****General California insurance Multiple Choice
The legal term "nolo contendere" means A) Without reason B) Without conviction C) No contest D) Not guilty
C) No contest
Any person who engages in any unfair method of competition or deceptive act is liable to the state for a civil penalty and a fine of $5,000 for each act. In addition, if it is determined that the act is willfull the fine will NOT exceed A) $10,000 B) $5000 C) $25,000 D) $50,000
A) $10,000
Who might receive dividends from a mutual insurer? A) Policyholders B) Subscribers C) Stockholders D) Agents
A) Policyholders
The Gramm-Leach Bliley Act was passed to A) Protect private customer information filed with a financial institution B) Define insurance as interstate commerce C) Allow consumers access to credit and private consumer reports D) Allow insurance companies access to medical information for underwriting purposes
A) Protect private customer information filed with a financial institution
Which of the following statements is the most accurate concerning the Commissioner's term of office? A) Serves 4 year terms, limited to not more than two B) Serves 4 year terms with no limits C) Serves until removed by the Governor D) Serves one year terms, with no limited
A) Serves 4 year terms, limited to not more than two
If a licensee wants to terminate her agent's license but it is in possession of her employer, which of the following is true? A) She can terminate the license by sending the Commissioner a written notice B) She must first ask for her appointment to be terminated. As soon as the employer returns her license, she can send it to the Commissioner C) She must request her employer to send her license to the Commissioner D) She will not be able to terminate the license until she has it in her possession
A) She can terminate the license by sending the Commissioner a written notice
Under the prior approval plan, insurers file proposed policy rate information with A) The Department of Insurance B) Their clients C) The Governor D) Their underwriters
A) The Department of Insurance
The Commissioner of insurance supervises and regulates the insurance affairs in the state of California, and is chose by A) The people B) Admitted insurers C) The Governor D) The State Senate
A) The people
What is the main role of a solicitor of insurance? A) To aid insurance agents in transacting insurance B) To legally represent the insurance company C) To manage general agents D) To serve as the agency administrator
A) To aid insurance agents in transacting insurance
An insurance agent who diverts premiums held in a trust capacity for his or her own use A) Will be considered guilty of theft and be punished to the extent of the law B) Must report the premium as additional to the insurer C) Will be fined $250 and required to attend a 3-hour ethics course review D) Must enter the transaction on a seperate ledger and report such
A) Will be considered guilty of theft and be punished to the extent of the law
Within 30 business days from the date of receipt of a written request from an individual to correct, amend or delete any recorded personal information, the agent or company must meet all of the following requirements EXCEPT A) Correct, amend or delete the portion of the recorded personal information in dispute B) Provide the corrected information to any person who in the last 5 years received such information C) Notify the individual of its refusal to make such correction, amendments or deletions D) State the reason for the refusal
B) Provide the corrected information to any person who in the last 5 years received such information
An insurance application cannot ask about which of the following information about an applicant? A) Address B) Sexual orientation C) Age D) Gender
B) Sexual orientation
Which of the following insurers are owned by stockholders who have the usual rights of ownership, including the right of voting? A) Fraternal B) Stock C) Mutual D) Reciprocal
B) Stock
The maximum penalty for failure to print an individual agent's license number on a printed document is A) 200 B) 500 C) 1000 D) 5000
C) 1000
If an insurer violates the California Financial Information Privacy Act by releasing an insured's financial records without consent, the insurer may be penalized with a fine up to A) 600 B) 1600 C) 2500 D) 4800
C) 2500
An insurer that holds a Certificate of Authority in the state in which it transacts business is considered a/an A) Certified insurer B) Self-insurer C) Authorized insurer D) Local insurer
C) Authorized insurer
Which of the following best describes an agent's fiduciary capacity? A) Soliciting insurance contracts to third parties B) Maintaining insurance license C) Promptly forwarding premiums to the insurer D) Commingling premiums with personal funds
C) Promptly forwarding premiums to the insurer
Anyone convicted of committing an insurance fraud may be fined up to the greater amount of double the value of the fraud or A) $50,000 B) $75,000 C) $100,000 D) $150,000
D) $150,000
An insured files a fraudulent claim for $100,000. The maximum fine that the insured could be ordered to pay if convicted of insurance fraud is A) $50,000 B) $100,000 C) $150,000 D) $200,000
D) $200,000
An agent has how many days in which to receive an appointment after the issuance of an insurance contract? A) 21 days B) 30 days C) 10 days D) 14 days
D) 14 days
