CA LAH Ch 17

What is the penalty for acting as an agent without a license? A. Up to $50,000 B. Prison for up to 1 year C. Neither A or B are correct D. Both A & B are correct

Both A & B are correct

What is the penalty for transacting insurance without a license in California? A. fine of up to $50,000 B. prison for up to 1 year C. Both A&B above D. Neither A nor B are correct

Both A&B above

What is the purpose of the California Financial Information Privacy Act or SB 1? A. To provide California residents with more control regarding information sharing. B. To provide California residents with greater financial privacy than Gramm-Leach-Bliley Act. C. Both answers are correct D. Neither answer is correct

Both answers are correct

What is the term used when an unauthorized party attempts to gain access to client nonpublic information without proper authority? A. Pre-Texting B. Social Engineering C. Both answers are correct D. Neither answer is correct

Both answers are correct

The failure to display an agent's license number on all marketing or sales literature may result in fines beginning at $200, and not exceeding ______ for third and subsequent offenses. A. $500 B. $1,000 C. $5,000 D. $10,000

$1,000

Which of the following products, if given at no charge to a client, would be deemed to have violated the Free Insurance provision? A. Insurance written in connection with newspaper subscriptions. B. Product warranty coverage C. Motor Club Insurance D. $10,000 Whole Life Policy

$10,000 Whole Life Policy

What is the penalty for knowingly violating the provisions of the California Financial Information Privacy Act? A. $2,500 fine per violation, with no limitation. B. $2,500 fine per violation, not to exceed $500,000. C. $25,000 fine per violation, not to exceed $500,000 D. None of the answers are correct.

$2,500 fine per violation, with no limitation.

An agent fails to display their license number properly. What penalty will be issued if this is a "first time" offense? A. $2,000 B. $500 C. $200 D. $1,000

$200

What is the name of the person who directly or indirectly directs the management and overall operational policy of a company, by owning______% of the voting proxy best describes a(n): A. 30%, shrewd investor B. 10%, influential policyowner C. 10%, controlling person D. 30%, controlling person

10%, controlling person

What is the minimum age requirement to obtain an insurance license? A. 18 B. 21 C. 30 D. There is no age requirement.

18

Once a policy is issued, the insurer must maintain Agent records for how many years? A. 1 B. 2 C. 3 D. 4

2

What is the maximum number of DBA's that will be approved for an agent's use? A. 1 B. 2 C. 3 D. 4

2

If an agent submits a policy application and the policy is issued by a company the agent is not appointed with, the issuer of the policy must file an agent notice of appointment form with the CDI within: A. 2 weeks or 14 days following application submission. B. The 31 day Grace Period. C. 3 weeks or 21 days following application submission. D. This is an unauthorized transaction, and is not allowed.

2 weeks or 14 days following application submission.

If requested by the CDI, how many days does a licensee have to provide claim information to the department? A. 10 B. 15 C. 21 D. 31

21

How many continuing education hours is a Life Only agent required to complete during the first two years of license? A. 24 B. 30 C. 50 D. 40

24

The penalty assessed against an insurer for a first time replacement violation would be: A. 250 B. 2500 C. 500 D. 5000

2500

A ____ day free look is required on all replaced policies. A. 10 B. 20 C. 30 D. 60

30

The Insurance Commissioner decides to conduct a formal investigative hearing. How many days of advanced notice of the hearing must be provided for all those involved in the hearing? A. 20 B. 30 C. 60 D. 90

30

An agent who holds a Life Only license is required to complete 24 hours of Continuing Education every 2 years. How many of these 24 hours must be devoted to the topic of Ethics? A. 2 B. 4 C. 6 D. 8

4

How long must an insurer maintain policy issue records? A. 1 year B. 2 years C. 3 years D. 5 years

5 years

What is the fine for unintentionally violating an Unfair Trade Act? A. 2500 B. 5000 C. 10000 D. 100000

