PA STATE LAWS
Greg's life insurance policy defaulted because he failed to pay the premiums. How much time does he have for reinstatement of his policy after a default?
3 years
What is the grace period for paying the first life insurance premium?
30 day
A producer has ________ to inform the Pennsylvania Insurance Department of their being appointed as a producer.
30 days
After an insurer sets their rates and submits their manuals, how much time must pass before the rates can be used?
30 days
How much time does an insurance licensee have to report to the Director any administrative action taken against them?
30 days
Health insurance policies issued in Pennsylvania cannot exclude preexisting conditions in group medical policies for more than -
6 months
How is the amount of a variable annuity payment determined?
Dependent on the value of a separate account maintained by the insurer
The _________constitutes the entire life insurance contract?
Policy
What must be included for an accelerated death benefit to be considered for payment?
A certification signed by a licensed physician
If a producer allows their insurance license to lapse, how much time do they have to be reinstated?
1 year
Barring extenuating circumstances, what is the maximum time an insurer has to complete an investigation of a claim?
30 days
How many days prior to publication must advertisements used in the soliciting and sales of insurance be submitted for review?
30 days
Chronically ill
To be chronically ill is to be unable to perform at least two activities of daily living (eating, toileting, transferring, bathing, dressing, or continence) or requiring substantial supervision to protect oneself from threats to health and safety due to severe cognitive impairment.
What is the maximum fine for each violation by an insurer who issues a policy that was NOT approved by the Commissioner?
$1,000
A mutual insurer must maintain at least how much policyholder surplus for its Life and Annuity lines of insurance?
$1,000,000
In Pennsylvania, accident and health insurance lines must maintain at least how much capital?
$100,000
What is the maximum fine for a person engaging in exclusive insurance agent activities without a license?
$1000
What is the maximum deductible for a specified (dread) disease health insurance policy?
$250
What is the minimum aggregate benefit limit for a specified (dread) disease health insurance policy?
$5,000
What is the maximum amount of fines in a six-month period for willful unfair competition violations?
$50,000
What is the maximum federal criminal penalty for embezzling funds by an individual engaged in the business of insurance?
$50,000 and 10 years in prison
What is the maximum federal criminal penalty for fraud by an individual engaged in the business of insurance?
$50,000 and 10 years in prison
What is the maximum fine for unfair discrimination between individuals of the same class?
$500
Replacement regulations apply to life insurance policies whose face amount is at least -
$5000
What is the maximum civil penalty for the first fraud violation?
$5000
following persons are not required to be licensed as insurance producers
-An insurer -An employee of an insurer who is not engaged in the sale, solicitation, or negotiation of insurance contracts -An officer, director, or employee of an insurer or of an insurance producer as long as the individual does not receive a commission on policies sold and the activities are executive, administrative, or managerial in character. -A person who, for no commission, secures and furnishes insurance information -A person engaged in the business of advertising insurance -A salaried full-time employee who counsels or advises his employer on the employer's insurance issues and does not sell or solicit insurance or receive a commission
How much time does the Insurance Department have to hold a hearing after notifying a licensee of a possible violation?
10 days
It is considered an unfair claims practice to fail to respond to an insured within how many days of receiving a claim?
10 working days
What surrender years must be included on the life insurance surrender comparison index disclosure?
10 years and 20 years
The insurance company must have liabilities equal to no more than _____ of its funds.
100%
How much notice must an individual be given of the expiration date of the eligibility period for converting from a group life insurance policy to an individual life insurance policy?
15 days
For how much time must a policy be in force before it becomes incontestable?
2 years
The minimum benefit period for a specified (dread) disease health insurance policy covering hospital room and board, treatment, x-rays, private services from a registered nurse, and ambulance services is -
2 years
What is the duration for an insurance producer license?
2 years
How much time does a viatical settlement provider have to give written notice to an insurance company of an agreement with a viator?
20 days
During each licensing period, a licensee must complete _______ of approved continuing education.
24 hours
Robert completed more than the required hours of continuing education last year. How many of his excess continuing education hours can be carried forward to the next licensing period?
24 hours
Accelerated death benefits must be at least what percentage of the total death benefit?
25% but no more than 100%
In order for an insurance company to sell any policy covering life, health, accident, personal liability, fire, marine, title, and casualty insurances, the forms must be submitted and approved by the Commissioner. How long does it take for the Commissioner to approve a form?