In order for Wild Life of Havana to do business in this state, it must apply for and obtain A) A state proclamation B) A local waiver C) Four corporate character references D) A certificate of authority
D) A certificate of authority
An insurance agent is planning to give out his business cards to prospective clients to solicit some insurance business. On the business card, the agent's name appears in font size 16, the phone number is in font size 14, and the business address is in font size 10. What font size should be used for the agent's license number? A) 10 B) 12 C) 14 D) 16
A) 10
An agent whose license is due to expire may submit an application for renewal and pay applicable fees and continue operating under the expired license for a period of A) 60 days B) 14 days C) 30 days D) 10 days
A) 60 days
De-mutualization happens when A) A mutual insurer becomes a stock company B) A reinsurer ends a contract with a primary insurer C) A stock insurer becomes a mutual company D) A primary insurer ends a contract with a reinsurer
A) A mutual insurer becomes a stock company
Which of the following would NOT be considered a form of direct response marketing? A) A sign in an insurer's office B) An ad in a newspaper C) A circular mailed to a city's residents D) An insurance company's TV commercial
A) A sign in an insurer's office
Which of the following statements is NOT true regarding an insurance solicitor in California? A) A solicitor may act as an insurance agent at the same time B) A solicitor cannot act as a broker at the same time C) A solicitor aids in transacting insurance other than life D) A solicitor must be a natural person
A) A solicitor may act as an insurance agent at the same time
According to the Agency Name/ Use of Name provision of the California Insurance Code, which of the following names for an insurance producer may be approved for use? A) ABC Insurance Services B) ABC Insurance Company C) ABC Insurer D) ABC Underwriter
A) ABC Insurance Services
When transacting business in this state an insured formed under the laws of another country is known as a/an A) Alien insurer B) Domestic insurer C) Foreign insurer D) Admitted insurer
A) Alien insurer
An insured noticed that his policy stated that he "shall" keep all flammable liquids at least ten feet from ignition source and "may" consider storing flammable liquids in another location. Where must they keep it? A) At least 10 feet away B) In another location entirely C) Anywhere within 10 feet D) There is no specified area
A) At least 10 feet away
The set of regulations issued by the California Insurance Commissioner that identifies the standards for the insurance code and how it is to be administered is A) California Administrative Code of Regulations B) California Regulatory Code of Conduct C) California Advisory Administrative Code D) California Advisory Code
A) California Administrative Code of Regulations
Which of the following must an insurer obtain in order to transact insurance within a given state? A) Certificate of authority B) Producer's certificate C) Business entity license D) Insurer's license
A) Certificate of authority
Which of the following terms is associated with a mutual insurer becoming a stock insurer? A) De-mutualization B) Reinsurance C) Interpolation D) Retrocession
A) De-Mutualization
When twin brothers applied for life insurance from Company A, the company found that while neither of them smoked and both had a very similar lifestyle, one of the twins was in a much stronger financial position than the other. Because of this, the company charged him a higher rate for his insurance. This practice is considered A) Discrimination B) Twisting C) Controlled business D) Adverse selection
A) Discrimination
If an agent unwittingly gives a client incorrect information, what professional insurance would pay for losses or defend against any resulting lawsuits? A) Errors and Omissions B) Nonadmitted agent insurance C) Professional liability D) Nonmedical insurance
A) Errors and Omissions
The insurance solicitor is found in which field of insurance? A) Fire and casualty B) Mortgage guaranty C) Life & Health D) Disability
A) Fire and casualty
Which of the following insurance providers must be nonprofit and sell insurance only to its members? A) Fraternal B) Service C) Mutual D) Reciprocal
A) Fraternal
All insurers doing business in California must maintain a department to investigate possible A) Fraudulent claims by insureds B) Fraud by insurers C) Ethics violations by agents D) Arson
A) Fraudulent claims by insureds
An exclusive agent A) Has a contract with one company B) Must limit the number of clients C) Offers insurance from a variety of sources D) Must be an insured's sole source for coverage
A) Has a contract with one company
Arnie worked for Evermore Life Insurance for many years and became their top-selling agent. However, while Arnie was out of the county enjoying his earnings, he forgot to send his renewal for his life license and his license expired. In addition to Arnie's license expiring, what else will happen to Arnie? A) His appointment will expire B) After Arnie finally renews his license he will need to start at the bottom of the pay scale again C) Arnie will need to look for a new career D) Nothing else will happen to Arnie
A) His appointment will expire
Home Service Insurance is a variation of which type of life policies? A) Industrial Life Insurance B) Credit Insurance C) Whole Life Insurance D) Homeowners insurance