5000

An agent, age ______, with at least _______ years of license experience, will be exempt from the California CE requirement. A. 65, 30 B. 80, 30 C. 70, 25 D. 70, 30

70, 30

Which of the following choices is INCORRECT regarding Continuing Education requirements? A. A Life Agent is required to complete 25 hours of CE credit each year for the first 4 years of license B. Beginning in the 5th year and every 2-year period beyond, a Life Agent is required to complete 30 hours C. 8 hours prior to selling annuities, then 8 hours every 2 years thereafter D. 4 hours of Ethics every 2 years

8 hours prior to selling annuities, then 8 hours every 2 years thereafter

Which statement below regarding the differences between an Agent and a Broker is false? A. A broker represents themselves and their client. B. An agent legally represents the insurer. C. In California, a Broker cannot transact life insurance. D. A broker is allowed to bind coverage.

A broker is allowed to bind coverage.

Which of the following individuals would be considered an Administrator per California law? A. An employer acting on behalf of their employees. B. n insurance company, HMO or PPO. C. Life Agents D. A licensed individual hired by an insurer to assist in premium collection.

A licensed individual hired by an insurer to assist in premium collection.

Which of the following is a false statement when discussing the alteration of an insurance application? A. A representation or answer made on an application can be altered prior to application submission, but never afterward. B. Administrative markings are allowed if clearly indicated. C. A manager can correct errors on an application submitted by an agent with less than 2 years experience. D. Requesting additional information to an application question would not be considered unethical and is quite common.

A manager can correct errors on an application submitted by an agent with less than 2 years experience.

What is the meaning of "Prima facie"? A. Absence of malice B. Absence of an extended time frame C. Absence of further proof D. Absence of extenuating circumstances

Absence of further proof

All internet advertisements must include all the following except: A. License # B. Agent state of residence and business location. C. Agent Social Security # D. Name as it appears on insurance license, including any approved fictitious name used.

Agent Social Security #

All are true statements with regard to license renewal except: A. Agent licenses are good for2 years and expire on the last day of the issue month, every 2 years. B. Completion of CE is a requirement for license renewal. C. Agents have a 90 day "grace period" following their license renewal date to complete their CE. D. The CE "grace period" does not apply to licenses that have been suspended or revoked.

Agents have a 90 day "grace period" following their license renewal date to complete their CE.

Which of the following characteristics cannot specifically be used by an insurer to determine whether or not a test for AIDS/HIV will be needed in the underwriting process? A. Gender B. Living Arrangement C. Beneficiary Designation D. All of the above

All of the above

The Insurance Commissioner may deny a license WITHOUT conducting a hearing for which of the following situations? A. The applicant has a previous felony conviction involving a state insurance law B. The applicant has had a previous application denied for cause during the last 5 years. C. The applicant has had a previous insurance license revoked within the last 5 years. D. All of the above.

All of the above.

According to the California Insurance Code, a "person" could mean: A. An individual licensee B. A Partnership C. A Limited Liability Corporation D. All the above

All the above

Which of the following items must an agent/ producers license number be listed on? A. Policy Applications B. Policy Quotations C. Business Stationary D. All the above

All the above

A solicitor: A. Cannot bind coverage B. Cannot solicit life insurance C. Must be licensed D. All the above are true

All the above are true

Agent producers: A. Should always follow the rules of their company. B. Should establish their own Code of Ethics. C. Should have as their own personal Code, ethics that exceed the minimum expectation of the law. D. All the above are true.

All the above are true.

Which statement below is not correct with regard to a cease and desist order? A. Is placed by the Commissioner B. Unintentional violations may result in a fine of $5,000 per violation C. Intentional Violations may result in a fine of $55,000 per violation D. All the answers above are true

All the answers above are true

An agent who adheres to very high ethical practices will be rewarded in many different ways. Which of the following answers would not be considered an advantage of ethical practices? A. Enhanced Reputation B. Repeat Sales C. Career Advancement D. All the answers above would be advantages of ethical behavior.

All the answers above would be advantages of ethical behavior.

