Chapter 12

Paul has an existing annuity and is sold a new one, in which the new policy holds no greater financial benefit to him than the existing contract. This is considered a(n)

This is an example of unnecessary replacement.

What does the term 'indemnity" mean as it pertains to insurance?

Indemnity" means to make whole again, as it pertains to insurance.

What type of license is required for an individual who charges a fee to review an insured's existing life insurance policy?

A life and disability insurance analyst license is required to review an insured's existing life or disability policy for a fee.

Who does a life settlement broker represent?

A life settlement broker represents the individual wanting to sell their life policy to a third party.

According to section 1729.2 of the California Insurance Code, which of these does NOT qualify as "background information"?

A misdemeanor CONVICTION would qualify as "background information".

Under the California Insurance Code, a licensee's license number must be printed at what size on all price quotes, business cards, and printed material?

According to state law, the same size print as the licensee's phone number, fax number, or address must be used for the licensee's license number on all price quotes, business cards, and printed material.

According to the California Insurance Code, what is "insurance"?

According to the California Insurance Code, 'insurance" is a contract to indemnify against loss.

Which of the following does the California Insurance Code NOT require an insurance policy to specify?

According to the California Insurance Code, an insurance policy must specify all of these EXCEPT the financial rating of the insurer.

Pete is a life agent who has misappropriated fiduciary funds to his own use. What is Pete guilty of?

Any person who diverts or misappropriation fiduciary funds to his or her own use is guilty of theft and punishable for theft as provided by law.

According to the California Insurance Code, what is the maximum penalty per violation for anyone who unwillfully commits an unfair method of competition?

Any person who unwillfully engages in an unfair method of competition is liable to the state for a fine of up to $5,000 per violation. If the act is determined to be willful, the fine will not exceed $10,000 per act.

Which word implies permissiveness according to the California Insurance Code?

California Insurance Code, the word "may" implies permissiveness.

Which of the following is NOT considered to be an unfair claims settlement practice?

Directly advising a claimant to hire an attorney is not an unfair claims settlement practice.

The California Insurance Code allows an individual how many days to cancel a life policy for a full-refund?

Every policy of individual life insurance shall have a notice stating that after receipt of the policy by the owner, the policy may be returned by the owner for cancellation by delivering it or mailing it to the insurer or to the agent through whom it was purchased. This period shall not be less than 10 days nor more than 30 days.

Insurance agents and brokers must make their insurance records available to the Commissioner

Insurance records of insurance agents and brokers must be made available to the Insurance Commissioner at all times.

Any changes in background information that occur after a producer application has been submitted or a license has been issued MUST be reported to the Insurance Commissioner within

Section 1729.2 of the California Insurance Code requires insurances producer application and licensees to notify the insurance commissioner in writing, within 30 days of changes in background information after an application has been submitted or a license has been issued.

. The free-look period for life insurance policyowners age 60 or older is

The free-look period for life insurance policies on individuals age 60 and older is 30 days in California.

An agent's attempt to stop the replacement of an existing life insurance policy is known as

conservation

In California, an insurer organized under the state laws of Oregon is called a(n)

In California, an insurer organized under the state laws of Oregon is considered a foreign insurer.

Before an insurer is allowed to test an individual for HIV what must be completed?

A consent form must be completed before an insurer is permitted to test an individual for HIV.

All of these are reasons the Commissioner may disapprove a licensee's request to use a fictitious name EXCEPT

According to the California insurance code, the commissioner can disapprove a licensee's request to use a fictitious name for all of these reasons EXCEPT "The name is the licensee's actual name".

According to the California code governing claim settlement practices, which of the following is NOT considered to be an act of unfair discrimination?

All of these are considered to be an act of unfair discrimination EXCEPT "Denial of a claim based on reckless behavior".

When an insurer has met the qualifications necessary to transact business in California, it is said to be

An admitted carrier has met the conditions required to transact business in the State of California.

What is required after a life agent sells an insurance policy to an applicant without being appointed by the insurer?

If a life agent sells an insurance policy on behalf of an insurer without an appointment, the insurer must submit a notice of appointment to the Commissioner within 14 days.

The California Insurance Code has authorized standards for names used by life insurance agents. Which of the following, if any, are automatically acceptable for Lance Manyon, a holder of the CLU designation?

If the word "Insurance" is included in the name, the California Department of Insurance then checks to make sure one of the six definitive words ("Agency," "Services," "Marketing," "Sales", "Center" or "Solutions") is also included in the name. In this instance, Lance Manyon Insurance Services would be acceptable.

Failure to report background changes within 30 days as required under section 1729.2 of the California insurance code could subject a license or applicant to

Failure to report background changes within 30 days as required under Section 1729.2 of the California Insurance Code could subject a licensee or applicant to formal disciplinary action, including a fine, suspension, denial, restriction, or revocation of the license.

Which of the following is NOT protected under the California Life and Health Guarantee Association?

Insurers

An agent has advertised that the insurer to which the agent is appointed with is a member of the Insurance Guarantee Association. This agent has committed a(n)

It is considered an unfair method of competition for an agent to advertise that the insurer to which the agent is appointed with is a member of the Insurance Guarantee Association

Life insurance surplus must be distributed to policyowners at what frequency?

Life insurance surplus must be distributed to policyowners annually in a participating policy.

Which of the following does NOT have to be included on life insurance policy illustrations?

Not all benefits and values are guaranteed in life insurance policies. Some have non- guaranteed values which must be described in the illustration.

Which of the following is NOT considered to be an act of insurance solicitation?

Publishing a magazine where one of the advertisers is an insurer is not considered to be an act of solicitation.

Which of the following does the California Department of Insurance (CDI) have NO jurisdiction over?

The California Department of Insurance (CDI) has no jurisdiction over Medicare.

What does the term "illustration" mean when used in the phrase "life insurance policy illustration". according to the California Insurance Code?

The California Insurance Code defines "illustration" as a presentation of policy features that includes non-guaranteed elements.

What is the insurance term the State of California uses for an insurer that is eligible to transact hileinnee in thin state?

The insurance term for an insurer which has met the conditions required to transact business in the State of California is "admitted".

According to the California Insurance Code, who is responsible for submitting a life agent's appointment?

The insurer is responsible for submitting a life agent's appointment.

What prevents a life insurance policy from being rescinded by the insurer after being in force for two years?

incontestability clause. Insurers are prohibited from denying claims or rescinding a policy based on misstatements in a life, accident, or disability policy application after the policy has been in force for two years. This is called the incontestability clause.

An insurer that has been found using higher rates based on race, religion, or ethnicity is said to be engaging in

unfair discrimination. It is an illegal practice to unfairly discriminate against a person in any way on an insurance-related matter. An example would be charging a different rate for someone in the same actuarial class. Fair discrimination is necessary for the issuance of life insurance policies, which is based on mortality. Also, no insurer or agent may cancel or refuse to underwrite or renew a particular insurance risk based on race, color, creed, sex, sexual orientation, or blindness of an applicant or policyholder.