Chapter 5
Denial of License
The applicant will be fully notified within 30 days
2 seperate accounts
The life insurance and annuities account: and the health insurance account...Who does it protect and who funds it>ALL authorized insurer's
Commision
payment to the agent by the insurance company for placing insurance, usually a percentage of the policy premium
Domicile
refers to the location where an insurer is incorporated, not necessarily where the insurer conducts business
Resident/non resident
resident is a person who lives in state, non is out of state
Restitution
restorationton the the original condition or repayment
Individual Remedies
An action under this section must be brought within 2 years from the date the alleged violation is or should have been discovered
What would be considered legal of discrimination
Benefits on the basis of difference life expectancies
Viatical
Terminally ill
Failure to notify the commissioner of changes to a license address within 10 business days may result in an administrative fee of?
$50
Unfair Trade Practices
- Misrepresentation- a LIE - False advertising- UNTRUE ADVERTISING - Twisting- MISREPRESINTAION of company - Rebating-BRIBE - Inducements - Boycott, coercion, and intimidation- INTENSION TO RESTRICT FAIR TRADE or CREATE a MONOPLY - Defamation- CRITICAL STATEMENTS ABOUT A PERSON - Unfair discrimination
Insurance producers must report their change of business or residence address within
10 days
The required privacy disclosure notice must be provided by insurer to current policyholders at least once in any period of?
12 months
A temporary license is normally valid for
180 days
Continuing education requirement must be
24 hours every 2 years
Access to Recorded Personal Information
30 business days after the date the request is received AND Disclose to the individual the identity of those persons to whom the insurance institution, agent, or insurance- support organization has disclosed such personal information within 2 years prior to request.
Grace Period
31 days for the payment of any premium due
Commissioner of office
4 years term elected BY THE PEOPLE, the Governor will appoint a replacement if needed
Each insurer must keep an itemized register or log of all written complaints for at least
5 years
Statute
A formal written law enacted by legislature; insurance statutes can be found in thr insuranee code
What is mandatory in a provision in a life insurance contract?
A mandatory provision includes a grace period of 31 days, , incontestability after 2 years, except for nonpayment of premium and misstatement of age and sex. A minimum of 5% on cash value is NOT a mandatory provision
What is a Rebate
A rebate is an illegal act which involves returning something of value to the client as an inducement to buy, such as the commission. Rebates are only allowed if specifically stated in the policy. Insurance dividends are NOT considered rebates as the IRS considers it as a return of overpaid premium.
Who is considered a non resident agent
An agent who resides in another state but is licensed to write insurance in that state
Authorized insurer
An insurance company that has qualified and received a Certificate of Authority from the Department of Insurance to transact insurance in the state.
Subpoena
An order for someone to appear as a witness or submit testimony or evidence
Fraternal Benefit Societies
An organization formed to provide insurance benefits for members of an affiliated lodge, religious organization, or fraternal organization with a representative form of government.
If an insurance company makes a statement that its policies are guaranteed by the existence of the insurance guaranty association, that would be considered
An unfair trade practice
Acting with out a license
Class 1 misdemeanor
An agent who deliberately makes a malicious statement about another insurance company is c guilty of an illegal trade practice called
Defamation
Marketing and research Surveys
Do not use your own creative ways to present company
General rules mandated by the law:
Each insurer must maintain a complete file containing one copy of each authorized document and form used in life insurance solicitation for 3 years following the date of its last authorized use. An agent must inform the prospective purchaser that he/she is acting as a life insurance agent and provide the full name of the insurance company he/she is representing
An insurance company that is formed under the laws of another state is known as which type of insurer
Foreign
Any person with intent to injure, defraud, or deceive an insurer, presents a written or oral statement as part of, or in opposition to, a claim for payment that contains FALSE or misleading information is
GUILTY of a CLASS HFELONY
What provision in a life insurance policy extends coverage beyond= he premium due date
Grace period- 30-31 days
cease and desist order
If after a hearing, the Commissioner determines that a person has violated an insurance statue or regulation
Surplus lines
Insurance not available from authorized insurers placed with nonadmitted insurers who specialize in offering insurance to the high risk market
General License Requirements
Life- coverage on human lives Accident and health or sickness-coverage on sickness, bodily injury and accidental death and may include benefits for disability. FINRA- registration, no examination required Medicare Supplement and Long Term Care- Property- Casualty-coverage of legal liability, including death, injury or disability, or damage to real and personal property Personal lines- property and casualty insurance coverage sold to individuals and families for primary noncommercial purposes Limited line; or Any other kind of insurance permitted under state laws or administrative rules.
Hearings
Notice must be provided within 10 days prior to hearing and must state any specific charges
Alien
OUT OF COUNTRY
Foreign
OUT OF STATE
An arrangement that allows someone living with a life-threating condition to sell an existing life insurance policy and use the proceeds before death is called
Viatical settlement
Ethical Standards when in contact with the public, agents, limited representatives, brokers, adjusters, appraisers or other license representatives you are required to:
Promptly identify yourself, and your occupation, carry your license, conduct yourself in such a manor as to inspire confidence by fair and honorable dealings
An agent who offers a cash reward to prospect for buying a policy is guilty of
Rebating
An agent offers a client free tickets to a sporting event in exchange for the purchase of an insurance policy. The agent is guilty of?
