Arkansas State Laws Quiz
Which of the following statements regarding the Commissioner's ability to hold hearings and examine insurer records is not correct? A The Commissioner may initiate a criminal prosecution against a licensee, which is based on a testimony that the licensee is compelled to provide at a hearing r B The Commissioner may subpoena witnesses, administer oaths and require the disclosure of books and records C The Commissioner must examine insurer records at least once every 5 years D The Commissioner may examine foreign and alien insurers as well as those insurers established under the laws of Arkansas
A The Commissioner may initiate a criminal prosecution against a licensee, which is based on a testimony that the licensee is compelled to provide at a hearing r
The Commissioner has all of the following duties and powers, except: A The Commissioner may update the insurance Code as needed B The Commissioner has the authority to make necessary rules and regulations C The Commissioner regulates premium rates D The Commissioner issues the proper insurance licenses for agents and brokers
A The Commissioner may update the insurance Code as needed
What is the maximum fine that may be applied to any person who violates a provision of the Arkansas Insurance Code? A $1,000 fine per violation B $5,000 fine per violation C $2,000 fine per violation D $10,000 fine per violation
A $1,000 fine per violation The maximum fine is $1,000, though other types of penalties may also be applied to a licensee who violates the insurance code.
It is an unfair claims settlement practice to fail to acknowledge a claim how long after receiving it? A 15 working days B 15 calendar days C 10 calendar days D 10 working days
A 15 working days
In Arkansas, the inflation protection provision under an LTC policy will increase coverage by at least what percentage? A 5% B 3% C 2% D 25%
A 5% Unless rejected in writing by the insured, inflation protection must be included in the policy, with increases in benefit levels compounded annually at no less than 5%. Small employers with similar case characteristics for similar coverage will not differ by more than 25%.
B discovered an insurer that had been soliciting to B was actually unlicensed in the state of Arkansas. According to the rules regarding fraud, B was required to report the insurer: A If B had any reason to believe the insurer to be unlicensed B If B inadvertently placed a policy through them C Only if B received the complaint from one of B's clients D Only if the company sold health insurance through the federal PPACA exchange
A If B had any reason to believe the insurer to be unlicensed
If a person violates an order from the Insurance Commissioner concerning credit insurance after it has become final, they may be fine up to: A $1,500 if the violation was willful B $250 C $500 D $2,000 if the violation was willful
B $250 If a person violates an order from the Insurance Commissioner concerning credit insurance after it has become final, they may be fined up to $250 and up to $1,000 if the violation was willful.
Which of the following statements describing the fiduciary and contractual relationships between producers, clients, and insurers is correct? A A licensed agent may not act as a broker and a licensed broker may not act as an agent B All funds received by licensee must be held in a trust, and any personal use is considered theft C A licensee appointed as an agent by one insurer is considered an agent by all insurers D All funds received by a licensee must be held in a trust, but the licensee may use the funds to help out an insolvent insurer
B All funds received by licensee must be held in a trust, and any personal use is considered theft
In Arkansas, the grace period of an individual life insurance policy must be: A At least 10 days B At least 30 days C The same as the reinstatement period D No more than 60 days
B At least 30 days
All of the following are prohibited marketing practices in Arkansas, except: A Cold lead advertising B Replacement C High-pressure tactics D Misrepresentation
B Replacement Replacement is legal when it is in the best interest of the consumer; otherwise, it becomes twisting, which is illegal. Cold lead advertising is a prohibited marketing practice, and it is using any marketing method that fails to disclose that insurance is being solicited.
Which of the following penalties may be applied to any person who violates a provision of the Arkansas Insurance Code? A A $10,000 fine per violation B Restitution of actual losses to anyone affected by the violation C Revocation of one's license forever D Banned from transacting insurance in the U.S.
B Restitution of actual losses to anyone affected by the violation
Which of the following statements regarding insurance licensing exam is not correct? A An applicant must be tested on each insurance class they wish to transact in B There is a four-week waiting period each time a candidate fails a licensing exam C Personal lines producers must pass a licensing exam D Nonresident agents are not required to pass an exam in Arkansas
B There is a four-week waiting period each time a candidate fails a licensing exam
he Arkansas Life and Health Insurance Guaranty Association will assume the contractual obligations of an insolvent life insurer up to what amount? A $200,000 B $500,000 C $300,000 D $400,000
C $300,000 The Association's liability is limited to the insurer's contractual obligation had it not become impaired or insolvent, up to $300,000 in life insurance death benefits, net cash surrender and withdrawal values.