All are true statements regarding the Family and Medical Leave Act of 1993 except: A. Allows an employee to take an unpaid leave of absence from their employment if required to provide care for themselves or a family member. B. Provides up to 12 weeks of unpaid leave. C. Provides a guarantee that the employee will be able to return to their job position after a qualified leave of absence. D. All the answers are correct.

All the answers are correct.

Which is a false statement regarding the CIC? A. New laws become effective January 1st of each year. B. Revised, amended or new laws are created by the California legislative body. C. Amended codes are created by the California Department of Insurance. D. The primary purpose of the code is to protect the insurance buying public.

Amended codes are created by the California Department of Insurance.

Which statement below is incorrect? A. DBA's may be used as long as they are not misleading and are approved by the CDI. B. Name changes need to be submitted to the CDI, in writing, immediately. C. The Commissioner may deny the use of a particular name if it is misleading or it is already similar to a name already in use. D. An agent may use any number of DBA's, as long as they are approved by the CDI.

An agent may use any number of DBA's, as long as they are approved by the CDI.

When does an agent need to inform their client of the effective date of coverage and/or the circumstances under which coverage will be effective, if such conditions exist? A. At time of application B. At time of policy delivery C. When the agent initially establishes the appointment D. At the time of the first medical exam

At time of application

Which statement regarding license surrender is incorrect? A. A license may be surrendered by delivering the license directly to the CDI. B. A license may be surrendered by providing written notice to the CDI. C. Should an agent die, their license automatically terminates. D. Clients must be notified by the CDI if an agent surrenders their license without cause.

Clients must be notified by the CDI if an agent surrenders their license without cause.

This act repealed a portion of Glass Steagall Act of 1933, which prohibited banks from offering commercial banking, investments and financial services products to its' customers. A. Consumer Driven Plans B. Government Driven Plans C. Community Driven Plans D. State Funded Plans

Community Driven Plans

"Adhering to a strict interpretation of an insurance law, while legal, may not always be considered an ethical practice." Is this statement true or false? A. True B. False

True

Which statement below is not true regarding the conservation of an insurer? A. Conservation occurs when an insurer is taken over by the CDI because they have become insolvent. B. The Commissioner becomes the "Conservator" C. The inability of an insurer to adhere to, or follow a plan established by the CDI to remedy its' dire financial position would be cause for the CDI to take over an insurer. D. Conservation is primarily designed to protect the insurance company.

Conservation is primarily designed to protect the insurance company.

According to state law, an individual who provides personal information and actually purchases a financial services product will be called a: A. Consumer B. Buyer C. Customer D. Contingent

Customer

Making false or misleading statements about the financial condition of another company or agent best describes what Unfair Trade Practice? A. Rebating B. Twisting C. Coercion D. Defamation

Defamation

Which is not an Unfair Claim Practice? A. Attempting to settle a claim for less than the amount listed on a contract. B. Failing to affirm or deny a claim payment. C. Denying a claim after a full and fair evaluation of the claim has been done. D. Denying a claim without conducting any investigation.

Denying a claim after a full and fair evaluation of the claim has been done.

An agent can submit an insurance proposal for a company that they are not appointed with. Is this statement true or false? A. True B. False C. N/A D. N/A

True

Surplus that represents net earnings or profits after all losses and expenses are paid best describes: A. Dividends B. Reserves C. Earned Surplus D. Profit Margin

Earned Surplus

The CIC is enforced by which branch of state government? A. Legislative B. Executive C. Judicial D. None of the above

Executive

An unfair comparison of two policies, in an attempt to replace existing coverage with new coverage describes what term below? A. Unfair Discrimination B. Rebating C. Twisting D. Boycott or Coercion

Twisting

The rules for "Paid In Capital" or "Capital Paid In" are not the same for: A. Foreign Mutual companies B. Domestic Mutual companies C. Alien Mutual companies D. Domestic Stock companies

Foreign Mutual companies

An agent lists on the application that a sale is not intended to replace an existing contract. Later on, it is determined that the policy did in fact replace an existing contract. Is this considered replacement? A. Yes B. No

Yes

All of the following are reasons why an insurance license applicant may have their application for license denied after a hearing except: A. Applicant has a poor reputation B. An applicant has a past history of allowing employees to violate insurance law. C. Had a professional license in another field of work revoked within the last 5 years. D. Had an insurance license revoked within the last 5 years for cause.

