CHAPTER 15: ETHICS

A licensed life agent submits an application to a company, and he/she is not appointed by that company. If the company issues a policy, it must appoint the life agent within how many days of receiving the application?

14 days

If an insurer who markets on a direct response basis does not propose replacement of any policies, if replacement is involved, the company must send the applicant

Notice Regarding Replacement of Life Insurance

Reporting of Multiple Policies

On or before March 1, every insurer providing Medicare supplement insurance coverage in California shall report the following information for every individual resident of this state for which the insurer has in force more than one Medicare supplement insurance policy or certificate: 1. Policy and certificate number. 2. Date of issuance

A licensee shall notify the commissioner of what kind of convictions after a license has been issued?

any criminal

Multiple Policies or Certificates Prohibited

Any sale of Medicare supplement coverage that will provide an individual more than one Medicare supplement policy or certificate is prohibited.

Any insurer who violates replacement rules with such frequency as to indicate that is a general business practice may be fined up to ______ for each violation.

$300,000

disclosure of fees agreement should elaborate:

-A statement that information and services about insurance policies may be obtained directly from insurers without cost. -A statement outlining the services to be performed by the analyst for which a fee is to be charged. -The fee to be charged. -A statement indicating that if the analyst also holds an insurance license that he may receive commissions for the sale of products.

Transactions Excluded:

-Credit life insurance. -Group life insurance or group annuities. -An application to the existing insurer to exercise a contractual change or conversion privilege. Life insurance to replace life insurance under a binding or conditional receipt issued by the same insurer. -Transactions where the replacing insurer and the existing insurer are the same or subsidiaries under common ownership and control as long as replacing agents perform their required duties. These duties include to provide and leave with the applicant a written statement containing information relating to premiums, cash values, death benefits, and outstanding indebtedness, and dividends and dividend accumulations, if any, for the existing policy, both immediately before and after replacement, and for the proposed life insurance or annuity.

Acceptable Methods of Delivery for policies

-Registered or certified mail -Personal delivery with a signed, written receipt of delivery -First-class mail with a signed, written receipt of delivery -Other reasonable means determined by the Commissioner

In replacing a Medicare supplement policy, the application should not include:

-Statement that Medicare enrollees are not eligible for Medi-Cal.

In addition to other unfair trade practices identified in the code, the following acts and practices are prohibited:

-twisting -high pressure tactics -cold lead advertising

When replacement of a policy takes place, the insured is entitled to a free-look period of how many days?

20 days

A copy of such agreement must be retained by the licensee for not less than _______ years after the services have been fully performed.

3

Which of these is unacceptable when replacing a long-term care policy?

A policy with a higher premium and fewer benefits.

Regarding post sales contact:

Agents should have post sales contact with their clients.

Who is allowed to do a pretext interview under special circumstances?

An insurance adjuster

Who is allowed to charge a policy fee?

An insurer

High pressure tactics

Employing any method of marketing having the effect of or tending to induce the purchase of insurance through force, fright, threat whether explicit or implied, or undue pressure to purchase or recommend the purchase of insurance.

True or False There is no continuing education that a licensee selling long-term care needs

False

Twisting

Knowingly making any misleading representation/incomplete/fraudulent comparison of any insurance policies of insurers for the purpose of inducing, or tending to induce, any person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on, or convert any insurance policy or to take out a policy of insurance with another insurer.

Replacement is a transaction in which new life insurance or a new annuity is purchased and it is known or should be known by the proposing agent, broker, or insurer that as a result of the transaction existing life insurance or annuity will be:

Lapsed, forfeited, surrendered or otherwise terminated. Converted to reduced paid-up insurance, continued as extended term insurance, or otherwise reduced in value by using non-forfeiture benefits or other policy values. Changed to effect either a reduction in benefits or in the length of time for which coverage would remain in force or for which benefits would be paid. Reissued with any reduction in cash value. Pledged as collateral for a loan or subjected to total loans for an aggregate amount exceeding 25% of the loan value.

Replacement involving a life policy or annuity includes:

Lapsing a policy, Converting to reduced paid-up insurance, Reissuing a policy with a reduction in cash value.

Cold lead advertising

Making use directly or indirectly of any method of marketing which fails to disclose in a conspicuous manner that a purpose of the method of marketing is solicitation of insurance and that contact will be made by an insurance agent or insurance company.

pretext interview

Pretext interviews are when the interviewer does not reveal his/her true identity, pretends to be someone else, or misrepresents the true purpose of the interview.

If an agent offers to sell an elder (anyone 65 or older) any life insurance or annuity product, the life agent shall advise in writing:

That the liquidation of any assets to fund the purchase may have tax consequences and that the elder may wish to consult independent financial advice

Replacement of a long-term care policy is considered unnecessary if done:

Three times during a 12-month period.

Life and annuity policies:

replacement rules

The purpose of replacement rules regarding life insurance is:

to protect the interests of life insurance purchasers by establishing standards of conduct to be observed in replacement transactions