In Arkansas, the term of a credit life policy may not exceed: A 20 years B 5 years C 10 years D 40 years
C 10 years
In Arkansas, a temporary license issued to a representative of a licensed producer who dies or becomes disabled is valid for up to how many days? A 120 days B 240 days C 180 days D 360 days
C 180 days
In Arkansas, a life insurer must maintain records for all replacement policies for how many years? A 5 years B 10 years C 2 years D 1 year
C 2 years A copy of the memorandum must be furnished to the existing insurer, and to the company represented by the agent, which must retain the copy for 5 years.
All the following statements regarding the regulation of Medicare Supplement policies sold in the state of Arkansas are correct, except: A Policyholders may suspend coverage for up to 24 months if they become eligible for Medicaid B Termination of a Medicare Supplement policy must be without prejudice to any continuous loss which commenced while the policy was in force C A Medicare Supplement policy must be noncancellable D The free look period for Medicare Supplement policies is 30 days
C A Medicare Supplement policy must be noncancellable
In Arkansas, which of the following statements regarding the rules governing health insurance advertising is correct? A HMOs may advertise enrolling during their open enrollment periods as a special, limited time offer B Hospitality Confinement Indemnity Plans may describe their benefits as extra, tax-free cash C A policy covering only accidents must carry the statement, "THIS IS A LIMITED POLICY" D Regulations governing advertisements of health insurance is to protect insurers
C A policy covering only accidents must carry the statement, "THIS IS A LIMITED POLICY" Limited policies must state that they are limited. Plans providing benefits conditional upon hospitalization may not use phrases like "tax-free" and "extra cash," as this can mislead consumers into believing they can profit from the benefits. Insurers that typically use enrollment periods may not describe them as "special" or "limited." Advertising regulations are intended to protect consume
In order for a business entity to obtain a producer license in Arkansas, it must: A Disclose the name of the company's CEO to the general public B Appoint a consultant to handle the entity's limited lines insurance business C Designate a licensed agent as a compliance officer D Employ enough licensed producers to span across all lines of insurance
C Designate a licensed agent as a compliance officer
Which of the following actions is not considered to be misrepresentation under law? A Describing a mutual life insurance policy as equivalent to a share of stock B Using a product name that hides the fact that it is an insurance policy C Making a false statement about a competitor's financial condition D Making false statements about dividends previously paid by a policy
C Making a false statement about a competitor's financial condition Making a false or maliciously critical statement regarding the financial condition of a competitor describes a different violation of the law known as defamation. Misrepresentation is making, issuing, or circulating any statement that misrepresents the benefits, advantages, conditions, or terms of any insurance policy.
All of the following are considered to be methods of unfair competition, except: A Unfair discrimination B Twisting C Replacement D Churning of business
C Replacement
In Arkansas, whenever the purchase of insurance results in existing policy being replaced, all of the following requirements apply, except: A The replacing agent must provide a memorandum comparing the existing and replacement policies B The memorandum comparing the existing and replacement policies must be signed by both the agent and the insured C The memorandum must include a signature from the agent, the insured, and the Commissioner D The replacing insurer must receive and maintain a copy of the memorandum for at least 5 years
C The memorandum must include a signature from the agent, the insured, and the Commissioner The Commissioner is not required to provide a signature when a life insurance policy is being replaced. The memorandum must include the name of the insurer, face amount of the policy, policy number or type of policy, signature of both the agent and the insured, and the date of delivery.
All licenses are the property of: A The licensee B The Commissioner of Insurance C The state of Arkansas D The NAIC
C The state of Arkansas
Which of the following statements regarding insurance licensing exam is not correct? A Nonresident agents are not required to pass an exam in Arkansas B Personal lines producers must pass a licensing exam C There is a four-week waiting period each time a candidate fails a licensing exam D An applicant must be tested on each insurance class they wish to transact in
C There is a four-week waiting period each time a candidate fails a licensing exam
In Arkansas, the basic hospital expense coverage will cover an individual for a period of at least how many days? A 15 days B 7 days C 90 days D 31 days
D 31 days
In Arkansas, the basic hospital expense coverage will cover an individual for a period of at least how many days? A 15 days B 90 days C 7 days D 31 days
D 31 days
The Arkansas Life and Health Guaranty Association provides coverage for: A Non-guaranteed values provided for by the policy B Dividends the policyholder is entitled to receive under the policy C Reinsurance D A portion of a policy for basic hospital expense coverage
D A portion of a policy for basic hospital expense coverage
In Arkansas, which of the following individuals is required to pass an insurance licensing exam in order to reinstate their license due to a failure to meet CE requirements? A A nonresident producer B An individual licensed to sell credit property insurance C A producer reinstating their license after 6 months D An insurance adjuster
D An insurance adjuster
In Arkansas, a blanket accident and health insurance policy would most likely offer: A Major medical insurance for employees B Long-Term Care insurance C Workers' Compensation insurance D Coverage for participants in a little league sporting event
D Coverage for participants in a little league sporting event
A producer tells an applicant for insurance that a competitor insurer is in dire financial straits, and may not be able to honor its claims obligations. Which unfair trade practice has the insurer committed? A Rebating B Unfair discrimination C Boycott, coercion and intimidation D Defamation
D Defamation
Issuers of Medicare Supplement policies in Arkansas are required to make all of the following disclosures, except: A A description of how renewal commissions will be paid to the producer B A description of policy provisions relating to renewability, cancellation, or continuation of coverage C The agent's name and address D The premiums for the policy, which must be listed separately from the premiums for any optional or supplemental riders
A A description of how renewal commissions will be paid to the producer Although it is true that the renewal commission must be the same as that provided in the second year and paid for no fewer than 5 renewal years, it is not a required disclosure.