A) Industrial Life Insurance
Which type of life insurance is usually written for small amounts and requires frequent premiums that are collected by the agent? A) Industrial life insurance B) Credit life insurance C) Group life insurance D) Key executive life insurance
A) Industrial life insurance
What are the consequences of a failure to comply with the Commissioner's office while it is executing a seizure order? A) It is misdemeanor punishable by a fine of $1,000, one-year imprisonment, or both B) It may become grounds for license revocation and termination of all agency contracts C) It is a felony and is punishable by a 5-year imprisonment and restitution to victims commensurate with damages claimed D) It would be considered as obstruction of justice, and is subject to a fine of $5,000 per day
A) It is misdemeanor punishable by a fine of $1,000, one-year imprisonment, or both
What are the consequences of a failure to comply with the Commissioner's office while it is executing a seizure order? A) It is misdemeanor punishable by a fine of $1000, one-year imprisonment, or both B) It may become grounds for license revocation and termination of all agency contracts C) It is a felony and is punishable by a 5-year imprisonment and restitution to victims commensurate with damages claimed D) It would be considered as obstruction of justice, and is subject to a fine of $5000 per day
A) It is misdemeanor punishable by a fine of $1000, one-year imprisonment, or both
What happens to a corporation's license if the corporation is dissolved? A) It terminates B) It remains in force for 60 days C) It becomes inactive D) It expires after 2 years
A) It terminates
Which type of insurance includes the assumption of contractual obligations to reimburse the insured against all of a portion of his fees, costs, and expenses related to or arising out of services performed by or under the supervision of an attorney who is an active member of the bar of any jurisdiction or jurisdictions of the United States? A) Legal insurance B) Errors and Omission insurance C) Professional Liability insurance D) Contract insurance
A) Legal insurance
Any person who knowingly and willfully obtains information about an individual from an insurance company, agent or organization supporting insurance under false pretenses shall be fined A) Not more than $10,000, imprisonment not to exceed one year or both B) Not more than $20,000, imprisonment not to exceed one year or both C) Not more than $10,000, imprisonment not to exceeds two years or both D) Not more than $20,000, imprisonment not to exceeds two years or both
A) Not more than $10,000, imprisonment not to exceed one year or both
Which of the following is NOT correct regarding false statements by a person engaged in the business of insurance? A) Oral statements cannot be considered fraud B) Omissions of material fact on insurance application are fraud C) False statements about financial condition of an insurer are unlawful D) Statements made with the intent to deceive are unlawful
A) Oral statements cannot be considered fraud
A participating insurance policy may do which of the following? A) Pay dividends to the policyholder B) Provide group coverage C) Pay dividends to the stockholder D) Require 80% participation
A) Pay dividends to the policyholder
A property and casualty agent has been licensed for 7 years. How many continuing education hours must the agent complete this licensing period? A) 30 B) 24 C) 15 D) 0
B) 24
What is the minimum fine for acting as an agent for a nonadmitted insurer in the transaction of insurance business? A) 100 B) 500 C) 1000 D) 5000
B) 500
All of the following would be considered insolvent insurers EXCEPT A) A company with an impairment of minimum paid-in capital B) A company that reinsures outstanding risks C) A company that paid out all of its liabilities but doesn't have additional assets equal to the aggregate paid-in capital D) A company with insufficient policy reserves to meet its financial obligations
B) A company that reinsures outstanding risks
What is reinsurance? A) An agreement between an insurer and an insured B) An agreement between a ceding insurer an assuming insurer C) An agreement between an originating insurer and a ceding insurer D) An agreement between a domestic insurer and a foreign insurer
B) An agreement between a ceding insurer an assuming insurer
The agent's authority to transact insurance business for an insurer is effective A) Once the Commissioner has given approval and the agency receives notice of such approval B) As of the date that the notice of appointment is signed C) Upon the initial hiring of the agent D) After the mandatory 60-day waiting period for all new agency contracts has expired
B) As of the date that the notice of appointment is signed
If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered to be A) Approved B) Authorized C) Certified D) Qualified
B) Authorized
What certification must an insurer receive before it can transact insurance in California? A) NAIC Charter Certificate B) Certificate of Authority C) Solvency Clearance D) Guarantee Association Clearance
B) Certificate of Authority
Of the following, which is NOT considered a general duty or power of State Insurance Commissioners? A) Issue, suspend, and revoke insurance licenses of authority B) Develop and implement laws to regulate the business of insurance C) Oversee the Department Of Insurance D) Conduct investigations and examinations of companies and individuals who conduct the business of insurance
