Chapter 15: Code and Ethics

Engaging in an unfair method of competition unwillingly subjects an agent to a civil penalty up to _______ per violation. A - $5,000 B - $500 C - $50,000 D - $1,500

A - $5,000 Engaging in unsuitable insurance transactions also subjects the agent to administrative penalties imposed by the Commissioner. A first violation invites a fine of up to $5,000.

Upon receiving a request for records, insurers and/or agents must deliver the records to the Commissioner within ____ days. A - 30 B - 7 C - 10 D - 60

A - 30 Upon receiving a request for records, insurers and/or agents must deliver the records to the Commissioner within 30 days. If the requested files cannot be immediately furnished, on request the agent will be given an additional 60 days to provide the information.

The Commissioner must approve which of the following agency names: A - A bona fide natural name of an individual B - One already filed by another licensee C - One which infers the licensee will engage in activities not permitted under the license D - One which implies that the licensee is an underwriter

A - A bona fide natural name of an individual The Commissioner may disapprove of the use of true or fictitious names that are misleading, but not a bona fide natural name of an individual.

An agent whose license is suspended for more than ___ years will need to retake the prelicensing course and pass the qualifying exam. A - 5 B - 2 C - 3 D - 4

B - 2 A license suspended for more than 2 years will require the agent to retake the prelicensing course and pass the qualifying exam.

After expiration or cancellation, agents and brokers must keep records of every insurance transaction for at least ___ years. A - 2 B - 5 C - 10 D - 3

B - 5 Records of insurance transactions must be kept on file for at least 5 years after the expiration or cancellation date.

Which of the following is not an example of an unfair trade practice? A - False entry B - Discriminating between persons of the same class that have essentially the same hazard C - Misrepresenting the benefits of an insurance policy D - Advertising on the internet

D - Advertising on the internet Advertising on the Internet is not an unfair trade practice.

Entering into an agreement that would result in an unreasonable restraint of, or monopoly in the business of insurance is considered: A - Boycott, Coercion, or Intimidation B - Discrimination C - Defamation D - Deceptive Advertising

A - Boycott, Coercion, or Intimidation Entering into any agreement that would result in an unreasonable restraint of, or monopoly in the business of insurance is known as Boycott, Coercion, or Intimidation.

All of the following are considered duties of the California Insurance Commissioner, except: A - Set insurance rates B - Keep all papers as required by law C - Structure and control insolvency procedures D - Regulate the internal affairs of the Department of Insurance

A - Set insurance rates The Commissioner does not set rates.

Which statement is false of the California Life and Health Guarantee Association? A - The maximum amount that will be paid to a covered person on behalf of an admitted insolvent insurer is $500,000 per life B - Member insurers are those that are admitted to transact insurance in California and are required to participate C - Annuity benefits cannot exceed $250,000 in present value D - The Association establishes a mechanism to pay claims that are unpaid as a result of the insolvency of a member insurer

A - The maximum amount that will be paid to a covered person on behalf of an admitted insolvent insurer is $500,000 per life. The maximum amount payable for a life insurance death benefit per life is $300,000.

Which statement is false regarding fraudulent claims in California? A - While investigating suspected fraud claims, insurers and agents will have access to all relevant public records required to be open for inspection B - Any insurer that believes that a fraudulent claim is being made shall report the fraudulent claim to the Bureau of Fraudulent claims within 30 days of such discovery C - Each admitted insurer must maintain a unit to investigate possible fraudulent claims by insureds D - If an insured signs a fraudulent claim form, he/she may be guilty of perjury

B - Any insurer that believes that a fraudulent claim is being made shall report the fraudulent claim to the Bureau of Fraudulent claims within 30 days of such discovery Any insurer that believes that a fraudulent claim is being made shall report the fraudulent claim to the Bureau of Fraudulent claims within 60 days of such discovery.

An agent's license will remain active as long as all of the following requirements have been met, except: A - Renewal fees are paid B - Insurer sales quota C - A Notice of Appointment is on file with the Commissioner D - Continuing education

B - Insurer sales quota As long as the agent pays renewal fees, has a notice of Appointment on file with the Commissioner and the continuing education hours have been met, the license will remain active. A minimum number of sales is not a licensing requirement.

Funds controlled by the Guarantee Association are used to: A - Subsidize insurer reserves B - Pay claims of insolvent insurers C - Subsidize state premium taxes D - Subsidize investment income losses

B - Pay claims of insolvent insurers The Guarantee Association pays claims to the insureds of insolvent admitted insurers.

The purpose of a Certificate of Authority is to: A - Give a producer authority to represent a certain insurer B - Permit an insurance company to transact business C - Allow producers to transact business D - Permit a deceased producer's relative to act for the producer

B - Permit an insurance company to transact business A Certificate of Authority permits an insurance company to transact business.

Which of the following is not an unfair discriminatory practice: A - Determining insurability using an applicant's sexual orientation B - Using an applicant's birthplace for purposes of identifying the applicant C - Refusing to accept an application due to an applicant's marital status D - Determining insurability using an applicant's race

B - Using an applicant's birthplace for purposes of identifying the applicant The applicant's birthplace can be used only for purposes of identifying the applicant and not to discriminate against the applicant.