In Arkansas, a licensed insurance adjuster: A Investigates and negotiates the settlement of claims on behalf of the insurer. B Advises consumers about their insurance needs for a fee C Solicits, negotiates, effects, or binds insurance contracts D Must obtain an insurance agent license
A Investigates and negotiates the settlement of claims on behalf of the insurer.
After a hearing before the Commissioner, O's insurance license was suspended because: A O failed to respond to a written inquiry from the Commissioner within 30 days B O was subpoenaed to appear before the insurance commissioner of another state C O was a accused of committing a misdemeanor that occurred after the hearing D O's state income tax return was audited
A O failed to respond to a written inquiry from the Commissioner within 30 days Failure to respond to the Insurance Department within 30 days is grounds for suspension, as is failing to pay state income tax. Being convicted of a misdemeanor, not just being accused, or violating a subpoena from another state, is also grounds for suspension, as is failing to respond to the insurance department within 30 days, is also grounds for suspension.
In Arkansas, B may have violated the Insurance Code when they: A Paid a referral fee to an unlicensed solicitor for each life insurance appointment arranged B Assigned some of their commissions to an out-of-state insurance agency not active in Arkansas C Procured insurance for their client from an insurer with whom B was not appointed D Paid a deferred commission to a formerly licensed producer who is now retired
A Paid a referral fee to an unlicensed solicitor for each life insurance appointment arranged
When L's company initiated a plan refusing to insure buildings over 50 years old on the basis that all the buildings were by definition high risk, dissatisfied consumers brought a complaint accusing them of: A Unfair discrimination B Geographical redlining C Defamation D Boycott and coercion
A Unfair discrimination
Which of the following statements apply to maintaining an insurance license in the state of Arkansas? A Every 2 years, an agent must complete 24 hours of continuing education courses and 3 more hours in ethics B For good cause, the Commissioner may grant a licensee an extension of up to 12 months to complete continuing education C Membership in a professional insurance organization or association is not considered a form of continuing education D The age of a person does not matter when determining whether an individual needs to complete continuing education requirements
B For good cause, the Commissioner may grant a licensee an extension of up to 12 months to complete continuing education
In Arkansas, charging different rates to insureds of the same actuarial class or hazard category is considered which of the following unfair trade practices? A Rebating B Unfair discrimination C Twisting D False advertising
B Unfair discrimination
Which of the following statements describing the fiduciary and contractual relationships between producers, clients, and insurers is correct? A A licensee appointed as an agent by one insurer is considered an agent by all insurers B All funds received by a licensee must be held in a trust, but the licensee may use the funds to help out an insolvent insurer C All funds received by licensee must be held in a trust, and any personal use is considered theft D A licensed agent may not act as a broker and a licensed broker may not act as an agent
C All funds received by licensee must be held in a trust, and any personal use is considered theft The fiduciary duty of the producer specifically refers to the funds that they handle for their clients and insurers, which are held in a trust and may not be diverted for their own use. Agents may act as brokers when dealing with firms with which they have no appointment. The reverse is equally true for brokers.
In Arkansas, which of the following statements regarding credit insurance is not correct? A Credit life insurance may provide coverage for no more than 10 years B Upon acceptance by the insurer, the insurance becomes effective as of the date the indebtedness is incurred C Certificates of coverage must be delivered to the debtor no later than the date upon which indebtedness is incurred D Individual policies of life insurance must be issued to debtors on a term plan
C Certificates of coverage must be delivered to the debtor no later than the date upon which indebtedness is incurred
In regard to hearings and the examination of insurer records, the Commissioner: A May only examine domestic insurers in the state of Arkansas, not foreign or alien insurers B May not examine insurer records more often than once every 5 years C May subpoena witnesses, administer oaths, and require the disclosure of books and records D May grant a rehearing, and send the notice 30 days in advance
C May subpoena witnesses, administer oaths, and require the disclosure of books and records The Commissioner may examine the records of any insurer, as often as needed, and may grant a rehearing of the matters involved in the hearing. The notice for a rehearing must be given out 10 days in advance.