Rebating-when a producers gives or promise anything of value that is not specified in the policy, they are guilty of REBATING
a transaction in which a new life insurance policy is to be purchased and an existing policy is to be lapsed, surrendered or converted to another type of insurance is called/
Replacements
Domestic
STATE, home office
Life Policy Provisions
Standard is 3 but could be 5
If the Commissioner issues a ceast and desist order, they must
Stop committing a particular violation
General power and Duties of a Commisioner
Supervise insurance business, Licensing, approve policies and forms, enforce insurance laws and impose penalties for violations, conduct examinations, investigations, hearings
A viatical settlement is arranged between a viatical company and a/an
Terminally ill insured
If an insurer becomes insolvent________would pay benefits to policyholders?
The Guaranty Association
Buisness entity
a corporation, association, partnership, limited liability company, limited liability partnership, or other entity
Business Entity
a corporation, association, partnership, limited liability company, limited liability partnership, or other legal entity
Temporary license
a maximum of 180 days
Agent
a person licensed to solicit applications or to negotiate a policy of, insurance. NOT DULY licensed
commissioner
a person sent to meet with others to plan and make official decisions
Broker
a person who, being licensed agent, procures insurance for a party other than himself through a duly authorized agent of an insurer that is licensed to do business in North Carolina
An agents license must be renewed
every 2 years
Broker's License Requirments
file a bond with at least 15,000 dollars or in lieu of a bond, cannot be terminated unless at least 30 days prior written notice is given, if a broker's license is terminated, the Commissioner must notify the surety within 10 days.
Automatically Suspended
if a person is convicted of a criminal violation of the General Statutes and has to be reinstated by the Commissioner
Content of Disclosure authorization forms
in the case of authorization signed for the purpose of collecting information in connection with an application for an insurance policy, a policy reinstatement or a request for change in policy benefits: 30 months from the date the authorization is signed if the application or request involves LIFE, HEALTH, or DISABILITY 1 year from the date the authorization is signed if the request involves property or casualty
Home office
insurer's headquarters, principal place of business
Replacing insurer
is the company that issues the new policy
Existing insurer
is the company whose policy is being replaced
Viator
the owner of the life insurance policy
claim reports
they specify the inception, handling, and disposition of each claim. Also retain for 5 years.
insolvent
unable to meet financial obligations
Disclosure
revealed information to help someone make an intelligent and educated decision
How long must a complaint record be maintained?
5 years
Cease and Desit
To stop or discontinue
How long should records be kept
5 years after termination of the transaction with an insured
Solicitation
Buyer's guide- basic information and a policy summary;- written statement describing the features and elements of the policy
Agent's Liability
Class 1 misdemeanor/ Class H felony unlawful solicitation, negotiation, or transaction of insurance with an unauthorized insurance company
A legally attempt by an existing insurer to dissuade a current policyowner from the replacement of existing life insurance is called?
Conservation- means any attempt by the existing insurer or its producers, or by a broker to dissuade a current policyowner from the replacement of existing life insurance or annuity.
NAIC
National Association of Insurance Commissioners
When a licensee is accused of any act, omission, or misconduct that could subject the licensee to a license suspension or revocation, with the approval of the commissioner, the license may be surrendered for a period of_________
Time to be set by the Commissioner
What is the main purpose of requiring licenses for persons who transact insurance
To protect the general public
Contract of insurance
an agreement by which the insurer is bound to pay money or its equivalent or to do some act of value to the insured upon, and as an indemnity or reimbursement for the destruction, loss, or injury of something in which the other party has an interest
Life and Health Insurance Guaranty Association
an association that protects policyowners against the insolvency of an insurance company
Inducement
an offer that attempts to influence the other party
Adjuster
any individual who, for salary, fee, or commission, investigates or reports to his principal relative to claims arising
Report to Commissioner
any licensed person, including employees or representatives of an insurance company, to notify the commissioner of any violations of the general Statues of the Insurance Code is a duty
Replacement
any transaction in which new life insurance or a new annuity is purchased, as a result, the existing life insurance or annuity has been or will be any of
Application for License
at least 18 years of age, has not committed any act that is ground for probation, suspension, nonrenewal, or revocation, has paid the fees, passed examinations
Education and training
complete 20 hours of prelicensing education for medicare supplement and long-term care insurance license must complete 10 hours of instruction
Business records
keep full records and transactions; relevant numbers, dates, terms, amount of insureds, premiums, and individuals responsible for issuing policies, certificates, or renewals.
Failure to maintain records
license suspension or revocation for no less than 1 month to no more then 6mofor the first offense and 1 year for the second. Refusal to provide records may result in a Class 1 misdemeanor
Willfully violates a cease and desist
may be subject to a fine from $1,000 - $5,000 for each violation
Exempt
not subject to an obligation
