The Insurance Marketplace

Which of the following entities or individuals evaluates requests for payment by insureds after a loss has occurred? A Marketing department B Underwriter C Insured D Claims department

Claims department

Which of the following is authorized to transact insurance on human lives? A Solicitor B Insurance agent C Broker D Life-only agent

Life-only agent

Which of the following best describes what policy dividends are? A Profit B Guaranteed C Distribution of excess funds D Income

Distribution of excess funds

An insured falsely reports the theft of a valuable item in order to collect payment from the insurance policy. This is an example of A Misrepresentation. B Fraud. C Concealment. D Twisting.

Fraud.

All insurers doing business in California must maintain a department to investigate possible A Ethics violations by agents. B Arson. C Fraudulent claims by insureds. D Fraud by insurers.

Fraudulent claims by insureds.

"Discontinuance" is a term used to describe the termination of what type of insurance? A Government B Group C Business continuation D Index-linked

Group

In insurance transactions, fiduciary responsibility means A Being liable with respect to payment of claims. B Commingling premiums with agent's personal funds. C Handling insurer funds in a trust capacity. D Maintaining a good credit record.

Handling insurer funds in a trust capacity.

A dependent who is covered under a group medical policy files multiple claims for a single loss, thereby committing fraud. To what extent can the insurer deny benefits? A For all insureds under that group policy B For all persons in the same employee classification as the employee sponsor of the dependent C Only for that person who committed the fraud D For the family of the person who committed the fraud

Only for that person who committed the fraud

When a group coverage replacement sale has occurred, which normal provision of the new policy cannot be applied as usual? A Renewability B Beneficiary C Pre-existing condition D Premium

Pre-existing condition

Pertaining to insurance, what is the definition of a fiduciary responsibility? A Offering additional coverage to clients B Promptly forwarding premiums to the insurance company C Helping insureds to file claims D Performing reviews of insured's coverage

Promptly forwarding premiums to the insurance company

When a replacement carrier has a question regarding the prior carrier's coverage, from which of the following can they demand a clarification? A The servicing agent B The Department of Insurance C The prior carrier D The employer

The prior carrier

A person that DOES NOT work on the behalf of the company for which he or she does business, but rather represents the prospect, insured, or client is called A An insurance broker. B An insurance solicitor. C An insurer's agent. D A fiduciary trustee.

An insurance broker.

An agent has been hired by a local businessowner to determine what type of personal and professional coverage he needs. The agent has determined the businessowner's needs and recommended policies from 3 possible companies. The agent does NOT have an agency contract with any of these companies. The agent is acting as A A property and casualty insurance agent. B An insurance broker. C An insurance fiduciary. D A nonadmitted insurer.

An insurance broker.

If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered to be A Certified. B Qualified. C Approved. D Authorized.

Authorized.

Which of the following are the authorities that an agent can hold? A Apparent and allowed B Authorized and admitted C Primary and secondary D Express and implied

Express and implied

An insurance company is domiciled in Montana and transacts insurance in Wyoming. Which term best describes the insurer's classification in Wyoming? A Domestic B Unauthorized C Foreign D Alien

Foreign

When doing business in this state, an insurance company that is formed under the laws of another state is known as which type of insurer? A Domestic B Alien C Nonadmitted D Foreign

Foreign

Which authority is NOT stated in an agent's contract but is required for the agent to conduct business? A Apparent B Assumed C Express D Implied

Implied

Which of the following best defines earned surplus? A Dividends paid to policyholders. B Insurer's unassigned funds. C Insurer's expenses and liabilities. D None of the above.

Insurer's unassigned funds.

When agents are acting within the scope of their contract, their actions will be assumed to be the acts of the A Department of Insurance. B Insured. C Insurer. D Policyowner.

Insurer.

What happens to a corporation's license if the corporation is dissolved? A It remains in force for 60 days. B It becomes inactive. C It expires after 2 years. D It terminates.

It terminates.