In Arkansas, when an insured's group health insurance coverage is terminated, the insured: A Is entitled to a replacement policy that matches the coverage of the terminated policy B Must choose between accepting 120 days of group coverage and applying for a conversion policy C Must apply within 60 days, if they want the available conversion policy D Is entitled to an additional 120 days of group coverage if they have been covered for at least 3 months
D Is entitled to an additional 120 days of group coverage if they have been covered for at least 3 months
Under an employer's group life insurance policy, all of the following may be considered employees, except: A Retired officers B Elected officials C Sole proprietor D Labor union
D Labor union
Which of the following actions is not considered to be misrepresentation under law? A Making false statements about dividends previously paid by a policy B Describing a mutual life insurance policy as equivalent to a share of stock C Using a product name that hides the fact that it is an insurance policy D Making a false statement about a competitor's financial condition
D Making a false statement about a competitor's financial condition
The Arkansas Life and Health Insurance Guaranty Association: A Treats an impaired insurer the same way as it does an insolvent insurer B Assesses the policyowners of solvent member firms, in order to cover the cost of the benefits paid to the policyowners of insolvent firms C Is the primary payor of benefits to Arkansas residents whenever an insurer based in the United States becomes insolvent D Provides protection to resident policyowners and beneficiaries in case a domestic insurer becomes insolvent
D Provides protection to resident policyowners and beneficiaries in case a domestic insurer becomes insolvent
In Arkansas, a licensed insurance adjuster: A Investigates and negotiates the settlement of claims on behalf of the insurer. B Must obtain an insurance agent license C Solicits, negotiates, effects, or binds insurance contracts D Advises consumers about their insurance needs for a fee
A Investigates and negotiates the settlement of claims on behalf of the insurer.
All of the following are unfair claims settlement practices, except: A Making claim payments without conducting an investigation B Attempting to settle a claim based on an application that was altered by the agent or company without notice to, or consent of, the insured C Compelling an insured to file suit by offering substantially less than what a lawsuit would award D Making claim payments that are not accompanied by statements indicating the coverage under which payments are being made
A Making claim payments without conducting an investigation
Which of the following statements accurately describe the penalties that may be imposed by the Commissioner? A The Commissioner may revoke the license of an individual who knowingly accepts business from an unlicensed producer B The Commissioner may order restitution for projected losses to affected persons C The Commissioner may impose a fine of up to $2,500 for violating any provision of the Insurance Code D The Commissioner can suspend an insurance license for up to 24 months
A The Commissioner may revoke the license of an individual who knowingly accepts business from an unlicensed produce If an individual knowingly accepts business from an unlicensed producer, the Commissioner may revoke the license. The Commissioner may not revoke a license if an individual unknowingly accepts business from an unlicensed producer. The Commissioner may suspend a license for up to 36 months, impose a fine of up to $1,000 for each violation of the Insurance Code, and order restitution for actual losses to affected persons.
Which of the following statements regarding group life insurance in Arkansas is correct? A If no beneficiary survives the insured, any death benefits must be paid to the insured's estate B Disabled employees must be allowed to continue their coverage for up to 6 months while remaining disabled C All covered employees are entitled to convert their coverage to individual insurance within 60 days of termination D Trustee groups may not purchase group life insurance in Arkansas
B Disabled employees must be allowed to continue their coverage for up to 6 months while remaining disabled
What will the Arkansas Life and Health Guaranty Association do if a member insurer becomes insolvent? A Ask for a loan from a local bank to continue coverage for every single person insured through the insolvent insurer B Make an assessment against the other members of the Association to pay the claims of the insolvent insurer C Notify every single person insured through the insolvent insurer that their policy will be cancelled D Ask for an equal amount of money from each insurer licensed in both life and health
B Make an assessment against the other members of the Association to pay the claims of the insolvent insurer
ll of the following are powers of the Insurance Commissioner, except: A Conduct insurer and agency audits B Writing the insurance laws C Issuing licenses D Regulating premium rates
B Writing the insurance laws
If a Medicare Supplement policy is being replaced, an agent: A Must receive compensation in an equal amount to the renewal commission payable by the replacing issuer B Must receive compensation greater than the renewal commission payable by the replacing issuer C May not receive compensation greater than the renewal commission payable by the replacing issuer D Will not receive compensation, and the renewal commission will be paid to the original issuer
C May not receive compensation greater than the renewal commission payable by the replacing issuer
Which of the following statements regarding insurance licensing exam is not correct? A Nonresident agents are not required to pass an exam in Arkansas B An applicant must be tested on each insurance class they wish to transact in C Personal lines producers must pass a licensing exam D There is a four-week waiting period each time a candidate fails a licensing exam
D There is a four-week waiting period each time a candidate fails a licensing exam