30 days
How much time does a buyer have to return a new annuity policy from the same insurer?
45 days
How does the state of Pennsylvania define a business entity?
A person which is not an individual
Viatical settlement provider
A person, other than a viator, who enters into or effectuates a viatical settlement contract
Illustrations
A producer may not alter the illustration provided by an insurer. Life insurance illustrations may not be made part of any policy issued. Illustrations must be clearly labeled "life insurance illustration" and contain the name of insurer and producer, the name, age, and sex of the insured, underwriting upon which illustration is based, the name of the policy, the initial death benefit, and the dividend option.
Life Insurance provisions include? (4)
A provision for forfeiture of the policy for failure to repay any loan on the policy. A provision limiting the time within which any action at law or equity may be commenced to less than 2 years after the cause of action accrues. A provision by which the policy takes effects more than 6 months before the original application for insurance was made. A provision for a mode of settlement at maturity of less value than the amount insured less the indebtedness to the company and less any deducted premiums.
Who are the members of the Pennsylvania Life & Health Guaranty Association?
All the life and health insurance companies licensed to do business in Pennsylvania
A viatical settlement provider must provide the viator with the following disclosures before the contract is signed:
Alternatives to viatical settlement contracts, including accelerated death benefits Some viatical settlement proceeds may be taxable Viatical proceeds may be subject to the claims of creditors Having a viatical settlement may adversely affect eligibility for Medicaid Viator has the right to rescind the contract within 15 calendar days from receipt of proceeds Funds will be sent within 3 days Other rights may be forfeited by the viator by entering into a viatical settlement contract All information provided by a viator will be shared with the insurer that issued the life insurance policy that is the subject of the viatical transaction
How does the Commissioner of Insurance obtain their job?
Appointed by the Governor with the consent of the Pennsylvania Senate
The Commissioner may examine an insurer's books and records -
As often as he wants
Refusing to do business with a company to try to drive them out of business is considered -
Boycott
How is the Insurance Fraud Prevention Trust Fund funded?
Civil and criminal fees paid on fraud convictions
JB's agent made a hint that if JB purchased a policy from him, the agent would pull some strings to get JB accepted for membership in the best golf club in town. Making such an offer is considered -
Coercion
The accelerated benefit contract may contain the following restrictions and exclusions
Committing an assault or felony,Participating in a riot and Alzheimer's disease
How often must an insurer provide a statement to the Commissioner stating the value of all annuity accounts?
EVERY YEAR
An insurer is prohibited from sharing nonpublic financial information on an insured - unless the insured was provided with the opportunity to opt out - and did not opt out. How often must an insurer send a privacy notice to a client?
Every year
If a producer attempts to settle a claim for an amount less than a reasonable amount by using fraudulent printed advertising material, the producer has committed -
False advertising
An insurance producer cannot mix client funds with his own funds because of his -
Fiduciary responsibility
In addition to being licensed in Pennsylvania, life insurance companies that want to offer variable contracts must also -
Gain the satisfaction of the Commissioner
Replacement rules do not apply to which type of life insurance?
Group
Giving an applicant stock in the insurance company if they buy a policy is considered -
Illegal inducement
In Pennsylvania, who is responsible for assessing the scope of insurance fraud problems?
Insurance Fraud Prevention Authority
Threatening to hurt someone's business if they don't buy a policy would be considered -
Intimidation
Continuing education hours are not required of licensees who were licensed prior to what date?
Jan 1st 1971
If an insurance company should fail, the maximum amount of protection provided by the association is
Life Insurance Death Benefit: up to $300,000 Life insurance Cash Surrender: $100,000 Health Insurance Claims: $300,000
What must insurer do regarding HIV?
No HIV-related tests may be performed without written consent of the subject. The insurer is only required to inform the subject of a negative test result if the subject requests notification. The insurer may not inform the subject of a positive test result, but rather must inform a designee chosen by the subject.
Before entering into a viatical settlement contract, a viator must be -
Of sound mind
How often is the Commissioner required to examine an insurer's books and records?
Once every 5 years
Tony was the victim of identity theft and subsequently put a fraud alert on his credit file. When may consumer credit reports with fraud alerts be used for insurance applications?
Only if the consumer gives consent
If James Gordon wants to start conducting business his business as Flash Gordon, when does he have to notify the Commissioner?