Which operating division of an insurer is responsible for advertising, promoting, and distributing the insurer's products to the public? A Marketing and Sales B Claims C Actuarial D Underwriting

Marketing and Sales

An independent agent may have contracts with which of the following? A The Department of Insurance B The Commissioner C Brokers D More than one insurer

More than one insurer

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? A Mutual B Reciprocal C Nonprofit service organization D Stock

Mutual

Applications for insurance may contain information about a person's race, religion, ancestry, or color A Never B Always C Only when the applicant is seeking life insurance. D Only when applicant was born in a foreign country.

Never

Which of the following entities may NOT be an insurer? A A natural person B The Commissioner C A business trust D A limited liability company

The Commissioner

A new insurance must be treated as a replacement if a new insurer sells a policy to a group which discontinued its group medical insurance within how many days? A 60 B 15 C 30 D 90

60

If a policyholder contacts an insurance company about a claim and expects a response to the inquiry, within what span of time must the agent respond? A 15 days B 21 days C 31 days D 90 days

15 days

Which of the following is the closest term to an authorized insurer? A Certified B Licensed C Legal D Admitted

Admitted

According to the Law of Agency, a principal is represented by a/an A Agent. B Insurer. C Broker. D Insured.

Agent.

When transacting business in this state an insurer formed under the laws of another country is known as a/an A Alien insurer. B Domestic insurer. C Foreign insurer. D Admitted insurer.

Alien insurer.

In order to determine whether to test an insurance applicant for HIV or AIDS, the insurer may do which of the following? A Establish minimum uniform standards for testing all applicants for insurance. B Base its decision to test on the proposed insured's sexual orientation. C Base its decision to test on the incidence of AIDS in the person's ZIP code. D Test only persons who are single and under age 30.

Establish minimum uniform standards for testing all applicants for insurance.

An insurance company assures its new policyholders that their premium costs will not increase for a period of at least five years. However, due to increasing financial strain, they plan to raise premium costs for all insureds by 10% over the next two years. What term best describes this act? A Defamation B Unfair discrimination C Fraud D Errors and omissions

Fraud

What will happen if an agent submits an application to an insurance company to which he is not appointed? A If the insurer accepts the policy, it must appoint the agent. B The application will not have to be approved by an underwriter. C The insurer will not accept the policy. D The agent will be found guilty of a misdemeanor.

If the insurer accepts the policy, it must appoint the agent.

Every holder of an insurance license must notify the Commissioner, in writing, of any change of residence address, principal business address, or mailing address within which time parameter? A 30 days B Immediately C 10 days D 10 working days

Immediately

Which of the following persons represents several insurance companies but owns the records of the policies sold? A Exclusive agent B General agent C Direct writing agent D Independent agent

Independent agent

If an insurer's legal reserve funds are found to be less than the minimum required by law, the insurer is A Solvent. B Unauthorized. C Fraudulent. D Insolvent.

Insolvent.

The public official in charge of the Insurance Department is the A Insurance Commissioner. B Insurance Executive. C Insurance Regulator. D Insurance Administrator.

Insurance Commissioner.

What are the consequences of a failure to comply with the Commissioner's office while it is executing a seizure order? A It is a felony and is punishable by a 5-year imprisonment and restitution to victims commensurate with damages claimed. B It would be considered as obstruction of justice, and is subject to a fine of $5,000 per day. C It is a misdemeanor punishable by a fine of $1,000, one-year imprisonment, or both. D It may become grounds for license revocation and termination of all agency contracts.

It is a misdemeanor punishable by a fine of $1,000, one-year imprisonment, or both.

Which entity pursues liquidation of an insolvent insurer? A The local government of the city in which the insurer is located B The attorneys of the insolvent insurer C The federal government D The state government

The state government

The Department of Insurance contacts an agent about a claim that was settled two months ago. Within what timeframe must the agent issue a complete response? A 10 days B 15 days C 21 days D 31 days

21 days

A property and casualty agent has been licensed for 7 years. How many continuing education hours must the agent complete this licensing period? A 30 B 24 C 15 D 0

24

What are the continuing education requirements for life-only agents in California? A 20 hours annually for the first 4 years B 30 hours every 4 years C 24 hours every 2 years D 25 hours every year

24 hours every 2 years

Without obtaining dual licensing, life-only agents may transact all of the following types of insurance EXCEPT A Endowments. B 24-hour care coverage. C Disability income. D Accidental death.

