Chapter 5

All agents licensed in this state must complete how many hours of continuing education specific to law and ethics?

4

An applicant for a life agents license may obtain a temporary license for a maximum period of

6 months

What are the most common penalties for violations of insurance statues?

A cease and desist order, a fine, and license suspension or revocation

Which of the following is true regarding the agent's appointments?

A person may hold several appointments at one time

Who just be a member of insurance guaranty associations?

All insurers authorized to write insurance within a state

Who is considered a nonresident agent?

An agent who resides and is licensed in another state, but who is authorized to transact insurance in this state

What is reinsurance?

An agreement between a ceding insurer and assuming insurer

If an insurer holds a Certificate of Authority, it is known as what type of insurer?

Authorized or admitted

If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered what type of insurer?

Authorized or admitted

If the Commissioner/Superintendent finds a licensee engaging in an unfair method of competition or an unfair practice, what order will be issued?

Cease and desist order

What document is required for an insurance company to transact insurance?

Certificate of Authority

Which of the following will NOT be considered unfair discrimination by insurers?

Discriminating in benefits and coverages based on the insured's habits and lifestyle

No insurance policy form can be issued, delivered, or used in this state unless it has been

Filed with and approved by the Office of Insurance Regulation.

For what reason can a temporary license be issued?

For continuation of business in case the licensed producer dies or becomes disabled

In general, who can be excluded from producer licensing and examination requirements?

Insurance company officers, directors, or any other employees who do not transact insurance and who do not receive commissions for their services (usually, their responsibilities include administrative, executive or clerical)

What is controlled business?

Insurance on the producer's own life or property, or the lives or property of the producer's family or business associates

Which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices?

Making comparisons between different policies

On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. What is the company guilty of?

Misrepresentation

An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy?

Mutual: Funds not paid out after paying cliams and other operating costs are returned to the policowners in the form of a dividend

Who may share in the commission from the sale of a life insurance policy?

Only producers properly licensed for the type of insurance transaction

Who can usually be granted a temporary license?

Producer's spouse or designee in case the licensed producer dies or becomes disabled

When an insurer terminates an agents appointment, the insurer must do all of the following EXCEPT

Provide a 30-day advance notice to the Commissioner.

An agent offers a client free tickets to a sporting event in exchange for the purchase of an insurance policy. What is the agent guilty of?

Rebating

Who must be notified of a producer's change of address?

The Department of Insurance (Commissioner/Director/Superintendent)

Who is responsible for the costs associated with the examination of insurers?

The insurer who is being examined

Which of the following is an example of a producer's fiduciary duty?

The trust that a client placed in the producer in regard to handling premiums

To whom may a certificate of authority be issued?

To an insurer authorized to transact business in this state

What is the purpose of cease and desist order?

To prevent a producer or insurer from further violating laws for transacting insurance

When is controlled business legal?

When the commissions from controlled business do not exceed the aggregate commissions on all the other business (specific limits may vary from state to state) 50% for Florida

What type of licensee represents the insurance company?

agent

What type of licensee represents the insured?

broker

Two individuals who are in the same risk and age class are charged different rates for their insurance policies due to an insignificant factor. What is this called?

discrimination

Who owns stock companies?

stockholders

What type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?

twisting

What is the purpose of insurance guaranty associations?

To protect policyowners, insureds and beneficiaries from financial losses caused by insolvent insurers

When can the Commissioner or Director examine insurers?

Whenever deemed necessary, but at least once every few years (please check your state regulations for specific time requirement)

How often must domestic insurance companies be examined by the Chief Financial Officer in Florida

at least every 5 years

What are producers required to do in order to renew their license?

complete CE hours and pay a renewal fee

If a producer makes maliciously critical statements about another insurer, what is this illegal practice called?

defamation

When twin brothers applied for life insurance from Company A, the company found that while neither of them smoked and both had a very similar lifestyle, one of the twins was in a much stronger financial position than the other. Because of this, the company charged him a higher rate for his insurance. This practice is considered

discrimination

Insurers are classified according to their domicile. What are the three types of insurers?

domestic, foreign, alien

Circulating deceptive sales material to the public is what type of Unfair Trade Practice?

false advertising

Who is responsible for the contents of insurance advertisements?

insurance company

In the agent/insurer relationship, who is considered the principal?

insurer

It would be considered unfair discrimination to ask an insurance applicant about which of the following and then use that information as a rating factor to determine insurability?

sexual orientation

Who is an insurance agent?

A person authorized to sell, solicit and negotiate insurance contracts

What illegal act does a producer commit when the producer represents a policy in a more favorable light than the policy really is?

Misrepresentation

Can insurers advertise the existence of the guaranty association during solicitation and sale of insurance policies?

No, advertising of the existence of the guaranty association for the purposes of solicitation and sale of insurance policies by insurers is an illegal business practice.

Which if the following would be required to be licensed as an insurance producer?

A salaried employee who advertises and solicits insurance