum limit of liability of how much? A $1,000,000 B $10,000,000 C $100,000,000 D $100,000
A $1,000,000 Errors and Omissions insurance is usually offered with a minimum limit of liability of $1,000,000.
Under the California Insurance Code, there is no such license as Life or Health ___________, only life licensees may transact life and disability insurance, according to their individual licensing. A Solicitor B Producer C Agent D Licensee
A Solicitor
The Commissioner may suspend or revoke a license or certificate of authority, not to exceed ______ year(s), of anyone for willfully violating the prohibition on arranging for the sale of free insurance. A 1 B 4 C 3 D 2
A 1 Under the California Insurance Code the Commissioner may suspend or revoke a license or certificate of authority not to exceed 1 year of anyone for willfully violating the prohibition on arranging for the sale of free insurance.
Which statement is FALSE regarding fraudulent claims in California? A Any insurer that believes that a fraudulent claim is being made shall report the fraudulent claim to the Bureau of Fraudulent claims within 30 days of such discovery B Each admitted insurer must maintain a unit to investigate possible fraudulent claims by insureds C While investigating suspected fraud claims, insurers and agents will have access to all relevant public records required to be open for inspection D If an insured signs a fraudulent claim form, he/she may be guilty of perjury
A Any insurer that believes that a fraudulent claim is being made shall report the fraudulent claim to the Bureau of Fraudulent claims within 30 days of such discovery Any insurer that believes that a fraudulent claim is being made shall report the fraudulent claim to the Bureau of Fraudulent claims within 60 days of such discovery.
Entering into an agreement that would result in an unreasonable restraint of, or monopoly in the business of insurance is considered: A Boycott, Coercion, or Intimidation B Discrimination C Defamation D Deceptive Advertising
A Boycott, Coercion, or Intimidation Entering into any agreement that would result in an unreasonable restraint of, or monopoly in the business of insurance is known as Boycott, Coercion, or Intimidation.
A person will be deemed to be transacting insurance when the person advertises on the internet, and does any of the following, except: A Communicates an invitation to inquire B Provides an insurance premium quote to a California resident C Communicates with a California resident regarding one or more terms of an agreement to provide insurance on an insurance policy D Accepts an application for coverage from a California resident
A Communicates an invitation to inquire
The Insurance Commissioner has the authority to A Enforce laws relating to insurance B Amend existing insurance laws but not write new ones C Set insurance premium rates D Write laws relating to insurance
A Enforce laws relating to insurance The Insurance Commissioner has the authority to enforce laws relating to insurance. The Commissioner does not write or rewrite the Insurance Code, nor does the Commissioner have authority to set insurance rates. Subject to certain restrictions, the Commissioner may reject rate increases or disapprove insurance rates believed to be too high or too low.
Offering any kind of insurance as an inducement to the purchase of property or services without a separate fee charged to the insured for the insurance is a violation and is considered: A Free Insurance B Defamation C Replacement D Discrimination
A Free Insurance No insurer or agent may offer any kind of insurance or annuities in this state as an inducement to the purchase or rental by the public of any property, or services, without any separate charge to the insured for such insurance. Offering free insurance is a violation that may result in suspension or revocation of a license.
An insurer cannot consider sexual orientation in its underwriting criteria or use marital status, living arrangements, occupation, sex, beneficiary designation or Zip Code to determine whether to require a test for the presence of: A HIV B Cancer C Diabetes D Heart conditions
A HIV
Under the California Insurance Code a(n) ______ only agent is a person authorized to transact insurance coverage on human lives including endowments and annuities. A Life B Accident and Health C Property and Casualty D Life Settlement
A Life
Which of the following is an example of concealment? A Mary answers 'No' to the question 'Have you been convicted of driving under the influence in the past ten years?' when she is scheduled to appear for trial for a DUI arrest tomorrow morning B Mary inadvertently answers 'No' to the question, 'Have you been involved in more than one traffic collision in the past three years?' believing her accident happened more than three years ago C Mary tells her agent she paid a traffic citation for speeding ten days ago, but her agent marks the application 'No' without Mary's knowledge because he knows the ticket will not show up on her driving record for at least 90 days D Mary indicates on her application that her annual mileage is 15,000, when she knows that she drives more than 450 miles per week to and from work
A Mary answers 'No' to the question 'Have you been convicted of driving under the influence in the past ten years?' when she is scheduled to appear for trial for a DUI arrest tomorrow morning Concealment involves the failure to communicate known information or information material to a risk. An inadvertent or intentional incorrect answer is a misrepresentation, not a concealment, even if committed by the agent without the insured's knowledge. Failure to communicate an upcoming trial for a traffic offense is a concealment of material information, even though the answer may be technically correct.