Had an insurance license revoked within the last 5 years for cause.

Which statement regarding the Privacy Protection Act is false? A. Upon request, an insurer must inform a policyowner with information within 30 days. B. If proven incorrect, policy records must be corrected within 60 days. C. Shared information must be disclosed going back 2 years. D. An applicant must be informed of the sources from which information may be gathered.

If proven incorrect, policy records must be corrected within 60 days.

Which of the following statements is false? A. No alterations can be made to an application without the applicant's knowledge and consent. B. Insertions of information for administrative purposes are allowed if clearly marked. C. Illegal alterations are considered felonies. D. If an executive makes an illegal alteration of an application, it is deemed to have been done by the company.

Illegal alterations are considered felonies.

If a permanent license is not renewed, all agent appointments will terminate. The license itself will not terminate, but will be deemed: A. Inactive B. Deactivated C. Suspended D. Unofficial

Inactive

Which type of insurance contract is most often serviced on a weekly or monthly basis, at home by a debit agent? A. Universal Life B. Variable Life C. Industrial Life D. Ordinary Life

Industrial Life

Which of the statements below is not correct? A. A Participating (Par) company is also called a mutual company. B. A Non-Participating company is also called a stock company. C. A whole life contract would be categorized as an Ordinary contract. D. Industrial Life policies typically have very high death benefits and are sold to those who work in hazardous industries.

Industrial Life policies typically have very high death benefits and are sold to those who work in hazardous industries.

Any impairment of minimum "paid-in capital" or "capital paid in", required in the aggregate of an insurer by the provisions of this code for the class, or classes, of insurance that it transacts anywhere or the inability of the insurer to meet its financial obligations when they are due describes which term below? A. Solvent B. Insolvent C. Non-Collateralized D. Unauthorized

Insolvent

Regarding examinations and audits, which statement is false? A. Insurers must file an annual financial statement with the CDI by March 1st. B. An insurer can be audited by the CDI anytime there is just cause. C. Insurance companies typically invest their assets in high risk growth accounts in order to maximize investment returns for the company. D. The CDI will help determine the amount of overall assets that an insurer needs to keep liquid.

Insurance companies typically invest their assets in high risk growth accounts in order to maximize investment returns for the company.

Which statement best describes "Free Insurance"? A. Dividends paid on a mutual policy. B. Bonus insurance as the result of coverage longevity. C. Insurance given in an attempt to induce future policies or services. D. Low cost health insurance.

Insurance given in an attempt to induce future policies or services.

Which of the following would be considered Free Insurance? A. Insurance written in connection with newspaper subscriptions. B. Credit life insurance designed to pay off a debt in the event the borrower dies. C. Motor Club Insurance D. Insurance provided as a "bonus" for existing and future insurance purchases.

Insurance provided as a "bonus" for existing and future insurance purchases.

Which is a false statement concerning the California Commissioner of Insurance? A. Conducts hearings to determine "just cause". B. Determines insurance company reserve amounts. C. Appoints examiners D. Is appointed by the Governor.

Is appointed by the Governor

Which would not be considered an ethical agent practice? A. An agent knows their job description in total. B. An agent knowing their product in total. C. Placing the interest of his client first. D. Placing the interest of his company first.

Placing the interest of his company first.

Which statement best describes the duration of an agents license? A. It is issued for 2 years. B. It is issued for 3 years. C. It is issued for 2 years and expires on the first day of the month in which it was issued. D. It is issued for 2 years and expires on the last day of the month in which it was issued.

It is issued for 2 years and expires on the last day of the month in which it was issued.

