Chapter 8 Quiz

An insurer has been found guilty of a Code violation regarding replacement. The insurer then repeats the violation. What will be the minimum penalty?

$30,000 (Additional violations of the replacement article by an insurer will result in increased fines ($30,000 to $300,000). The Commissioner may suspend or revoke the license of any person or entity that violates this article.)

Every individual life insurance policy must provide for a free-look provision that lasts for at least

10 days (Insurers must allow individual life insurance customers the ability to return their new policy within 10-30 days (this time period is up to the insurer) for a full refund.)

What is the minimum free-look period for newly issued life insurance policies in this state?

10 days (The free-look period for all individual life insurance contracts must be no less than 10 days and not exceed 30 days from the date the policy is delivered to the insured.)

Every individual life insurance policy must provide for a free-look provision that lasts for at least A. 60 days. B. 10 days. C. 30 days. D. 90 days.

B. 10 days (Insurers must allow individual life insurance customers the ability to return their new policy within 10-30 days (this time period is up to the insurer) for a full refund.)

Every policy of individual life insurance must include a notice of right to cancel the policy, stating the specific time frame for the free-look period. Once the insured has cancelled the policy, within how many days must the insurer refund all premiums and policy fees? A. 10-30 days B. 30 days C. 2 weeks D. 90 days

B. 30 days (All premiums and policy fees paid for the policy must be refunded by the insurer to the owner within 30 days from the date that the insurer is notified that the insured has cancelled the policy.)

Any insurance agent who commits a repeated violation of the Insurance Code with respect to insurance replacement will be liable for A. A penalty not to exceed $1,000 per violation. B. An administrative penalty of no less than $5,000 and no more than $50,000 per violation. C. A criminal penalty of up to $10,000. D. An administrative penalty of no less than $30,000 and have his/her license revoked.

B. An administrative penalty of no less than $5,000 and no more than $50,000 per violation. (The fines for additional violations of the replacement article by an individual agent will result in increased fines ($5,000 to $50,000). The Commissioner may suspend or revoke the license of any person or entity that violates this article.)

Which of the following is true regarding a policy with a face value less than $10,000? A. If it's returned during the free look period, the contract will be cancelled, but the insurer will retain the premium paid. B. If it's returned during the free look period, the agreement will be void. C. An insured cannot return the policy. D. The policy can be cancelled with full refund of premium at any time.

B. If it's returned during the free look period, the agreement will be void. (If the owner returns the policy within the free-look period, the agreement will be void from its beginning. All premiums and any policy fees that have already been paid must be refunded to the owner.)

Any insurance agent who engages in the insurance business and violates the Code with respect to insurance replacement shall on the first violation

Be fined a sum of $1,000. (An agent who violates the replacement provision of the Code will be fined a $1,000 for the first offense.)

Any insurer who engages in the insurance business and violates the Code with respect to insurance replacement shall on the first violation

Be fined a sum of $10,000. (An insurance company that violates the replacement provision of the Code will be fined $10,000 for the first offense.)

An insured has the right to cancel a policy by written notification to the insurer. This notification may be mailed to the insurer or returned to the original agent who made the sale. Upon receipt of the cancellation request, the insurer will A. Cancel the policy and terminate an automatic bank-drafting of premiums. B. Report the cancellation to the insurer's home office and the Department of Insurance Policy Conservation Unit for statistical data accounting purposes. C. Refund any premiums and policy fees within 30 days of notice if the policy is within the cancellation period specified by the insurer. D. Have the writing agent review the policy cancellation and attempt to conserve the policy.

C. Refund any premiums and policy fees within 30 days of notice if the policy is within the cancellation period specified by the insurer. (An insurer has 30 days from notification of cancellation to refund any premiums and policy fees and return the parties to the place they were prior to the policy being sold.)

Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance? A. Disclosure rule B. Reinstatement rule C. Replacement rule D. Conversion rule

C. Replacement rule (Anytime a new policy is issued that replaces or modifies existing insurance, a replacement form must be submitted to the ceding company.)

To which of the following products does the Replacement Regulation apply? A. Credit life insurance B. Group annuities C. Converting an existing policy with the same insurer D. Whole life insurance

D. whole life insurance (The Replacement Regulation does not apply to credit life, group life and group annuities, or transactions with the same insurer.)

An insured has the right to return the new insurance policy for a full refund during the

Free-look period (The right-to-return period for all individual life insurance contracts must be no less than 10 days and not exceed 30 days from the date the policy is delivered to the insured. During this period, the insured may return the policy to the insurer for a full refund.)

Which of the following is true regarding a policy with a face value less than $10,000?

If it's returned during the free look period, the agreement will be void. (If the owner returns the policy within the free-look period, the agreement will be void from its beginning. All premiums and any policy fees that have already been paid must be refunded to the owner.)

Which of the following insureds have a right to cancel an individual life policy for a full refund within 30 days of policy delivery?

Insureds who are 60 years of age or older (If the insured on the individual life policy or the annuitant on an annuity contract is 60 years of age or older, the insured has a right to cancel the policy for a full refund within 30 days.)

The right of the applicant to rescind the policy for a full refund of all premiums

Must be clearly stated in the policy's text (The right of the applicant to rescind the policy for a full refund of all premiums paid, if the policy is returned within the specified timeframe, must be clearly stated in the policy's text (outlined on title page and described in text).