A Property & Casualty Broker-Agent also licensed as a Life-Only or Accident & Health agent must do all of the following prior to renewing his or her license, except: A Complete 24 hours of continuing education in any line of licensing B Complete 24 hours of continuing education in each line of licensing C Complete all mandatory continuing education required for any line of licensing, regardless of the total hours of CE already credited toward renewal D Complete 3 hours of ethics continuing education
B Complete 24 hours of continuing education in each line of licensing Mandatory CE requirements can result in a producer completing more than the 24 hours of required continuing education needed to renew a license. There is no requirement to complete CE in each line of licensing.
The Insurance Commissioner may examine the records of an insurer in order to: A Evaluate an insurer's claims process prior to recommending it to the Chamber of Commerce B Determine the insurer's solvency C Determine whether the insurer's information technology is up to date D
B Determine the insurer's solvency
If renewal fees are paid and continuing education requirements are satisfied, but an agent has no active Notice of Appointment on file with the Commissioner, the license will be: A Terminated B Placed on inactive status C Cancelled D Revoked
B Placed on inactive status Under the California Insurance Code, if renewal fees are paid and continuing education requirements are satisfied, but the agent has NO active Notice of Appointment on file with the Commissioner, the license will be placed on inactive status.
All Internet advertisements by nonresident agents directed to California insurance consumers must clearly indicate the: A Email address B State of resident licensing C Phone number D Home address
B State of resident licensing
Which of the following risks may not be insured by a non-admitted company? A Property and liability insurance for aircraft or spacecraft B Workers' Compensation C Marine builders risk D International maritime transportation
B Workers' Compensation The Insurance Code requires employers to obtain Workers' Compensation insurance only from an admitted insurer.
Before a regulation proposed by the Insurance Commissioner takes effect, all of the following must occur, except: A Proposed regulations must be published for public comment B A public hearing is held to receive comment on the proposed regulation C The state legislature must enact the regulation after the OAL has approved it D The Office of Administrative Law must review the regulation for conformity with other state laws
C The state legislature must enact the regulation after the OAL has approved it The legislature is not involved in the process of creating regulations.
An agent whose license is suspended for more than ___ years will need to retake the prelicensing course and pass the qualifying exam. A 4 B 3 C 2 D 5
C 2
After expiration or cancellation, agents and brokers must keep records of every insurance transaction for at least ___ years. A 3 B 2 C 5 D 10
C 5
The Commissioner must approve which of the following agency names: A One which implies that the licensee is an underwriter B One already filed by another licensee C A bona fide natural name of an individual D One which infers the licensee will engage in activities not permitted under the license
C A bona fide natural name of an individual The Commissioner may disapprove of the use of true or fictitious names that are misleading, but not a bona fide natural name of an individual.
Which of the following is not an example of an unfair trade practice? A Misrepresenting the benefits of an insurance policy B False entry C Advertising on the internet D Discriminating between persons of the same class that have essentially the same hazard
C Advertising on the internet
In an insurance transaction, a(n) ______ represents the insurance company. A Solicitor B Administrator C Agent D Broker
C Agent
What is the maximum number of appointments a producer may accept? A 1 B 3 C Unlimited D 2
C Unlimited
California's Unfair Trade Practices Act does which of the following? A Identifies all possible unfair acts or practices B Gives individual consumers the right to private enforcement of the Act C Applies to all licensed persons under the Insurance Code, as well as unlicensed persons who would otherwise be regulated under the Code D Enables the Commissioner to initiate criminal or civil action against persons who commit violations of the Act
C Applies to all licensed persons under the Insurance Code, as well as unlicensed persons who would otherwise be regulated under the Code Most violations of the Act are civil, not criminal, but the Act does not provide for 'private attorney general' actions by consumers. The Commissioner may take direct administrative action against any person who violates the Act, including persons who may or may not be licensed. The Act provides that the Commissioner may conduct hearings to determine whether unspecified acts are unfair or deceptive.
Under the California Insurance Code, there are no _______ for life or health insurance in California. A Non-resident agents B Resident agents C Brokers D Producers
C Brokers
In a presentation to the local life underwriter association, Randy wrongly stated that ABC insurer is in financial difficulty. Randy may be guilty of: A Twisting B Coercion C Defamation D False advertising
C Defamation A statement critical of an insurer's financial condition is called defamation.
Any person who acts, offers to act, or assumes to act in a capacity for which a license is required without holding a license is guilty of a ___________, punishable by a fine of up to $50,000 and/or 1 year in jail. A Felony B Code violation C Misdemeanor D Civil infraction
C Misdemeanor Under the California Insurance Code, any person who acts, offers to act, or assumes to act in a capacity for which a license is required without holding a license is guilty of a misdemeanor, punishable by a fine of up to $50,000 and/or 1 year in jail.