Which statement regarding the surrender of a co-partnership's license is false? A. Membership change forms must be submitted, with fee to the CDI within 30 days of any change. B. A remaining partner may continue to act as the agency power, upon whom all notices can be served. C. Should the last named partner die, the partnership will become ineffective. D. It is required that when the original partnership dissolves, the original partnership license must be returned to the CDI.

It is required that when the original partnership dissolves, the original partnership license must be returned to the CDI.

Which branch of state government is responsible for creating state law, including insurance code? A. Legislative B. Executive C. Judicial D. Legislative and Judicial

Legislative

A California Insurance Agent cannot sell: A. Life and Disability Insurance B. Fire and Casualty Insurance C. Health Insurance D. All of the above

Life and Disability Insurance

What term below best describes the life insurance death benefit, subject to conditions of contract, minus any loans and/or loan interest? A. Gross Premium B. Limit of Liability C. Limit of Insurability D. Inside limitations of the policy

Limit of Liability

Which insurance product below would a Life Only agent NOT be able to sell? A. Life Insurance B. Endowments C. Major Medical D. Disability Income

Major Medical

The CDI has jurisdiction over all of the following entities except: A. Domestic HMO's B. California Life agents C. Major Medical plans approved in California. D. Medicare

Medicare

An agent who guarantees the future dividend return on a mutual policy has probably engaged in what Unfair Trade Practice? A. Rebating B. Twisting C. Misrepresentation D. Coercion

Misrepresentation

The California Insurance Code and Code of Regulation: A. List all the ethical practices or violations an agent should be concerned with. B. Are subject to personal interpretation. C. Outline many unethical practices, but are not a complete guide to insurance ethics. D. Do not need to be followed.

Outline many unethical practices, but are not a complete guide to insurance ethics.

A person who signs a falsely signs a claim form may be guilty of: A. Lying B. Perjury C. Warranty D. Cheating

Perjury

A copy of a policy application must be delivered to an insurance applicant no later than time of: A. Application B. Policy Delivery C. Policy Issuance D. Initial Underwriting

Policy Delivery

The illegal action of a company issuing an insurance contract with little or no underwriting, and then conducting a thorough underwriting of the client at claim time in an attempt to deny a claim best describes: A. Unfair Trade Practice B. Pre-Test interview C. Post Claim Underwriting D. Normal Underwriting

Post Claim Underwriting

Mike, a local sales agent markets himself to be a representative of the Medicare program. He in fact is not a Medicare representative. This illegal and unethical action would most likely be considered a: A. Pre-Text interview B. Post-Text interview C. False investigation D. Investigative journalism

Pre-Text interview

One of the major concerns with the Gramm-Leach-Bliley Act is: A. Increasing competition between various banks. B. Providing greater access to financial service products. C. Protecting consumer privacy when sharing information with non-affiliated third party groups. D. Protecting the growth of consumer investments.

Protecting consumer privacy when sharing information with non-affiliated third party groups.

Jolene wishes to provide insurance advice to his clients in exchange for a fee. In order to do this, she must do all of the following except: A. Have at least 5 years experience as a Life agent B. Pass a state exam and apply for a Life and Disability Analyst license. C. Must provide his fee structure to the client, in advance of their meeting. D. Provide advice in writing, but only when requested by his client.

Provide advice in writing, but only when requested by his client.

Offering a leather briefcase, sporting tickets, special inside information or a portion of the policy commission would illustrate: A. Unfair Discrimination B. Rebating C. Twisting D. Boycott or Coercion

Rebating

According to the California Insurance Code, which action below does not fall under the definition of "transacting" Insurance? A. Receiving agent commissions B. Negotiating insurance contracts C. Soliciting insurance contracts D. Addressing matters that arise either before or after a sale is made.