B) Develop and implement laws to regulate the business of insurance
What is the term for a sales campaign conducted through the mail? A) Advertising B) Direct-response C) Direct-mail D) Mass marketing
B) Direct-response
The Commissioner may, without hearing suspend an agent's license for all of the following reasons EXCEPT A) Revocation of another professional license B) Failure to properly identify the insured true risk C) Committing a felony D) Denial of a previous application for another professional license
B) Failure to properly identify the insured true risk
According to the California Law, if an insurer includes a fraudulent claim clause in the contract regarding the legal ramifications of a false claim, the clause must be preceded by which of the following statements? A) "WARNING" The following conditions are in accordance with California Law B) For your protection, California Law requires the following to appear on this form C) The legal ramifications only apply to insurance professionals D) State law requires that insurance fraud be reported to county, state, and federal authorities for the maximum prosecution allowed by law
B) For your protection, California Law requires the following to appear on this form
Which of the following entities is not an insurer but an organization formed to provide insurance benefits for members of an affiliated lodge or religious organization? A) Reciprocal association B) Fraternal benefit society C) Mutual company D) Stock company
B) Fraternal benefit society
A deceptive act or practice committed by a person with the intent to secure an unfair advantage or unlawful gain is known as A) Misrepresentation B) Fraud C) Transacting without a license D) Misinformation
B) Fraud
Which of the following is true regarding free insurance issued in this state? A) It is allowed as a rider B) It is illegal C) It is illegal with the exception of health insurance D) It is allowed if issued by a government insurer
B) It is illegal
In which of the following situations is it legal to limit coverage based on marital status? A) Divorce within the last six months applying for insurance B) It is never legal to limit coverage based on marital status C) Excessive number of divorces, as defined by the Insurance Code D) Legal separation during the application
B) It is never legal to limit coverage based on marital status
All of the following may recommend life insurance contracts for their prospects, clients, and proposed insureds EXCEPT A) Brokers B) Life solicitors C) Life and Disability Analyst D) Life agents
B) Life solicitors
An insurance company that is NOT authorized to do business in the State of California is known as a(n) A) Alien company B) Nonadmitted company C) Surplus company D) Foreign company
B) Nonadmitted company
Which of the following best defines the owner in a life settlement contract? A) An insurance provider B) Owner of the life insurance policy C) The insured under the contract D) A qualified institutional buyer
B) Owner of the life insurance policy
Which of the following is NOT a typical characteristic of an ERRORS and OMISSIONS policy? A) Coverage can be written on a "limit per claim" basis or a "limit for all claims during the policy period" basis B) Policies have numerous exclusions to limit or avoid fraudulent claims C) Coverage is provided only for negligence, errors, and omissions D) Policies typically have high deductibles ($100 or $500)
B) Policies have numerous exclusions to limit or avoid fraudulent claims
In California, which system is used to approve or disapprove rate filings? A) File and Use B) Prior C) Open D) Mandatory
B) Prior
The type of insurance that guarantees the behavior of a person and the performance of contracts other than insurance policies is known as A) Behavioral Contract insurance B) Surety insurance C) Contract insurance D) Performance Guaranteed Insurance
B) Surety insurance
In a conservation or liquidation effort, what powers does the Commissioner have? A) The Commissioner has the power to sell the company's assets until all of its creditors are paid B) The Commissioner has all of these powers C) The commissioner has complete control over the assets of the insolvent company D) The Commissioner has the power to sue the company's officers
B) The Commissioner has all of these powers
The Commissioner may deny a license application without hearing for which of the following reasons? A) The applicant has conducted previous business in an unethical manner B) The applicant had a previous license suspended or revoked for cause within the immediate 5-year period C) The applicant has been accused of a felony D) None of these
B) The applicant had a previous license suspended or revoked for cause within the immediate 5-year period
An agent's role to act in the insured's best interest, based on the good faith and trust placed on the agent by the public is known as A) The insurer agreement B) The fiduciary duty C) The prudent man rule D) The agency agreement
B) The fiduciary duty
An agent is a legal person who acts on behalf of A) Himself/herself B) The principal C) The applicant D) The beneficiary
B) The principal (insurer)
