Chapter 13 - Alabama Insurance Law (pertinent to Life Ins. only)

What is the proposal used in the selling of life insurance that depicts the non-guaranteed elements of the policy over a period of time?

Illustration.

Which of the following provisions would NOT be found in Term life insurance?

Policy Loans.

Who is responsible for the contents of life insurance advertising?

Insurer.

The life Insurance Solicitation Regulation was promulgated to do the following

Provide adequate information to consumers regarding the relative cost of insurance products. Solicitation regulation spells out required and prohibited actions for companies and producers in order to provide adequate information to consumers regarding life insurance products and their relative costs.

Which of the following entities will most likely regulate an insurer's advertisement on a local TV station?

The marketing department of the insurance company. Responsibility of the insurer.

Misrepresenting an insurance policy as a share of stock is an example of which of the following?

False Advertising.

Using names or titles that have a tendency to misrepresent the true nature of a policy is an example of what illegal practice?

False Advertising.

All advertisements pertaining to life insurance policies are the responsibility of the

Insurer. All advertisements are the responsibility of the insurer.

Which of the following is NOT true regarding minors purchasing insurance policies in this state?

Minors at the age of 14 are allowed to buy their own policies. In the state of Alabama, minors are allowed to buy insurance policies are annuity contracts at the age of 15. Once the minor reaches the age of 18, he/she is considered competent to receive payments or settlements under the policy up to a specified maximum amount.

Illustrations used in the sale of life insurance policies must contain all of the following except

The insured's financial classification. An insured's financial status is not part of an illustration used in selling life insurance policies.

According to the regulations on life insurance policy solicitation, what two documents must be presented to an applicant during the application process?

The policy summary and the buyer's guide

What is the minimum age for an individual to buy an insurance policy in Alabama?

15.

If the Commissioner has not approved or disapproved any insurance form by the end of the judgment period, the insurer

Can assume the form is approved. At the end of the 30 day approval period, if the commissioner has not taken action regarding an insurance form filed with the office, the form is automatically deemed approved.

Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance?

Replacement Rule. Anytime a new policy is issued that replaces or modifies existing insurance, a replacement form must be submitted to the ceding company.

An individual wants to purchase a life insurance policy. His agent asks if the transaction will involve replacing any existing life insurance policies. If the customer replies, "Yes," which of the following best describes the agent's next step?

The agent must provide a replacement notice to the applicant. In a replacement transaction, an agent must present to the applicant a Notice Regarding Replacement that is signed by both the applicant and the agent.

Which of the following documents must be provided to the policyowner or applicant during policy replacement?

Notice Regarding Replacement. Has to be signed by both applicant and producer.

What is the maximum amount that the Alabama life and Disability Insurance Guarantee Association will pay in benefits for one life?

$300,000. The total liability of the Association may not exceed $100,000 in cash values OR $300,000 for all benefits for any 1 life.

When the insurer stipulates the time period for payment of claims, how soon must the insurer pay a death benefits claim after receiving the proof of death?

2 months. A provision on a settlement upon proof of death mandates that a settlement must be made no later than 2 months after the receipt of proof of death.

Insurance policies are incontestable if they have been in effect for at least

2 years. If an insurance policy has been in effect for at least 2 years, it cannot be contested except for nonpayment of premium.

Insurance policies stay in force even if the insureds are overdue on the premium payments. What phrase best describes this concept?

Grace Period. The grace period allows insurance policies to stay in effect even if the policyowner is overdue on the premium payment. In Alabama, can last up to 30 days.

Which of the following entities was created to protect insured's against an insurer's insolvency?

The Life and Disability Insurance Guaranty Association. Created to protect policyholders, insureds, and beneficiaries of life insurance policies, health insurance policies, annuity contracts and supplemental contracts when insurers fail to perform contractual obligations due to financial impairment.

How many days before delivery must an annuity contract be filed with, and approved by, the Commissioner?

30 days. All insurance forms must be filed with and approved by the Commissioner 30 days before their delivery.

If an application for an annuity is gathered any way other than face-to-face, within how many days after the insurer receives the completed application must the applicant be given a Buyer's Guide?

5 business days.

The term illustration in a life insurance policy refers to

A presentation of non-guaranteed elements of a policy.

During replacement of life insurance, a replacing insurer must do which of the following?

Obtain a list of all life insurance policies that will be replaced. The replacing insurance company must require from the producer a list of the applicant's life insurance or annuity contracts to be replaced and a copy of the replacement notice provided to the applicant, and send each existing insurance company a written communication advising of the proposed replacement.

What is the purpose of life insurance solicitation regulations?

To help consumers compare life insurance products in regard to their relative cost.