24-hour care coverage.

An insurer, by filing a notice of appointment on behalf of an applicant, shall be deemed to have declared that the applicant has had experience or instruction in insurance or that the necessary instruction will be given within A 20 days after issuance of license. B 10 days after issuance of license. C 60 days after issuance of license. D 30 days after issuance of license.

30 days after issuance of license.

Which of the following was designed to provide more extensive privacy protection than the federal Gramm-Leach-Bliley Act? A Privacy Act of 1974 B California Financial Information Privacy Act C NAIC Privacy Protection Model Act D California Consumer Protection Act

California Financial Information Privacy Act

In order to become an admitted, authorized insurer, what is the primary body of law about which an applicant company must be concerned? A California Insurance Code B California Business Code C California Penal Code D California Constitution

California Insurance Code

Which of the following must an insurer obtain in order to transact insurance within a given state? A Producer's certificate B Business entity license C Insurer's license D Certificate of authority

Certificate of authority

The term "administrator" under California Insurance Codes refers to any person who A Settles the claims on nonregulated policy coverages in the state. B The third-party agency responsible for applications processing by an insurer. C Collects any charge or premium from, or who adjusts or settles claims on, life and health insurance policies or annuities. D Maintains the records of an insurer and its agencies for the purpose of insurance sales and administration.

Collects any charge or premium from, or who adjusts or settles claims on, life and health insurance policies or annuities.

Company A enters into a reinsurance agreement with Company B, where Company B reinsures Company A's policies. Which of the following is true? A Company A is the primary insurer, and Company B is the facultative insurer. B Company A is the facultative insurer, and Company B is the primary insurer. C Company A is the primary insurer, and Company B is the reinsurer. D Company A is the reinsurer, and Company B is the primary insurer.

Company A is the primary insurer, and Company B is the reinsurer.

What is described as the termination of a plan of insurance between the insurer and the entire group of employees? A Nonrenewal B Discontinuance C Termination D Cancellation

Discontinuance

A licensee is NOT required to comply with continuing education requirements in the state of California if which conditions are met? A The licensee has been in good standing for 20 continuous years, and is at least 70 years old. B The licensee has been in good standing for 20 continuous years, and is at least 55 years old. C The licensee has been in good standing for 30 continuous years, and is at least 70 years old. D The licensee has been in good standing for 30 continuous years, and is at least 65 years old.

The licensee has been in good standing for 30 continuous years, and is at least 70 years old.

In a life settlement contract, whom does the life settlement broker represent? A The owner B The insurer C The beneficiary D The life settlement intermediary

The owner

Which of the following is an example of a producer's fiduciary duty? A An obligation to state every known fact about the policy the producer is selling. B A duty to base all transactions upon the principle of Utmost Good Faith. C The obligation to tell the truth to the best of one's knowledge D The trust that a client places in the producer in regard to handling premiums.

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

Which of the following statements regarding policy dividends is true? A They are available in any life insurance policy. B They are guaranteed. C They are a refund of unearned premiums. D They are automatically paid out to policyholders.

They are a refund of unearned premiums.

Under the Privacy Rule for HIPAA, protected information includes all individually identifiable health information A Held or transmitted in paper form. B Held or transmitted in any form. C Transmitted electronically only. D Held in a computer format.

Held or transmitted in any form.

Which of the following would be considered refund of unearned premium? A Nonforfeiture values B Cash value C Dividends D Commissions

Dividends

Arnie worked for Evermore Life Insurance for many years and became their top-selling agent. However, while Arnie was out of the country enjoying his earnings, he forgot to send in his renewal for his life license and his license expired. In addition to Arnie's license expiring, what else will happen to Arnie? A After Arnie finally renews his license he will need to start at the bottom of the pay scale again. B Arnie will need to look for a new career. C Nothing else will happen to Arnie. D His appointment will expire.