What is the purpose of the California laws regulating production agencies? A) They are mainly concerned with standardizing production agencies B) To provide protection for the clients by requiring producers to maintain professional standards of conduct C) Avoid unnecessary federal regulation D) All of these
B) To provide protection for the clients by requiring producers to maintain professional standards of conduct
When can a life-only agent transact disability insurance on behalf of an authorized insurer? A) With special permission from the Commissioner B) Upon obtaining a signed by the insurer notice of appointment C) Upon obtaining a disability insurance license D) Under no circumstances
B) Upon obtaining a signed by the insurer notice of appointment
In order for the California Insurance Code to be changed in any way, what is required? A) The governor's signature is required on the bill B) The state senators vote on any bills and if they are approved, they become law C) A bill must be approved by both houses of the California legislature D) A bill must be presented to the residents of California who decide by popular vote
C) A bill must be approved by both houses of the California legislature
An insurance agent, who has been in a sales slump for the last 6 months, has decided that she will offer complimentary health insurance for the first year on every life insurance policy she sells for the next 12 months. This practice is an example of A) Free insurance as an inducement to purchase real property and is prohibited by the Code B) An option in a purchase contract, therefore, is permitted C) A violation of the Code D) Free insurance as an inducement to purchase real property and is permitted by the Code
C) A violation of the Code
An insurance agent explains to his client the difference between two disability income insurance policies and then offers to fill out an application with the client's personal information and history. Upon completion of the application, the agent informs his client that he will "shop around" to find the company with the most favorable rates. If the agent present the client's application to an insurer, he will be acting in which of the following capacities? A) An insurance solicitor B) An insurance agent C) An insurance broker D) A life agent
C) An insurance broker
Which of the following actions would NOT be considered a form of "adverse underwriting decisions" for a policy involving individually underwritten coverage? A) Termination of existing coverage of an insured risk B) Failure of an agent to apply for coverage that an applicant requests C) An insurer giving an insured "preferred" rating due to health and lifestyle conditions D) A declination to cover an applicant
C) An insurer giving an insured "preferred" rating due to health and lifestyle conditions
What is a foreign insurer? A) An insurer with licensed agents who are citizens in other countries B) An insurer with licensed agents who are citizens in more than one country C) An insurer with a home office in another state D) An insurer with a home office in another country
C) An insurer with a home office in another state
An agent solicited a policy for a client who originally qualified for standard premiums. During the underwriting process, the applicant was rated as a substandard risk and assigned a higher premium. Upon policy delivery, the agent failed to mention that the premiums would be higher, and the client filed a lawsuit against the insurer. This is an example of A) Concealment and will not be covered by an Errors & Omissions policy B) An unfair claim settlement C) An omission and will be covered by an Errors & Omission policy D) A misrepresentation
C) An omission and will be covered by an Errors & Omission policy
An insurance company and its agents must notify all applicants and policyholders of information-gathering processes utilized for written application transactions A) At the time of delivery of the policy when personal information is only collected from the applicant, an insured under the policy, or public records B) At the time of application for the policy when information is collected from sources other than the applicant, persons under the policy, or public records C) Both of these answers are correct D) Neither of these answers is correct
C) Both of these answers are correct
A France-based insurer would like to do business in California. What document must it first receive? A) Alien Insurer License B) International Certificate of Incorporation C) Certificate of Authority D) Transcontinental Commerce Clearance
C) Certificate of Authority
To legally transact insurance in this state, an insurer must obtain which of the following? A) Business entity license B) Certificate of Insurance C) Certificate of Authority D) Power of Attorney
C) Certificate of Authority
What document must an insurer receive in order to transact insurance in this state? A) Admitted insurer license B) Guarantee Association clearance C) Certificate of Authority D) Commissioner's certificate
C) Certificate of Authority
In which distribution system must the potential client take the initiative and respond to an advertisement through a telephone or mail contract with the insurer? A) Home service system B) Direct agency system C) Direct response system D) Managing general agent system
C) Direct response system
Which of the following provisions requires an insurer to document all correspondence with an insured? A) Claims settlement B) Entire contract C) Errors and omissions D) Unfair trade practices
