Life Insurance and Annuities - Policy Replacement and Cancellation

An insurer has been found guilty of a Code violation regarding replacement. The insurer then repeats the violation. What will be the minimum penalty? A $10,000 B $25,000 C $30,000 D $100,000

$30,000

Every individual life insurance policy must provide for a free-look provision that lasts for at least A 90 days. B 10 days. C 30 days. D 60 days.

10 days.

To which of the following products does the Replacement Regulation apply? A Group annuities B Credit life insurance C Converting an existing policy with the same insurer D Whole life insurance

Whole life insurance

The notice to senior consumers regarding their right to cancel a policy must be printed on the cover or policy jacket in at least what type of print? A 12-point standard print B 12-point bold print C 14-point standard print D 14-point bold print

12-point bold print

Any insurer who engages in the insurance business and violates the Code with respect to insurance replacement shall on the first violation A Be fined a sum of $10,000. B Be fined a sum no less than $30,000 and no more than $300,000. C Have his/her license suspended. D Be fined a sum of $1,000.

Be fined a sum of $10,000.

A legally acceptable attempt by an existing insurer to dissuade a current policyowner from the replacement of existing life insurance is called A Rebating. B Retention. C Conservation. D Solicitation.

Conservation.

Which of the following insureds have a right to cancel an individual life policy for a full refund within 30 days of policy delivery? A All insureds B Only insureds who have dependents C Only preferred insureds D Insureds who are 60 years of age or older

Insureds who are 60 years of age or older

During the cancellation period, an insurer must refund any premiums and policy fees within how many days of written cancellation notice by the insured? A 30 B 60 C 10 D 20

30

Every policy of individual life insurance must include a notice of right to cancel the policy, stating the specific time frame for the free-look period. Once the insured has cancelled the policy, within how many days must the insurer refund all premiums and policy fees? A 90 days B 30 days C 10-30 days D 2 weeks

30 days

All insurance policies and annuity contracts delivered to senior citizens in the State of California are subject to a cancellation period of at least A 20 days. B 30 days. C 45 days. D 60 days.

30 days.

Which of the following documents must be provided to the policyowner or applicant during policy replacement? A Buyer's Guide and Policy Summary B Policy illustrations C Notice Regarding Replacement D Disclosure Authorization Form

Notice Regarding Replacement

Any insurance agent who engages in the insurance business and violates the Code with respect to insurance replacement shall on the first violation A Be fined a sum of $1,000. B Be fined a sum of $10,000. C Be administratively suspended from licensing for a period of 180 days. D Be fined a sum of $5,000.

Be fined a sum of $1,000.

Any insurance agent who commits a repeated violation of the Insurance Code with respect to insurance replacement will be liable for A An administrative penalty of no less than $30,000 and have his/her license revoked. B A criminal penalty of up to $10,000. C A penalty not to exceed $1,000 per violation. D An administrative penalty of no less than $5,000 and no more than $50,000 per violation.

An administrative penalty of no less than $5,000 and no more than $50,000 per violation.

An insured has the right to cancel a policy by written notification to the insurer. This notification may be mailed to the insurer or returned to the original agent who made the sale. Upon receipt of the cancellation request, the insurer will A Have the writing agent review the policy cancellation and attempt to conserve the policy. B Report the cancellation to the insurer's home office and the Department of Insurance Policy Conservation Unit for statistical data accounting purposes. C Cancel the policy and terminate an automatic bank-drafting of premiums. D Refund any premiums and policy fees within 30 days of notice if the policy is within the cancellation period specified by the insurer.

Refund any premiums and policy fees within 30 days of notice if the policy is within the cancellation period specified by the insurer.

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? A Reinstatement rule B Conversion rule C Disclosure rule D Replacement rule

Replacement rule

An insured has the right to return the new insurance policy for a full refund during the A Grace period. B Free-look period. C Settlement period. D Probationary period.

Free-look period.

Which of the following is true regarding a policy with a face value less than $10,000? A An insured cannot return the policy. B If it's returned during the free look period, the contract will be cancelled, but the insurer will retain the premium paid. C The policy can be cancelled with full refund of premium at any time. D If it's returned during the free look period, the agreement will be void.

If it's returned during the free look period, the agreement will be void.

The right of the applicant to rescind the policy for a full refund of all premiums A Is not a valid right. B Must be clearly stated in the policy's text. C Is implied during the application process. D Must be exercised within 3 days of the policy issue.

Must be clearly stated in the policy's text.

During the free-look period, the premium for a variable annuity may be invested in all of the following EXCEPT A Value funds. B Fixed-income investments. C Money-market funds. D Mutual funds (only upon the investor's request).

Value funds.

During replacement of life insurance, a replacing insurer must do which of the following? A Designate a new producer for a replaced policy B Send a copy of the Notice Regarding Replacement to the Department of Insurance C Obtain a list of all life insurance policies that will be replaced D Guarantee a replacement for each existing policy

Obtain a list of all life insurance policies that will be replaced

How must a replacing producer respond to an applicant wishing to replace existing life insurance? A The producer must provide the applicant with a Notice Regarding Replacement. B The producer must collect the existing policies and turn them over to the replacing insurer. C The producer must request the permission of the existing insurer. D The producer has no specific duties.

The producer must provide the applicant with a Notice Regarding Replacement.