His appointment will expire.

Which of the following is NOT true regarding a Certificate of Authority? A It may be necessary for transacting business in a specific state. B It is equivalent to an insurance license. C It is issued by the state department of insurance. D It is issued to group insurance participants.

It is issued to group insurance participants.

To be licensed as a Life and Disability Analyst in the State of California, an applicant must meet all of the following requirements EXCEPT A The applicant must apply for and pass the California insurance examination. B The applicant must be at least 21 years of age. C The applicant must be a resident of the state of California. D The applicant may not be an employee of an insurance company.

The applicant must be at least 21 years of age.

When an employee or dependent who is currently receiving benefits qualifies for an extension of benefits due to a discontinuance which was followed by a replacement, which of the following is responsible for that disabled person's continuance of benefits? A Workers Compensation B The employer C The new insurer D The old insurer

The old insurer

Which of the following is an example of a producer's fiduciary duty? A A duty to base all transactions upon the principle of Utmost Good Faith. B The obligation to tell the truth to the best of one's knowledge C The trust that a client places in the producer in regard to handling premiums. D An obligation to state every known fact about the policy the producer is selling.

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

What is the main difference between a life agent and a life analyst? A Licensing requirements B Eligible age C Type of insurance transactions D The way each is compensated

The way each is compensated

What is the purpose of the California Life and Health Guarantee Association? A To "bail out" any insurance company based in California B To protect residents against false claims in insurance advertising C To protect life and health policyholders and/or insureds should a member insurer become insolvent D To help small insurance companies start doing business

To protect life and health policyholders and/or insureds should a member insurer become insolvent

Which of the following is NOT a responsibility of an insurance agent? A Delivering the contract B Explaining policy provisions C Submitting the application to the insurer D Underwriting the contract

Underwriting the contract

An insurer may discriminate against a person through underwriting if that person has A A physical handicap that could result in an actuarially predictable loss. B Been a fare-paying passenger on a regularly scheduled airline flight. C No previous history of buying life insurance. D A history of buying and canceling insurance policies.

A physical handicap that could result in an actuarially predictable loss.

If the information is used only for identification and not for underwriting purposes, which of the following information about the applicant may be listed on a life insurance application? A Hair and eye color B Mother's maiden name C Name, age, height, and weight D Birthplace

Birthplace

The authority granted to an agent through the agent's contract is referred to as A Absolute authority. B Express authority. C Apparent authority. D Implied authority.

Express authority.

Which of the following terms is defined by the California Insurance Code as unassigned funds that must be reported on a stock insurer's annual statement? A Earned income B Premiums C Earned surplus D Dividends

Earned surplus

An example of "adverse underwriting decisions" in a policy involving individually underwritten coverage would be A Declination of coverage solely because coverage is not available on a class or statewide basis. B Termination of an individual policy form on an insured class statewide. C The rescission of a policy type company-wide. D Placing coverage with a residual marketing mechanism such as an unauthorized insurer that offers other than preferred and standard rates.

Placing coverage with a residual marketing mechanism such as an unauthorized insurer that offers other than preferred and standard rates.

Which of the following persons would not lose all of their coverage due to a discontinuance of their employer's group medical policy? A A disabled employee or dependent B A probationary employee C The CEO D A union member

A disabled employee or dependent

Every insurer is required to provide all records requested by the Commissioner within A A period of 60 days following a written request. B 5 business days of notification by the Commissioner's office. C 10 business days of notification by the Commissioner's office. D A period of 30 days following a written request.

A period of 30 days following a written request.

An agent is acting ethically in all of the following situations EXCEPT A Always representing the insured. B Working within the conditions of his/her contract. C Representing the insurer, not the insured. D Keeping customers' best interests in mind.

Always representing the insured.