The purpose of a Certificate of Authority is to: A Permit a deceased producer's relative to act for the producer B Give a producer authority to represent a certain insurer C Permit an insurance company to transact business D Allow producers to transact business
C Permit an insurance company to transact business
A licensed life agent may __________ on behalf of a life insurer for which the life agent is not specifically appointed. A Provide service to a policyholder B Deliver a policy to an applicant/insured C Present a proposal for insurance to a prospective policyholder D Fill out an application, collect the initial premium, and issue a receipt to an applicant/insured
C Present a proposal for insurance to a prospective policyholder
An agent would be guilty of 'pretexting' or conducting a 'pretext interview' in which of the following situations? A Advises a client to lapse, forfeit, or surrender any insurance contract on the basis of misrepresentation or fraud B Pretending to be an employee of a local utility company when attempting to obtain information in the investigation of an insurance claim C Pretends to be someone or something other than an insurance producer in order to obtain personal non-public information about someone in connection with an insurance transaction D Sends unsolicited text messages to persons who are not existing client
C Pretends to be someone or something other than an insurance producer in order to obtain personal non-public information about someone in connection with an insurance transaction Pretending to be someone other than an agent or broker when transacting insurance is prohibited, and may be a state or federal crime under specific circumstances. Pretending to be someone else during the investigation of an insurance claim is not prohibited and is a common practice by insurance company and law enforcement investigators working undercover.
In California, Arthur wants to personally place business with RTS Insurance Company who is a nonadmitted carrier. The only way Arthur can rightfully place such business is if he seeks a: A General Agent's License B Fire/Casualty Agent's License C Surplus Lines Broker's License D Life Agent's License
C Surplus Lines Broker's License
Which of the following is not an unfair discriminatory practice: A Refusing to accept an application due to an applicant's marital status B Determining insurability using an applicant's sexual orientation C Using an applicant's birthplace for purposes of identifying the applicant D Determining insurability using an applicant's race
C Using an applicant's birthplace for purposes of identifying the applicant
Which circumstance would be a basis for Ted to have his California insurance license, suspended, revoked, or renewal refused? A Ted has been convicted of a felony or crime of moral turpitude B Ted has committed a fraudulent or dishonest act in the acceptance, custody or payment of money C Ted knowingly has misrepresented the terms of an insurance policy to a client D All of the answers listed
D All of the answers listed
Before a licensed agent may transact insurance, the agent must first be _________ by an admitted insurer or a licensed agency which has a marketing agreement with one or more insurers. A Authorized B Licensed C Certified D Appointed
D Appointed
Which of the following actions by an insurer is considered an unfair claims practice? A Requiring the insured to submit a complete inventory of property loss B Notification that a fair and reasonable estimate must be provided before starting repairs C Requiring that a proof of loss be filed within a certain period D Attempting to settle a claim for less than the amount that the insured is entitled to under the policy
D Attempting to settle a claim for less than the amount that the insured is entitled to under the policy
A Life-Only Agent who is not also licensed as an Accident and Health Agent may transact: A 24-hour Care Coverage B Free insurance as long as the insurer authorizes the sale C Workers' Compensation D Certain disability benefits as riders to life or annuity contracts and are subject to specific continuing education requirements
D Certain disability benefits as riders to life or annuity contracts and are subject to specific continuing education requirements Under the California Insurance Code a Life-Only Agent who is not also licensed as an Accident and Health Agent may transact certain disability benefits as RIDERS to LIFE or ANNUITY contracts, such as disability income or long-term care, subject to any specific continuing education requirements.
Which of the following is considered the responsibility of the California Commissioner of Insurance? Alters or amends insurance legislation as passed by the state legislature or governing body B Sets insurance rates C Issues a Certificate of Authority to any insurer that requests one D Established policies and procedures for dealing with insurer insolvency
D Established policies and procedures for dealing with insurer insolvency The Commissioner has no authority to establish laws or alter or amend /insurance laws, that is the responsibility of the legislature. The Commissioner establishes policies and procedures for carrying out the laws. He or she does not set rates. Certificates of Authority go only to authorized insurers.
An agent's license will remain active as long as all of the following requirements have been met, except: A Continuing education B Renewal fees are paid C A Notice of Appointment is on file with the Commissioner D Insurer sales quota
D Insurer sales quota
All of the following are considered duties of the California Insurance Commissioner, EXCEPT: a. Regulate the internal affairs of the Department of Insurance b. Structure and control insolvency procedures c. Set insurance rates d. Keep all papers as required by law
c. Set insurance rates The Commissioner does not set rates.