C) Errors and omissions
To make sure that an agent's license stays active, the agent of an insurer must see that all of the following are done EXCEPT A) An appointment notice has been executed by the insurer B) A notice of appointment is filed for the agent by the insurer with the Commissioner's office C) File a security bond with the Commissioner D) Be legally appointed with the insurer
C) File a security bond with the Commissioner
An insurance company is domiciled in Montana and transacts insurance in Wyoming. Which term best describes the insurer's classification in Wyoming? A) Domestic B) Unauthorized C) Foreign D) Alien
C) Foreign
When doing business in this state, an insurance company that is formed under the laws of another state is known as which type of insurer? A) Alien B) Nonadmitted C) Foreign D) Domestic
C) Foreign
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? A) Defamation B) Unfair discrimination C) Fraud D) Errors and omissions
C) Fraud
Which of the following is NOT considered personally identifiable information? A) Financial information collected through web servers B) Consumer reports C) Government records D) Loan history
C) Government records
Every holder of an insurance license must notify the Commissioner, in writing, of any change of residence address, principal business address, or mailing address within which time parameter? A) 10 working days B) 30 days C) Immediately D) 10 days
C) Immediately
When would the insurer be allowed to use the information obtained through a pretext interview? A) Under no circumstances B) If it was obtained during underwriting C) In the investigation of a claim suspected as fraudulent D) Any time the policy is being replaced
C) In the investigation of a claim suspected as fraudulent
Fraudulent activities in health care are estimated in billions of dollars annually. This results in A) Fewer insurance policies being written B) Stricter underwriting requirements C) Increase in health care costs for everyone D) More people going to jail
C) Increase in health care costs for everyone
An insurance company was able to meet its financial obligations to the policyowners, however, it does not own enough additional assets to equal at least the amount of paid-in capital. That company may be deemed A) Delinquent B) Terminated C) Insolvent D) Unauthorized
C) Insolvent
If an insurer's legal reserve funds are found to be less than the minimum required by law, the insurer is A) Unauthorized B) Fraudulent C) Insolvent D) Solvent
C) Insolvent
When an agent does not hold any active appointments with an insurers, what happens to the agent's license? A) It must be renewed with a new appointment B) It expires C) It becomes inactive D) It must be returned to the Department of Insurance
C) It becomes inactive
Which of the following is NOT true regarding a Certificate of Authority? A) It is equivalent to an insurance license B) It is issued by the state department of insurance C) It is issued to group insurance participants D) It may be necessary for transacting business in a specific state
C) It is issued to group insurance participants
An "insurance agent" in the state of California is able to transact business in all classes of insurance EXCEPT A) Workers compensation B) Auto insurance C) Life insurance D) Homeowner's insurance
C) Life insurance
Which of the following best describes the unfair trade practice of defamation A) Issuing false advertising material B) Refusing to deal with other insurers C) Making derogatory oral statements about another insurer's financial condition D) Assuming the name and identity of another person
C) Making derogatory oral statements about another insurer's financial condition
Any person who transacts insurance without a license A) Is called a Life Solicitor B) Is guilty of twisting, a misrepresentation C) May be guilty of a misdemeanor D) May do so as long as he/she does not get a commission
C) May be guilty of a misdemeanor
Acting as an agent for a nonadmitted insurer (unless a surplus line broker) is considered a/an A) Class A violation B) Unfair trade practice C) Misdemeanor D) Felony
C) Misdemeanor
According to CIC, all licensees must prominently display their individual license numbers on all EXCEPT A) Printed advertisements B) Business cards C) Motor club advertisements D) Marketing materials
C) Motor club advertisements
An insured who signs a fraudulent claim form may be guilty of A) Misrepresentation B) Rebating C) Perjury D) Misdemeanor
C) Perjury
If a licensee would like to terminate his license and has it in his possession, what would he have to do? A) Request his employer terminate his appointment and notify the Commissioner B) Wait until the license expiration date and allow his license to expire C) Send the license to the Commissioner for termination D) Write the Commissioner and request a hearing for license termination
C) Send the license to the Commissioner for termination
All of the following statements are true regarding an application by an insurer for a rate change EXCEPT A) The application will be deemed approved 60 days after public notice unless a consumer requests a hearing and the Commissioner grants the hearing B) The application will be deemed approved 60 days after the public notice unless the Commissioner on his or her own motion determines to hold a hearing C) The application will be deemed approved 60 days after public notice unless the proposed adjustment exceeds 10% for personal lines or 25% for commercial lines D) The Commissioner will notify the public of any application by an insurer for a rate change