For the purpose of a contract, which of the following could be considered a "person"? A An association B A business trust C A limited liability corporation D Any of these would qualify as a person

Any of these would qualify as a person

Which of the following types of agent authority is also called "perceived authority"? A Fiduciary B Apparent C Express D Implied

Apparent

All of the following are fraud prevention systems and agencies EXCEPT A The Insurance Claims Analysis Bureau. B The Medical Information Bureau. C The Fraud Division of the Department of Insurance. D The Arson Information Reporting System.

The Medical Information Bureau.

Which type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another? A Rebating B Twisting C Switching D False advertising

Twisting

Who is responsible for equitably evaluating insurable risks and selecting and distributing to the insurer those that are profitable to the insurer? A Governor B Underwriter C Insured D Insurance Commissioner

Underwriter

When can earned surplus be returned to the policyholder? A Whenever requested by the policyholder B Whenever it occurs C Whenever it exists and is not needed for other expenses D Whenever the funds are unassigned

Whenever it exists and is not needed for other expenses

The continuing education requirement for the California Partnership for Long-Term Care policies A Is part of an agent's regular continuing education requirements. B Does not apply to agents who hold a life license. C Only needs to be completed if an actual sale occurs during that licensing period. D Must be completed in addition to an agent's regular continuing education requirements.

Is part of an agent's regular continuing education requirements.

An insurer received a claim on May 1st. On May 31th, the claim was approved in its entirety. By what date can the claimant expect the payment? A June 10th B June 30th C July 10th D June 3rd

June 30th

Which of the following is NOT permitted to charge a fee for any services provided unless he/she has a signed, written agreement with the party being charged, including a statement of the charge or basis on which charges will be made? A Solicitor B Life agent C Life and disability analyst D Broker

Life and disability analyst

A licensed insurance agent overhears a conversation that leads him to believe a person is committing fraud. If the agent makes a written report to a law enforcement agency and the person is investigated, but it turns out that it was an erroneous accusation, what charge will the agent face? A A misrepresentation B Slander C No charges; the Insurance Code gives the agent legal immunity. D Libel, a written untruth

No charges; the Insurance Code gives the agent legal immunity.

Applicants for insurance who are blind may be rated substandard for life insurance A Always, because they cannot avoid the risk of injury or death. B Only on the basis of information unrelated to their blindness. C Only if they have been blind from birth. D Only if their blindness resulted from an injury.

Only on the basis of information unrelated to their blindness.

When a discontinued policy contained a death benefit, what term is used in the CIC to describe the length of the applicable extension of benefits? A Insurer's discretion B Until death or cancellation C Reasonable D Client's discretion

Reasonable

An insurance company and its agents must notify all applicants and policyholders of information-gathering processes utilized for written application transactions A At the time of delivery of the policy when personal information is only collected from the applicant, an insured under the policy, or public records. B At the time of application for the policy when information is collected from sources other than the applicant, persons under the policy, or public records. C Both of these answers are correct. D Neither of these answers is correct.

Both of these answers are correct.

In any case where there is a controversy or dispute between the insurance company and the insured, the soliciting agent is the agent of the A Applicant. B Insured. C Company. D Beneficiary.

Company.

The types of policies that are covered under the terms of the Association include A Contracts involving reinsurance. B An annuity issued by a charitable organization. C Direct, nongroup life, health, annuity and supplemental policies. D Employer self-funded contracts.

Direct, nongroup life, health, annuity and supplemental policies.

Your client wants to buy a par policy to supplement his retirement savings program. Which of the following does your client need to understand about insurance policy dividends? A Dividends are considered a refund of unused premiums. B Dividends are written into the contract. C Dividends require the purchase of additional insurance. D Dividends are guaranteed.

Dividends are considered a refund of unused premiums.

Which of the following is NOT a required licensing qualification for a Life and Disability Insurance Analyst in this state? A Employment with an insurance company B Residence in the state of California C The ability to maintain a fiduciary relationship D Thorough knowledge of life and disability insurance

Employment with an insurance company

If an agent unwittingly gives a client incorrect information, what professional insurance would pay for losses or defend the agent against any resulting lawsuits? A Nonmedical insurance B Errors and Omissions C Nonadmitted agent insurance D Professional liability

Errors and Omissions