CH 5

If a person applies to become a life insurance producer, what is the minimum number of hours of prelicensing education that must be completed in a classroom? A 7.5 B 10 C 12.5 D 20

A 7.5

Which of the following persons is required to hold a producer license? A A person who negotiates insurance contracts B A person who creates insurance advertisements C A person who takes messages related to claims D A person who administers employee benefits

A A person who negotiates insurance contracts

Temporary producer license can be issued to all of the following EXCEPT A A spouse of disabled licensed producer before and after the sale of the business. B Designee of a licensed producer entering active military service. C An applicant in the process of obtaining a producer license. D A court-appointed representative of a deceased licensed producer.

A A spouse of disabled licensed producer before and after the sale of the business

All of the following would be considered rebating EXCEPT A An agent misrepresents policy benefits to convince a policyowner to replace policies. B An agent offers the use of his lake house to a client as an inducement to buy an insurance policy from him. C An agent offers to share his commission with a policyholder. D An agent offers tickets to a baseball game as an inducement to buy insurance.

A An agent misrepresents policy benefits to convince a policyowner to replace policies.

Which of the following is an example of an unfair claims settlement practice? A Failure to promptly settle a claim when liability has been clearly established B Denying coverage after a reasonable investigation has been conducted C Making claims payments which clearly indicate under which coverage payment has been made D Using arbitration when the insured and insurer cannot reach agreement

A Failure to promptly settle a claim when liability has been clearly established

A nonresident producer in Illinois just relocated to Indiana and became a resident producer in that state. What must the producer do to satisfy one of Illinois' requirements for nonresident producers? A File a change of address within 30 days B Pay a fee to the Illinois Department of Insurance C Resubmit a nonresident license application D Nothing

A File a change of address within 30 days

Which of the following is NOT true regarding a Premium Fund Trust Account? A It could be used as a claim payment account. B It is a fiduciary account. C It may be a depository for service fees and late charges. D It is established to maintain all the premiums.

A It could be used as a claim payment account.

An agent offers his client free tickets to a sporting event in exchange for the purchase of an insurance policy. The agent is guilty of A Rebating. B Coercion. C Twisting. D Controlled business.

A Rebating.

Which of the following is NOT a duty of the Director of Insurance? A Setting premium rates B Examining authorized insurers C Enforcing the Insurance Code D Issuing Certificates of Authority

A Setting premium rates

All of the following are correct regarding misrepresentation EXCEPT A The fines for misrepresentation range from $50 to $1,000. B The fines for misrepresentation range from $200 up to $10,000. C Misrepresentation includes the guarantee of dividends. D Misleading advertisements are considered misrepresentations.

A The fines for misrepresentation range from $50 to $1,000.

What is the minimum age that a person can obtain a producer's license? A18 B21 C25 D26

A18

A person is in the process of becoming permanently licensed as a producer. A temporary producer's license may be issued for a maximum period of A90 days. B100 days. C120 days. D180 days.

A90 days.

Within how many days may a person who is being examined by the Director for nonfinancial business practices request a hearing after receiving the examination report? A 3 days B 10 days C 15 days D 30 days

B 10 days

Which of the following situations would describe a proper handling of premiums by a producer in this state? A A temporary producer is not under the obligation to hold the premiums in a fiduciary capacity. B A producer who holds premiums for 15 days establishes a Premium Fund Trust Account. C A producer is using the premiums account as a general operations account. D Fiduciary account balance is less than the amount deposited due to the number of claims.

B A producer who holds premiums for 15 days establishes a Premium Fund Trust Account.

When a producer was reviewing a potential customer's coverage written by another company, the producer made several remarks that were maliciously critical of that other insurer. The producer could be found guilty of A Nothing, unless the remarks were in writing B Defamation. C Misrepresentation. D Discrimination.

B Defamation.

How often is a resident insurance producer required to pay license fees? A Annually B Every 2 years C Every 4 years D It's a one-time fee.

B Every 2 years

All policy applications must identify which of the following? A Director B Producer who solicited the applicant's business C Conditions of acceptance D MIB

B Producer who solicited the applicant's business

All of the following are true regarding rebates EXCEPT A Dividends are not considered to be rebates. B Rebates are allowed if it is in the best interest of the client. C Rebates are only allowed if specifically stated in the policy. D Rebating can be anything of monetary value given as an inducement to purchase insurance.

B Rebates are allowed if it is in the best interest of the client.

In the event an insurer is found guilty of committing defamation, the insurer may be subject to the maximum penalty of A $1,000. B $5,000. C $10,000. D $20,000.

C $10,000.

What is the resident producer license fee payable once every two years? A $50 B $105 C $215 D $250

C $215

Producers who broker insurance must file a bond along with the application for license. The bond must be issued in favor of the people of Illinois, and must be on a continuous form and for an amount equal to 5% of the premium brokered the previous year, NOT to exceed A $10,000 B $25,000 C $50,000 D $100,000

C $50,000

An applicant for a fire insurance producer's license must successfully complete an approved prelicensing education course of at least A 10 hours. B 12.5 hours. C 20 hours. D 40 hours.

C 20 hours.

Before each license renewal, an insurance producer must complete at least how many hours of continuing education? A 14 B 20 C 24 D 30

C 24

How long must an insurer keep books and records of insurance transactions in the Premium Fund Trust Account? A 3 years B 5 years C 7 years D Indefinitely

C 7 years

All of the following are true regarding reinstatement of a lapsed producer license EXCEPT A To reinstate a lapsed license a penalty of double the unpaid renewal fee shall be required. B A licensed insurance producer who is unable to comply with license renewal procedures due to military service may request a waiver of those procedures. C A producer's license may be reinstated within 24 months without having to pass a written exam. D A producer's license may be reinstated within 12 months without having to pass a written exam.