Receiving agent commissions

What answer below names the statement "A policy that is lapsed or surrendered, or one that is converted into a reduced paid-up contract"? A. Replacement B. Rescission C. Restitution D. Policy Fulfillment

Replacement

All are true statements regarding the California Financial Information Privacy Act except: A. Resident must opt-in regarding the sharing of information with non-affiliated third party groups. B. Regarding affiliated groups, consumers must be provided with an annual notice. C. Residents have the option to opt-out of information sharing one time each year. D. A company cannot discriminate against an individual who has opted out of information sharing.

Residents have the option to opt-out of information sharing one time each year.

Which item below best describes "an attachment to an insurance contract that may either expand or restrict insurance coverage"? A. Policy B. Clause C. Provision D. Rider

Rider

All are correct statements with regard to the financial privacy notice except: A. A consumer must be provided with this notice prior to any information being shared. B. A consumer will have the option to opt-out of information sharing. C. The notice must explain with whom collected information can be shared. D. Safeguards must be in place to protect information, but these safeguards are confidential and only known by the financial company itself.

Safeguards must be in place to protect information, but these safeguards are confidential and only known by the financial company itself.

Acceptable delivery modes for California Continuing Education would include all the following except: A. Classroom courses B. Self-study C. Self-study with final exam D. Internet with final exam

Self-study

What is the difference between the words "shall" and "may"? A. Shall means mandatory, while May means permissive. B. Both Shall and May are permissive C. Both Shall and May are mandatory. D. Shall means permissive, while May means mandatory.

Shall means mandatory, while May means permissive.

Which investment option below would an insurer be least likely to invest their assets in? A. Corporate Bonds B. Small Cap Stocks C. Government Backed Mortgages D. Policy Loans

Small Cap Stocks

Each statement below is true regarding the differences that exist between an agent and a solicitor except: A. An agent has binding authority, whereas a solicitor does not. B. Agents cannot pretend or act as though they are a solicitor. C. Solicitors can be employed by more than one agent simultaneously. D. Solicitors can only be employed by one agent and not multiple agents at the same time.

Solicitors can be employed by more than one agent simultaneously.

Which situation below would not be considered a fraudulent insurance transaction? A. Arson for profit. B. Filing a falsified death claim C. Submission of a false disability claim. D. Submission of a questionable disability claim.

Submission of a questionable disability claim.

To which company would an individual go in order to purchase insurance coverage that is not normally sold in their state of residence? A. Admitted B. Foreign C. Surplus Line D. Alien

Surplus Line

In California, a group health policy must not offer coverage for a registered domestic partner that is not equal to the coverage provided to the spouse of an employee, insured or policyholder. Is this statement true or false? A. TRUE B. FALSE

TRUE

Insurance department hearings are an important function of the department. Which statement below is false? A. Witnesses and records can be subpoenaed B. Testifying falsely under oath is called misrepresentation. C. 30 day notice must be provided. D. Attorneys can be present.

Testifying falsely under oath is called misrepresentation.

Which statement is not true regarding insurance advertising? A. Testimonials can be given by actors and are not regulated. B. All advertising must be approved by the CDI prior to use. C. Deceptive wording is not allowed. D. Full company name and address must be listed on all advertising.

Testimonials can be given by actors and are not regulated.

All are true statements with regard to the Americans With Disabilities Act except: A. It is a federal law. B. Disability as defined in this law means a physical or mental impairment that substantially limits a major life activity. C. Full and equal access must be provided to all regarding employment, public accommodations and telecommunication. D. This law only applies to new organizations, not organizations established prior to the law being enacted.

This law only applies to new organizations, not organizations established prior to the law being enacted.

The Notice Regarding Replacement form must be provided to a client no later than: A. Time of application B. Time of delivery C. Time of underwriting D. Time of renewal

Time of application

The Privacy Protection Act requires insurers to provide notice of an insured's privacy rights no later than: A. Time of policy application. B. Time of policy delivery. C. Time of second renewal. D. Does not need to be provided.

Time of policy delivery.

An individual who violates a Cease and Desist order for the first time may be penalized: A. up to $10,000 B. up to $100,000 C. up to $50,000 D. up to $1,000

up to $10,000