Chapter 2 quiz questions
The Federal Fair Credit Reporting Act
Regulate consumer reports
An agent offers his client free tickets to a sporting event in exchange for the purchase of an insurance policy. The agent is guilty of
Rebating
Which of the following is a person who receives a fee or commission to attempt to negotiate settlements between a life insurance policyholder or certificate holder and one or more viatical settlement providers?
Life settlement broker
under the fair credit reporting act, individuals rejected for insurance due to information contained in a consumer report
Must be informed of the source of the report
Which of the following is NOT correct regarding false statements by a person engaged in the business of insurance?
Only written statements can be considered fraud.
A license applicant's trustworthiness and competence will be determined by all of the following EXCEPT
Personal testimonies from pervious co-workers and managers.
circulating deceptive sales material to the public is what type of Unfair Trade Practice?
False advertising
State law specifically prohibits using illegal inducements in the marketing of insurance. All of the following would be considered illegal inducements EXCEPT
Inviting prospective clients to the grand opening of the company's new office
Which of the following is any person who has authority to bind, or manages all or part of the assumed reinsurance business of a reinsurer and acts as an agent for the reinsurer?
Reinsurance manager
An agent makes a sales pitch that contains blatant lies about the insurer and its competitions. Who will ultimately be held legally responsible for this?
The insurer
an insurer refuses to renew a policy written by an intermediary whose contract has been terminated. This is allowed if-
The notice contains an offer to renew the policy by written request
Which of the following statements is INCORRECT
replacing insurance policies for the purpose of making commissions is legal.
all of the following are considered unfair trade practices in the business of insurance EXCEPT
sharing commissions
If a person violates an order specifically issued to him or her, that person may be required to pay a fine up to
$1,000
The Commissioner may require a surplus lines agent or broker to supply a bond of up to
$100,000
If a person does not comply with an order issued within 2 weeks after the commissioner has given notice, for each day that the violation continues, the Commissioner may issue a fine of up to
$5000
What is the maximum annual billing for an insurer
1% of net premiums earned
Insurance regulations in this state require prompt initiation and completion of claims investigations, and delivery of necessary claims forms and assistance to the insured and claimants. What constitutes prompt action?
10 consecutive days
The insurer decided to cancel an insurance policy prior to its expiration due to nonpayment of premium. When can cancellation take place?
10 days after the notice was delivered to the policyholder
The commissioner may issue a temporary license for an intermediary for a period of up to
12 months
an intermediary has just placed insurance on himself. He can receive compensation for this transaction only if he has placed insurance on other individuals with the same insurer with the last
12 months
if reasonably possible, a notice of proof of loss claim must be provided to the insurer within what period of time after the time required by the policy?
12 months
an insurer terminates an agent's appointment. Within how many days of termination must the intermediary be notified>
15
What is the minimum age to apply for an insurance license in Wisconsin
18
How many hours of prelicensing education approve by the Commissioner must each applicant complete
20
within how many days of the of the original hearing and final issuance of an order (regarding an order issued by the Commissioner) may an aggrieved person request a re-hearing?
20
After the original hearing and a final order is issued, an aggrieved person may request a re-hearing within
20 days
an intermediary holding a Wisconsin insurance license in any major line of insurance must complete how many credit hours of continuing education every 2 years?
24
Any person who violates an insurance statute or rule of Wisconsin can be imprisoned for up to how many years?
3 1/2
Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?
3 days
The Commissioner issues an order without having conducted a hearing. Within how many days of receiving the order can the person aggrieved by the order request a trial
30
if the commissioner issues an order without having conducted a hearing, the person aggrieved by the order may demand a hearing within how many days after the order was mailed?
30
when the appointment of an individual agent is terminated, the insurer must notify the office of the commissioner with the appropriate forms within now many days after the termination date?
30
A claim is considered overdue if NOT paid within how many days after the insurer receives written notice?
30 days
An agent who has had formal disciplinary action taken against them by a state regulatory agency must notify the commissioner of this within
30 days
How long are oral contracts valid in Wisconsin?
30 days
In this state, Insurers must pay a claim within how many days of receiving proof of loss?
30 days
Life settlements sold in Wisconsin must allow for the rescission of the contract within
30 days
What is the maximum number of insurance risks an agent can place with a single insurer in one calendar year if the agent is not listed with that insurer?
5
if a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?
5 days
The commissioner is required to examine every domestic insurer and every licensed rate service organization every
5 years
When the Commissioner revokes an intermediary's license for any reason other than nonpayment of fees, the intermediary may NOT apply for a new license for how many years?
5 years
An insurer decides to renew a life policy but at a higher premium rate, starting on the renewal date. How many days in advance must the insured be notified?
60
every producer must maintain a place of business in this state
Accessible to the public
Which of the following would NOT be a violation of state insurance regulations?
Agent C uses her license to write only business other can controlled.
The rule relating to insurance policy readability applies to which of the following?
All insurance policies issued in this state
How is the Commissioner of insurance placed in office
An appointment by the Governor
How is the Commissioner of insurance placed in office?
An appointment by the governor
Which of the following statements is true of insurance licensing in the state of Wisconsin
Applicants must pass a state licensing exam
Which of the following terms describes a situation in which an agent and policyholder act together to defraud in the insurer?