C A producer's license may be reinstated within 24 months without having to pass a written exam.

All of the following are regulated areas of the insurance industry EXCEPT A Trade practices. B Investments. C Commissions. D Producers.

C Commissions.

All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT A Stocks, securities, or bonds. B An offer to share in commissions generated by the sale. C Dividends from a mutual insurer. D An offer of employment.

C Dividends from a mutual insurer.

An insurance company that routinely ignores all letters and phone calls from insureds that have filed claims is A Saving money and improving the bottom line. B Avoiding a lot of little nuisance claims. C Guilty of an unfair claim settlement practice. D Avoiding a lot of paperwork hassles.

C Guilty of an unfair claim settlement practice.

If an agent changes address on January 1st, by what date must he or she inform the Director? A January 8 B January 16 C January 31 D February 1

C January 31

If an actuary would like to sell life insurance policies, what licensure is needed? A Broker's license B Insurer's license C Producer's license for life insurance D General producer's license

C Producer's license for life insurance

In order for a firm to maintain its registration as a legal insurance company, what must it do? A Submit registration application annually B Pass a semi-annual inspection for the first 2 years C Submit a biennial fee to the Director D Nothing. Once a firm is registered with the Director, there is nothing that an insurer must do in order to maintain the registration.

C Submit a biennial fee to the Director

A group insurance policy was solicited by a limited insurance representative. Which of the following is true according to the disclosure regulation? A Disclosure regulation does not apply to group insurance. B The name of the representative must be displayed on each certificate of insurance. C The representative's name and signature must appear on the master policy. D Disclosure regulation does not apply to limited insurance representatives.

C The representative's name and signature must appear on the master policy.

What is the maximum fine for a violation of a cease and desist order? A$100 B$500 C$1,000 D$5,000

C$1,000

What is the minimum number of study hours required of a candidate for a casualty producer's license? A10 B15 C20 D40

C20

The Director may refuse to issue a license if a licensee's aggregate amount of premiums on controlled business exceeded the aggregate amount of premiums on all other insurance business during A The 6-month period immediately following the issuance or extension of the license. B Any 1 year. C The licensing period. D 2 calendar years immediately preceding the extension date of the license.

D 2 calendar years immediately preceding the extension date of the license.

Which of the following would be required to be licensed as an insurance producer? A A person whose activities are limited to producing insurance advertisements B A salaried full-time employee who furnishes information for group insurance C An insurance company director who performs executive, administrative and managerial duties D A salaried employee who advertises and solicits insurance

D A salaried employee who advertises and solicits insurance

Which of the following correctly describes controlled business? A A producer obtaining a license and never selling insurance B A producer obtaining a license for the purpose of selling to the general public C A producer obtaining a license for the purpose of selling 20% to his or herself and his or her spouse, 80% to the public D Anytime more than 50% of the total premiums collected by a producer comes from themselves, his or her spouse, employer, or own business

D Anytime more than 50% of the total premiums collected by a producer comes from themselves, his or her spouse, employer, or own business

Which of the following terms describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance? A Undercutting B Twisting C Slandering D Defamation

D Defamation

All of the following are true about the bond requirements in the state of Illinois EXCEPT A Maintaining a bond or appointing insurance company is a requirement to holding a producer's license. B The maximum the bond would have to be is $50,000. C The amount of the bond must be $2,500 or 5% of the premiums collected in the previous year. D Insurance producers with insurance companies that take responsibility for their actions are still required to post a bond.

D Insurance producers with insurance companies that take responsibility for their actions are still required to post a bond.

If a licensee charges any fee separate from a commission off of the insured's premium, and if the fee exceeds 10% of the premium's value, what must the licensee obtain? A Director's permission B Special tax form C Premium Fund Trust form D Insured's signature

D Insured's signature

What type of license does an individual need to obtain in order to solicit and sell insurance? A Business entity license B Broker's license C Insurer's license D Producer's license

D Producer's license

Any inducement offered to the insured in the sale of an insurance policy that is not specified in the policy is an unlawful practice known as A Twisting. B False advertising. C Coercion. D Rebating.

D Rebating.

Which of the following is an example of a producer being involved in an unfair trade practice of rebating? A Inducing the insured to drop a policy in favor of another one when it is not in the insured's best interest B Charging a client a higher premium for the same policy as another client in the same insuring class C Making deceptive statements about a competitor D Telling a client that his first premium will be waived if he purchases the insurance policy today

D Telling a client that his first premium will be waived if he purchases the insurance policy today

If a nonresident if applying for a license in Illinois and his home state does not require continuing education for Illinois residents, A The applicant must complete the required education in Illinois before being issued a license. B The applicant can take a federal exam that will serve the continuing education requirement in Illinois. C If the applicant has been licensed for over 10 years in his home state, the continuing education requirement is waived. D The continuing education requirement will be waived in Illinois.

D The continuing education requirement will be waived in Illinois.

Who must inform the Director of a producer's felony conviction? A MIB B State police C FBI D The producer

D The producer

What consequences will occur if a producer acts without a bond that is required? A The producer's license will be maintained without fee. B The producer will be fined $350. C The producer will be required to fulfill extra CE requirements. D The producer's license may be revoked.

D The producer's license may be revoked.