Prior to using the name
Who cannot be offered a variable life insurance contract in Pennsylvania?
Someone who has been convicted of a felony
Which of the following is a requirement for applying for an insurance producer's license in Pennsylvania? +Be at least 21 years old +Pay a nonrefundable $100 application fee +Submit to a fingerprint and background check analysis
Submit to a fingerprint and background check analysis
Responsibilities of Commissioner
The Commissioner is responsible for issuing insurance producer licenses and approving the pre-examination programs, producer licensing examinations, and continuing education programs. In addition, other duties of the Commissioner include collecting fees, issuing cease and desist orders, conducting hearings, reporting illegalities to the state attorney general, and regulating insurer solvency, policy forms, and premium rates.
Who must approve the manual containing the rates set by an insurer?
The Commissioner of Insurance
What happens if when a life insurance contract becomes payable it is discovered that the age was misstated on the policy?
The amount payable under the policy would be based on the insured's correct age.
Who must give signed statements when a life insurance policy is a replacement?
The producer and the insured
Terminally ill
To be terminally ill is to have an illness that can reasonably be expected to result in death in 24 months or less.
A person that on behalf of a viator, offers to negotiate viatical settlements is a -
Viatical settlement broker
When does evidence of insurance fraud gathered in an investigation become pubic knowledge?
When the Section of Insurance Fraud deems it appropriate
When must the life insurance surrender comparison index disclosure be given to an applicant?
When the policy is delivered
A licensed insurer seeking to offer a variable life insurance policy must -
Write a statement specifying the standards of suitability
When a policy is delivered to the policyholder by the producer by hand, a ____ must be used
delivery receipt
How often must an insurer file a Certificate of Compliance stating that their advertisements comply with insurance laws?
every year
How often must the Commissioner value the reserve liabilities for an insurer?
every year
Accerlerated Benefits provisions include? (3)
insured's life expectancy is 12 months or less the insured has suffered a total and permanent disability the insured is confined to an eligible health care facility for the rest of his expected lifetime.
nonresident insurance producer
is a producer whose home state is a state or territory other than Pennsylvania
If a producer promises compensation as incentive to purchase a policy, or misrepresents any insurance policy as being shares of stock, they have committed
rebating
Charles was issued a temporary insurance producer license. The temporary license allows him to -
service existing contracts, A person may not use a temporary insurance license to transact new insurance business.
Viator
the owner of life insurance policy who enters into a viatical settlement contract
At what time must a life insurance agent provide a purchaser with a disclosure stating the significant elements of the policy?
time app. is signed
Which terms may NOT be used on an illustration
vanish/ vanishing premiums
A stock insurer must maintain at least how much capital for its Life and Annuity lines of insurance?
$1,000,000
What is the maximum amount of fines in a six-month period for unknowingly violating insurance rules?
$10000
When a producer is appointed by an insurer, an appointment fee must be paid in the amount of -
$12.50
A willful violation by an insurance rating organization of its principles is subject to a maximum fine of -
$500 for each
What is the maximum civil penalty to a licensee for committing fraud?
$5000 for each violation
Who is eligible to be issued a temporary insurance producer license?
+the surviving spouse of an insurance producer who dies or becomes disabled in order to allow adequate time for the sale of the insurance business, to train another insurance producers, or to allow time for recovery +an employee of an insurance producer agency, upon the death of agency's designated insurance producer +the designee of an insurance producer entering the armed forces of the United States of America +Any other person in an extenuating circumstance where public interest will be best served by granting a temporary license
If a licensee fails to pay an insurance fine within 30 days, how much additional time is given before further fines are levied?
15 days
In the event a claim is denied, how much time does an insurer have to explain the grounds for a claim denial?
15 days
How much time does an insurance licensee have to notify the Insurance Department of a change in address?
30 days
Collin was recently found guilty of the unfair trade practice of rebating. What is the penalty for a producer convicted of rebating?