Collusion
Which of the following includes information regarding a person's credit character reputation, and habits?
Consumer report
All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT
Dividends from a mutual insurer
how often are domestic insurers examined by the Commissioner?
Every 5 years
which of the following is true regarding the notice of the insured's right to file a complaint?
Every insurer must provide such notice to its policyholders when the policy is issued
When the Commissioner examines an insurer, who pays the examination costs?
Examinees
All of the following violations may result in an agent's imprisonment EXCEPT
Failing to report to the department a criminal prosecution taken against the agent in another jurisdiction
An applicant is denied insurance because of information found on a consumer report. Which of the following requires that the insurance company supply the applicant with the name and address of the consumer reporting company?
Fair credit Reporting Act
An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of?
False advertising
Which of the following is an intermediary who acts on behalf of the insurer
Insurance agent
Which of the following is true regarding state regulations for record maintenance?
Insurer's records may be maintained electronically
A person who assists another in soliciting, negotiating, or placing insurance or annuities on behalf of an insurer or a person seeking insurance or annuities is called a(n)
Intermediary
The Gramm-Leach-Bliley Act was passed to
Protect private customer information filed with a financial institution.
which of the following may NOT be included in an insurance company's advertisement?
That its policies are covered by a state Insurance security fund
The commissioner conducts an examination of a domestic insurer and believes that the costs of examination places an unreasonable financial burden on the insurer. Which of the following will happen?
The Commissioner's office may pay all or part of the costs
if a licensee wants to transact insurance under a different name than that listed on his or her producer's license, which of the following must occur?
The change must be reported to the Department
The commissioner has the power to perform all of the following EXCEPT
Write insurance laws to protect the public
in Wisconsin, producers are permitted to share or split commissions, providing that
both are properly licensed for the line of insurance
an insurance producer just sold an insurance policy to his sister. What kind of business is this?
controlled
All of the following are CORRECT regarding temporary licenses EXCEPT
examinations are never required for the issuance of a temporary license
all of the following actions can be described as twisting EXCEPT
explaining to client the advantages of permanent insurance over term and suggesting changing policies
an agent who includes a statement or omits a statement which, when taken in context of the whole presentation, may tend to mislead or deceive the persons addressed has committed
misrepresentation
under what circumstance may an insurer cancel or refuse to renew an insurance policy based upon the past criminal record of the insured
only upon conviction of an offence directly related to the risk insured
An intermediary must maintain records for how long?
3 years
An intermediary must notify the Commissioner of a change of residence address within how many days of the change
30
According to the rule of readability of insurance policies in this state, what is a required minimum score on the Flesch reading ease test for Medicare supplement policies
50
If the commissioner issues an order and the person who is the object of the order demands a hearing within 30 days, within how many days must the hearing be held?
60 days
Any licensed person whose activities affect interstate commerce and who knowingly makes false material statements related to the business of insurance may be imprisoned for up to
10 years
applicants must complete a crime information bureau form within how many days before taking their state exam?
180 days
In addition to any other forfeiture imposed, any person who violate an effective order may be required to pay
Twice the amount of any profit gained from the violation
Which of the following is a statement made in an insurance application by the insured that is the absolute truth?
Warranty
If an insurer develops a new policy form, which authority must approve it?
Commissioner
Which of the following authorities decides whether a person's license should be revoked?
Commissioner
All funds collected by an intermediary for prompt payment to insureds, insurers, or producers as entitled are received in what is known as
Fiduciary capacity
An insurance company assures its new policyholders that their premium costs will not increase for a period of at least five years. However, due to increasing financial strain, they plan to raise premium costs for all insureds by 10% over the next two years. What term best describes this act?
Fraud
Any inducement offered to the insured in the sale of an insurance policy that is not specified in the policy is an unlawful practice known as
rebating
A policy may be issued for a term longer than one year or for an indefinite term as long as there is a clause in the policy providing for cancellation by giving how much notice prior to the anniversary date?
60 days
an insurance policy is considered a "new policy" if it has been in effect for what maximum time period?
60 days
an intermediary failed to complete the CE requirements by the due date 14 months ago. What must they do to reinstate their license?2
Complete the prelicensing education course and pass the state exam
which of the following would be considered an illegal inducement to purchase insurance
Confirming future dividends in a life insurance proposal
All of the following are true regarding rebates EXCEPT
Rebates are allowed if it is in the best interest of the client
Which of the following is an example of a producer being involved in an unfair trade practice rebating?
Telling a client that his first premium will be waived if he purchases the insurance policy today
which of the following entities is appointed to oversee the business of insurance and to ensure that the insurance laws of Wisconsin are enforced?
The commissioner of insurance
Federal law makes it illegal for any individual convicted of a crime involving dishonesty or breach of trust to work in the business of insurance affecting interstate commerce
Without receiving written consent from an insurance regulatory authority
If an insurance company wishes to order a consumer report on an applicant to assist in the underwriting process, and if a notice of insurance information practices has been provided, the report may contain all of the following information EXCEPT the applicant's
ancestry
If an agent advises a policyholder to replace an insurance policy but only does so for the purpose of making commissions, the agent has committed an act of
churning
