Chapter 12 Alabama Insurance Law Common to all lines

To maintain their license in this state, how many hours of continuing education must producers complete every 2 years? A. 10 B. 12 C. 24 D. 48

C. 24

How often must the Commissioner or an examiner designated by the Commissioner examine domestic insurance companies? A. Biannually B. Not more frequently than once every five years C. As often as the Commissioner deems necessary, but not less frequently than every five years D. Annually

C. As often as the Commissioner deems necessary, but not less frequently than every five years

While serving as Commissioner, which of the following would be allowable to that individual? A. Service on an advisory board of any insurance company B. File as a candidate for governor C. Be a policyholder of a health insurance contract D. Service on the board of directors of an insurance company not authorized in Alabama

C. Be a policyholder of a health insurance contract

A producer has become disabled. In order to keep his business going, what may his designee do? A. File for federal aid designated for this situation B. Hire a temp producer to run the business during the producer's absence C. Obtain a temporary license D. Suspend operations

C. Obtain a temporary license

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

C. Twisting

A person convicted of willfully violating an insurnce law of Alabama is subject to A. Fine up to $10,000 or a sentence of hard labor, determined by the violator B. 100 hours community service C. Sentence to hard labor for period of 2 years D. Fine up to $1,000, imprisonment, and a sentence to hard labor for a period of one year

D. Fine up to $1,000, imprisonment, and a sentence to hard labor for a period of one year

An insurance producer who is late in filing an application for license renewal will be charged a fee of A. $20 B. $50 C. $75 D. $200

B. $50

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

B. Agent misrepresents policy benefits to convince a policy owner to replace policies

A producer is licensed in Alabama must notify the Insurance Department of any changes of address in his or her residence or business address within how many days A. 10 B, 15 C, 20 D, 30

D. 30

What instrument is available to the Commissioner to prevent a licensee from performing specific acts or using certain methods of conducting the business of insurance before any hearing is held to determine if a violation of laws or regulations has occurred? A. License suspension B. License revocation C. Arrest warrant D. Cease and desist order

D. Cease and desist order

Producers are responsible to collect and disperse premiums, and return premiums or other funds. Which insurance term is associated with this? A. Financial trust B. Broker C. Monetary gatekeeper D. Fiduciary capacity

D. Fiduciary capacity

In applying for an original certificate of authority, an insurer must submit an application with the appropriate fees and the following information, EXCEPT A. Name of company B. Coy of it's last financial statement C. State or country of domicile D. Amount of insurance it intends to write

D. the amount of insurance it intends to write

A producer holds both a Life and Health and a Property and Casualty Licenses. How many hours of continuing education will the producer be required to complete every 2 years? A. 24 B. 48 C. 12 D. 20

A. 24

Which of the following authorities issues insurance producer licenses? A. State insurance board B. Commissioner C. Guaranty association D. NAIC

A. Commissioner

All of the following are lines of insurance that may be transacted under a life and accident/health producer license EXCEPT A. Consequential loss insurance B. Annuities C. Disability income insurance D. Group health insurance

A. Consequential loss insurance

All of the following may cause the Commissioner to suspend or revoke the license of an insurance producer EXCEPT A. Failure of a producer to meet company imposed sales quotas for two consecutive periods B. Misappropriating money belonging to an insurance company or insured C. Failure to pay state income tax when demanded by the state treasurer D. Conviction of a felony

A. Failure of a producer to meet company imposed sales quotas for two consecutive periods

Licensees must make a report of any action taken against them in another jurisdiction by another governmental agency in alabama within how many days of the final disposition of the matter? A. 10 B. 30 C. 60 D. 90

B. 30

How long does a temp producer's license last? A. 150 days B, 6 months C. 1 year D. 90 days

B. 6 months

A business entity acting as an insurance producer is required to do all of the following EXCEPT A. Designate a licensed individual producer to be responsible for the business's compliance with the insurance laws of Alabama B. Be a publicly owned company C. Obtain an insurance producer license D. Pay the fees established by the Insurance Code

B. Be a publicly owned company

A resident of another state wishing to transact insurance in Alabama may obtain a nonresident producer license, without exam, upon meeting one of the following EXCEPT A. Provide the Commissioner with a letter of certificate from the resident state indicating the lines of insurance of the applicant is qualified to sell B. Been an executive officer of an insurance company C. Hold a valid resident producer license in his or her state of residence for the same lines of insurance which a nonresident license is being sought D. Have completed a comparable initial educational requirement and/or written exam in the residential state

B. Been an executive officer of an insurance company

The failure of an authorized insurer to file its annual financial statement with the Commissioner when due may result in any of the following actions by the Commissioner EXCEPT A. Exacting a fine of $250 B. Requesting an audit C. Suspending the certificate of authority D. Revoking the certificate of authority

B. Requesting an audit

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? A. Address B. Sexual orientation C. Age D. Occupation

B. Sexual orientation

What is the duration of an insurance producer or service representative's license? A. Licensees must requalify for the lines of authority covered by the license every two years. B. Licenses are perpetual so long as continuing education requirements are met C. License is perpetual after the payment of a one time licensing fee D. Licenses remain in effect unless revoked or suspended as long as the license renewal fee is paid and continuing education requirements for the license are met by the due date

D. Licenses remain in effect unless revoked or suspended as long as the license renewal fee is paid and continuing education requirements for the license are met by the due date

Which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices? A. Stating that the insurance policy is a share of stock B. Exaggerating the benefits provided in the policy C. Stating that the competitors will arbitrarily increase their premiums each year D. Making comparisons between different policies

D. Making comparisons between different policies

Paul is a producer in Louisiana and wants to become a producer in Alabama. The commissioner will waive certain examination requirements, provided that Louisiana would waive these same requirements if an Alabama producer sought licensure in Louisiana. What term is used to describe this phenomenon? A. Fair exchange B. Equanimity D. Reciprocity D. Equality

D. Reciprocity

A certificate of authority is NOT required for an insurance company that writes only A. Accident and health insurance B. Annuities C. Limited policies D. Surplus lines insurance

D. Surplus lines insurance

Before transacting insurance under an assumed or artificial name, a licensee must first obtain approval from A. The secretary of state B. The govenor C. The insurance company D. The commissioner

D. The commissioner