The right of the applicant to rescind the policy for a full refund of all premiums A. Must be clearly stated in the policy's text. B. Is implied during the application process. C. Is not a valid right. D. Must be exercised within 3 days of the policy issue.

Must be clearly stated in the policy's text (The right of the applicant to rescind the policy for a full refund of all premiums paid, if the policy is returned within the specified timeframe, must be clearly stated in the policy's text (outlined on title page and described in text).)

Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance?

Replacement rule (Anytime a new policy is issued that replaces or modifies existing insurance, a replacement form must be submitted to the ceding company.)

How must a replacing producer respond to an applicant wishing to replace existing life insurance?

The producer must provide the applicant with a Notice Regarding Replacement (In a replacement transaction, a producer must present to the applicant a Notice Regarding Replacement, signed by both the applicant and the producer.)

During the free-look period, the premium for a variable annuity may be invested in all of the following EXCEPT

Value funds (During the 30-day cancellation (free-look) period, the premium for a variable annuity may only be invested in fixed-income investments and money-market funds, unless the investor specifically requests that the premiums be invested in the mutual funds.)

A legally acceptable attempt by an existing insurer to dissuade a current policyowner from the replacement of existing life insurance is called

conservation (Conservation means any attempt by the existing insurer or its producers, or by a broker to dissuade a current policyowner from the replacement of existing life insurance or annuit)

To which of the following products does the Replacement Regulation apply?

whole life insurance (The Replacement Regulation does not apply to credit life, group life and group annuities, or transactions with the same insurer.)

The notice to senior consumers regarding their right to cancel a policy must be printed on the cover or policy jacket in at least what type of print?

12-point bold print (Each individual life policy annuity contract delivered to a senior consumer must have the regarding their right to cancel either printed on the cover page or policy jacket in 12-point bold print with one inch of space on all sides, or printed on a sticker attached to the cover page or policy jacket.)

All insurance policies and annuity contracts delivered to senior citizens in the State of California are subject to a cancellation period of at least

30 days (All insurance policies and annuity contracts, other than variable contracts and modified guaranteed contracts, marketed to senior citizens in the State of California are subject to a cancellation period of no fewer than 30 days.)

Every policy of individual life insurance must include a notice of right to cancel the policy, stating the specific time frame for the free-look period. Once the insured has cancelled the policy, within how many days must the insurer refund all premiums and policy fees?

30 days (All premiums and policy fees paid for the policy must be refunded by the insurer to the owner within 30 days from the date that the insurer is notified that the insured has cancelled the policy.)

During the cancellation period, an insurer must refund any premiums and policy fees within how many days of written cancellation notice by the insured?

30 days (Once the insurer receives notification of rescission, the company has 30 days to issue the refund of premiums and policy fees.)

Which of the following insureds have a right to cancel an individual life policy for a full refund within 30 days of policy delivery? A. Insureds who are 60 years of age or older B. All insureds C. Only preferred insureds D. Only insureds who have dependents

A. Insureds who are 60 years of age or older (If the insured on the individual life policy or the annuitant on an annuity contract is 60 years of age or older, the insured has a right to cancel the policy for a full refund within 30 days.)

During replacement of life insurance, a replacing insurer must do which of the following? A. Obtain a list of all life insurance policies that will be replaced B. Designate a new producer for a replaced policy C. Guarantee a replacement for each existing policy D. Send a copy of the Notice Regarding Replacement to the Department of Insurance

A. Obtain a list of all life insurance policies that will be replaced (The replacing insurance company must require from the producer a list of the applicant's life insurance policies to be replaced and a copy of the replacement notice provided to the applicant, and send each existing insurance company a written communication advising of the proposed replacement.)

How must a replacing producer respond to an applicant wishing to replace existing life insurance? A. The producer must provide the applicant with a Notice Regarding Replacement. B. The producer must collect the existing policies and turn them over to the replacing insurer. C. The producer has no specific duties. D. The producer must request the permission of the existing insurer.

A. The producer must provide the applicant with a Notice Regarding Replacement (In a replacement transaction, a producer must present to the applicant a Notice Regarding Replacement, signed by both the applicant and the producer.)

Any insurance agent who commits a repeated violation of the Insurance Code with respect to insurance replacement will be liable for

An administrative penalty of no less than $5,000 and no more than $50,000 per violation. (The fines for additional violations of the replacement article by an individual agent will result in increased fines ($5,000 to $50,000). The Commissioner may suspend or revoke the license of any person or entity that violates this article.)

Which of the following documents must be provided to the policyowner or applicant during policy replacement?

Notice Regarding Replacement (During policy replacement, the replacing producer must present to the applicant a Notice Regarding Replacement that is signed by both the applicant and the producer.)

During replacement of life insurance, a replacing insurer must do which of the following?

Obtain a list of all life insurance policies that will be replaced (The replacing insurance company must require from the producer a list of the applicant's life insurance policies to be replaced and a copy of the replacement notice provided to the applicant, and send each existing insurance company a written communication advising of the proposed replacement.)

An insured has the right to cancel a policy by written notification to the insurer. This notification may be mailed to the insurer or returned to the original agent who made the sale. Upon receipt of the cancellation request, the insurer will

Refund any premiums and policy fees within 30 days of notice if the policy is within the cancellation period specified by the insurer. (An insurer has 30 days from notification of cancellation to refund any premiums and policy fees and return the parties to the place they were prior to the policy being sold.)