A third degree misdemeanor
Except for a producer whose authority is limited primarily to the production of insurance business with limited underwriting authority, or a manager operating under a management contract or exclusive general agency agreement, a person engaging in exclusive insurance agent activities without a license can be charged with-
A third degree misdemeanor
If a producer makes a statement saying that a health discount plan (HMO) is a form of insurance he has committed -
Misrepresentation
If a producer relates only the benefits of a policy and does not include a description of conditions or limitations the producer is guilty of -
Misrepresentation
Fraudulent Viatical Settlement Acts
Presenting or preparing false material information or concealing material information in connection with an application for a viatical settlement contract, an insurance policy, or a claim for benefits Destroying, concealing, or altering the assets or records of a licensee or other person engaged in the business of viatical settlements Misrepresenting or concealing the financial condition of a licensee or insurer Engaging in the business of viatical settlements without a license, certificate of authority, or other legal authority Filing a document that contains false information or otherwise conceals information about a material fact with the Commissioner or an insurance regulator in another jurisdiction Presenting or preparing an insurance policy with knowledge that it was fraudulently obtained by the insured in a viatical settlement transaction Embezzlement, theft, or conversion of money or other property in connection with a viatical settlement Attempting to commit or helping someone else commit any of these acts
In Pennsylvania, it is _____________ that has the power to initiate and conduct investigations, and to prosecute and report incidences of fraud to other agencies.
The Pennsylvania Attorney General's office
Insurance companies are allowed to discriminate when -
The same principles are applied equally. "Discriminate all and all is good"
The Department of Insurance waives the licensing examination requirement for certain persons. Who is exempt from taking the licensing examination?
a Chartered Life Underwriter, Chartered Property and Casualty Underwriter, Certified Insurance Counselor, or a person who is licensed as a producer in another state.
It is also illegal to refuse to insure solely because
another insurer has refused to write a policy; or refuse to renew coverage solely because the applicant or insured is mentally or physically impaired.
An insurance entity may also not pay a commission to a person if
his/her license is under suspension or has been revoked.
It is illegal to refuse to insure or to limit the amount of coverage offered to an individual solely because of
individual's sex, marital status, race, religion, or national origin.
What is the purpose of the Pennsylvania Life & Health Guaranty Association?
protect policyholders of policies issued by an insolvent insurance company
Viatical settlement purchaser
A person who purchases a life insurance policy that is the subject of a viatical settlement contract.
Maria's agent encouraged her to allow her current policy to lapse and buy a new policy from him. He did this without regard to the possible disadvantages of such an action. The producer is guilty of -
Twisting
A licensee may not (11)
+violate the insurance laws of Pennsylvania +obtain a license through misrepresentation +misappropriate funds received +intentionally misrepresent the terms of insurance contracts +cheat on a license examination +accept insurance business that was sold by an unlicensed person +fail to comply with child support obligations +fail to pay taxes +commit a felony +commit a misdemeanor that involves theft of money or property +fail to notify the department of a change of address within 30 days.
Pa Process Requirements
-Be at least 18 years of age -Complete of a minimum of 24 hours of approved pre-examination courses -Pass an insurance producer licensing examination -Submit a completed application indicating the type of license desired -Pay a nonrefundable $55 application fee -Submit to a fingerprint and background check analysis
Within how many days of informing the Pennsylvania Insurance Department of a producer's termination does the insurer have to inform the producer?
15 days
What is the maximum amount of time that a temporary insurance producer license is valid without requiring the licensee to pass the licensing examination?
180 days
How much time does an insurance licensee have to report to the Director any criminal charges brought against them?
30 days
How much time does an insurer have to inform the Pennsylvania Insurance Department of a producer's termination?
30 days
Producers cannot promise stocks, bonds, or property as an inducement to purchase insurance. Violation of this provision is a -
3rd degree misdemeanor
What is the term of office for the Commissioner of Insurance?
4 years
The Commissioner must perform an examination of each rating organization at least once in -
5 years
With the right to examine, or free look, the applicant has ______ to return a policy for a full refund?
10 days
A business entity can apply to the Commissioner for a license as a rating organization. An insurance rating organization is licensed for how many years?
3 years
Martin lives is a licensed insurance producer living in New York. He wants to sell insurance in Pennsylvania also. Who is eligible for a nonresident insurance producer license in the state of Pennsylvania?
A licensed person who lives in another state OR territory that has a reciprocal agreement with Pennsylvania
Viatical settlement contract
A written agreement entered into between a viatical settlement provider and a person owning a policy establishing the terms under which compensation will be paid, which compensation is less than the expected death benefit of the insurance policy, in return for the viator's sale of policy.
Spreading rumors about the financial condition of another company is called -
Defamation
If the Commissioner determines that a licensee has committed a violation what is the minimum action that may be taken?
Issue a cease and desist order