C) The application will be deemed approved 60 days after public notice unless the proposed adjustment exceeds 10% for personal lines or 25% for commercial lines
Which of the following is NOT required to be present on a licensed insurance broker's website? A) The broker's license number B) The broker's principal place of business C) The broker's residential address D) The broker's name
C) The broker's residential address
What does the Commissioner use to decide if a rate for an insurance policy is adequate and fair? A) Whether at least 60 percent of clients can afford it B) If the rate charged would be able to pay off a claim on the policy within at least 2 years C) The rate and how it compares to insurance company's investment income D) The amount charged by competing companies
C) The rate and how it compares to insurance company's investment income
An applicant has submitted an application for a Life agent license in the state of California. Five years ago, the applicant was charged with, but not convicted of, a felony in another state. The California Commissioner could deny the license on the grounds that the applicant A) Has a felony charge and is therefore excluded from licensing B) May commit another felony based on his past history C) There are no grounds for which license could be denied based on the information provided D) Is not properly qualified to perform the duties of a person holding the license
C) There are no grounds for which license could be denied based on the information provided
ABC Insurance has determined that the premiums that it currently charges for its Safe Driver II plan needs to be increased. ABC's underwriters have reevaluated the rate pan and sent the new rate schedule to each managing general agent for distribution to its agents. After two weeks of marketing the new plan, ABC files the new plan with the Commissioner for approval. This method of rate plan marketing is considered A) File and use rate laws B) Adjust and market rate laws C) Use and file rate laws D) Develop and file rate laws
C) Use and file rate laws
When is an insurance license considered inactive? A) When renewal fees are not paid B) When it's a temporary license C) When no company appointment is in effect for the license D) When the agent is not conducting business with the general public
C) When no company appointment is in effect for the license
An insurer devises an intimidation strategy in order to corner a large portion of the insurance market. Which of the following best describes this practice? A) Unfair discrimination B) Defamation C) illegal D) A legal advertising strategy
C) illegal
Which of the following is the closest term to an authorized insurer? A) Certified B) Licensed C) Legal D) Admitted
D) Admitted
A natural person that is employed to aid an insurance agent or insurance broker in the transacting of insurance business other than life insurance transactions is called A) An agency administrator B) A managing general agent C) A general agent D) An insurance solicitor
D) An insurance solicitor
For the purpose of a contract, which of the following could be considered a "person"? A) An association B) A business trust C) A limited liability corporation D) Any of these would qualify as a person
D) Any of these would qualify as a person
An individual wants to transact business as a life agent in this state. In addition to obtaining a life agent license, what else must the applicant have? A) Certificate of insurance B) Insurable interest C) A letter of recommendation from the Commissioner D) Appointment
D) Appointment
For an insurance contract to be valid in the State of California, when must insurable interest exist? A) At any time prior to the issue of a policy on the beneficiary B) At the time at which a claim for indemnification is made C) At the time at which the first premium is paid D) At the time of application for a policy on the insured
D) At the time of application for a policy on the insured
Which of the following terms describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance? A) Undercutting B) Twisting C) Slandering D) Defamation
D) Defamation
Which of the following best describes an insurance company that has been formed under the laws of this state? A) Sovereign B) Alien C) Foreign D) Domestic
D) Domestic
The Commissioner performs all of the duties dictated by the CIC and A) May be appointed with only ONE insurer during his/her term to avoid conflicts of interest B) Makes any changes to the Code that he/she deems necessary from time to time C) Acts as the executor for all fraudulent claims filed in this state D) Enforces the execution of all provisions and laws
D) Enforces the execution of all provisions and laws
Intentionally misrepresenting or concealing a material fact to induce an insurance company to make a contract is known as A) Avoidance B) Misrepresentation C) Concealment D) Fraud
D) Fraud
What will happen if an agent submits an application to an insurance company to which he is not appointed? A) The application will not have to be approved by an underwriter B) The insurer will not accept the policy C) The agent will be found guilty of a misdemeanor D) If the insurer accepts the policy, it must appoint the agent
D) If the insurer accepts the policy, it must appoint the agent
Which of the following persons represents several insurance companies but owns the records of the policies sold? A) Exclusive agent B) General agent C) Direct writing agent D) Independent agent
D) Independent agent
The continuing education requirement for the California Partnership for Long-Term Care policies A) Does not apply to agents who hold a life license B) Only needs to be completed if an actual sale occurs during that licensing period C) Must be completed in addition to an agent's regular continuing education requirements D) Is part of an agent's regular continuing education requirements
D) Is part of an agent's regular continuing education requirements
Which of the following terms means a results of calculation based on the average number of months the insured is projected to live due to medical history and mortality factors? A) Mortality rate B) Risk exposure C) Morbidity D) Life expectancy
D) Life expectancy
An insurance agent may NOT transact A) Auto insurance B) Workers compensation insurance C) Property and casualty insurance D) Life insurance
D) Life insurance
According to California Insurance Code, the term "shall" describes what kind of actions? A) Permissive B) Implied C) Directive D) Mandatory
D) Mandatory
Transacting insurance without a license is considered a/an A) Class A violation B) Act of negligence C) Felony D) Misdemeanor
D) Misdemeanor
On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. The company is guilty of A) Concealment B) Unfair claim practice C) Rebating D) Misrepresentation
D) Misrepresentation
An independent agent may have contracts with which of the following? A) The Department of insurance B) The commissioner C) Brokers D) More than one insurer
D) More than one insurer
An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy? A) Reciprocal B) Nonprofit service organization C) Stock D) Mutual
D) Mutual
A person applying for an insurance license in California was previously found guilty in a trial in which he entered a plea of "nolo contedere." What does "nolo contendere" mean? A) Guilty, but with justification B) Not guilty by reason of circumstances C) Without reason D) No contest
D) No contest
On a participating policy issued by a mutual insurance company dividends paid to policyholders are A) Paid at a fixed rate every year B) Taxable as ordinary income C) Guaranteed D) Not taxable since the IRS treats them as a return of a portion
D) Not taxable since the IRS treats them as a return of a portion
ABC Insurance Company wishes to begin transacting business in Louisiana. Before it can do so, it must do which of the following? A) Receive permission from the Governor of California B) Receive a letter of clearance from ABC's home state C) Obtain approval of each of its corporate officers and executives D) Obtain a certificate of authority
D) Obtain a certificate of authority
What is the purpose of errors and omissions insurance? A) Protect agents against human resources errors made by their respective agencies B) Protect against misrepresentation in declarations C) Protect insureds against a claim loss D) Protect agents against charges that they didn't properly serve a client
D) Protect agents against charges that they didn't properly serve a client
What method do insurers use to protect themselves against catastrophic loss? A) Indemnity B) Pro rata liability C) Risk management D) Reinsurance
D) Reinsurance
If an insured intentionally failed to communicate information related to an implied warranty, which of the following may occur? A) The insured will be fined B) The insurer may increase premiums at anniversary date C) The insurer will cancel the policy and retain premiums paid D) The insurer may rescind the contract
D) The insurer may rescind the contract
In a life settlement contract, whom does the life settlement broker represent? A) The insurer B) The beneficiary C) The life settlement intermediary D) The owner
D) The owner
An agent has completed 30 hours of continuing education by the end of a license period instead of the required 24 hours. What will happen to the 6 hours in excess? A) They will be credited toward the agent's commissions B) The outcome will depend upon whether it is the agent's first license period or not C) They will be lost D) They will be carried over into the next licensing period
D) They will be carried over into the next licensing period
An agent has completed 30 hours of continuing education by the end of a license period instead of the required 24 hours. What will happen to the extra 6 hours? A) They will be credited toward commission's B) The outcome will depend on whether it is the agent's first license period or not C) They will be lost D) They will be carried over into the next licensing period
D) They will be carried over into the next licensing period
Which type of insurance guarantees or indemnifies owners of real of personal property or the holder of liens or other interested parties against loss or damage suffered to said property? A) Commercial property insurance B) Surety insurance C) Contract insurance D) Title insurance
D) Title insurance
How often must every insurer doing business in California report its financial condition to the Commissioner? A) March 1 of even-numbered years B) Each year, on or before January 1 C) January 1 of odd-numbered years D) each year, on or before March 1
D) each year, on or before March 1