Ethics
Every insurer is required to provide all records requested by the Commissioner within
A period of 30 days following a written request. According to CIC 10508, all records must be made available within 30 days of written request.
The agent's authority to transact insurance business for an insurer is effective
As of the date that the notice of appointment is signed. According to CIC 1704a, an agent's authority to transact insurance business is effective as of the date the notice of appointment is signed.
Which of the following is NOT a license in the state of California?
Life broker. There is no such license as "life broker" or "health broker."
What is the purpose of California's State Compensation Insurance Fund (SCIF)?
To make workers compensation insurance available, especially to smaller companies with more limited payrolls. California's State Compensation Insurance Fund (SCIF) provides workers compensation insurance. However, commercial insurers may also provide this insurance. The State's plan is typically utilized only if a company cannot otherwise obtain the coverage in the commercial market. So, SCIF typically works with small employers with limited payrolls, as opposed to large corporations.
Which type of life insurance is usually written for small amounts and requires frequent premiums that are collected by the agent?
Industrial life insurance. Industrial or home service life insurance is written for small amounts (under $1,000) and premiums are collected each week or month. Industrial life insurance is written as whole life, limited pay life, or endowment. Family members covered by this type of insurance are covered from birth to age 65 or 70.
What is the purpose of the California laws regulating production agencies?
To provide protection for the clients by requiring producers to maintain professional standards of conduct. The primary concern of the Insurance Department is to protect the citizens of California.
A life agent may use the name of corporation or association on any stationery or advertisement to identify the relationship in all of the following ways EXCEPT
"Contracted by _______________" Advertising a relationship as "contracted by" is not permitted by CIC 1729.5.
Jack and Jill each own a 50% interest in a dwelling that is insured under a standard fire policy issued to Jill to cover her interest in the structure. The amount of insurance is $40,000. Following a $10,000 fire loss to the structure, Jill will receive
$5,000. Because Jill interest in the property is 50%, she will receive an amount equal to 50% of the loss.
When an auto insurance policy is cancelled for nonpayment of premium, how many days' notice must the insurer provide to the policyowner?
10 days. Notice of policy cancellation may be effective only if mailed or delivered by the insurer to the policyowner at least 20 days prior to the effective date of cancellation, or 10 days' notice when cancellation is for nonpayment of premium, accompanied by the reason for cancellation.
Any licensed agent may submit an application for insurance to an insurer without an appointment. However, the insurer must submit the notice of appointment to the Commissioner within how many days?
14. In order to validate and legitimatize the agency relationship and the insurance contract, the insurer must submit a notice of appointment within 14 days to the Commissioner.
Within how many days of termination of employment must an employer give notice of the employee's right to convert the group policy to an individual policy?
15 days. The employer or the insurer must give the employee notice of his/her right to convert to individual coverage within 15 days of termination of employment (or at least 15 days prior to the expiration date of the conversion period).
How many names (real or fictitious) may insurers have?
2. Any insurance business is allowed two names, real or fictitious. These names must be filed with the Commissioner when they are created or changed.
Replacement of life insurance and annuities policies requires for the replacing and existing insurers to retain evidence of all signed applications and disclosures for no less than
3 years. The replacing and existing insurers must retain evidence of all signed applications and disclosures, as well as other materials used in replacement or conservation, for no less than 3 years.
How many pints of blood are covered by Medicare Supplement core benefits?
3. The first three pints of blood are covered by Medicare supplemental policies; this is considered to be a core benefit.
During a house fire, an insured moves an antique chair listed on the policy to a storage unit. In the Standard Fire Policy, how many days will the antique chair be covered at the new location?
5 days In the Standard Fire Policy, if a covered property is removed from a location to protect it from an insured peril, the property will be covered at the new location for 5 days.
A state-established program that requires insurers who write property insurance to accept risks in economically depressed areas in the same proportion as their other business bears to the total property insurance market is called the
Fair Access to Insurance Requirements plan. The FAIR plan (fair access to insurance requirements) provides risk protection for those risks for which insurance is unavailable through normal distribution channels.
California's Compulsory Financial Responsibility Law requires every driver and every owner of a motor vehicle to maintain financial responsibility (liability coverage) at all times. If you don't have acceptable financial responsibility and have an accident, you may lose your driver's license for up to
Four years. If you don't have acceptable financial responsibility and have an accident, you may lose your driver's license for up to 4 years.
Which of the following is NOT considered personally identifiable information?
Government records. Personally identifiable information includes loan, credit card, or other financial applications, credit or debit card balances or history, consumer reports, internet cookies or web servers, and information from current or previous financial institutions.
When would the insurer be allowed to use the information obtained through a pretext interview?
In the investigation of a claim suspected as fraudulent. In the investigation of a claim, particularly when fraud is suspected, as an investigative technique, pretext interviews are permitted.
A licensed insurance agent overhears a conversation that leads him to believe a person is committing fraud. If the agent makes a written report to a law enforcement agency and the person is investigated, but it turns out that it was an erroneous accusation, what charge will the agent face?
No charges; the Insurance Code gives the agent legal immunity. Because every agent has a responsibility to combat fraud, the state grants immunity from lawsuits for an agent's "good faith" report of suspected fraud. (CIC 1877.5)
All of the following are marketing arrangements used by insurers EXCEPT
Reinsurance System. Reinsurance is a method used by insurers to protect against catastrophic losses. The rest are marketing arrangements.
What method do insurers use to protect themselves against catastrophic losses?
Reinsurance. Insurers use reinsurance to protect themselves from catastrophic losses. This is a method where the reinsurer indemnifies the ceding insurer for part or all of the losses it sustains related to a policy issued previously.
In a life settlement contract, whom does the life settlement broker represent?
The owner. Life Settlement Broker is a person who, for compensation, solicits, negotiates, or offers to negotiate a life settlement contract. Life settlement brokers represent only the policyowners.
Which type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?
Twisting. "Twisting" is a misrepresentation that persuades an insured/owner, to his or her detriment, to cancel, lapse, or switch policies from one to another.
What is the education requirement for accident and health agents who want to sell 24-hour care coverage?
The same number of hours of training in workers compensation as required for a property or casualty broker-agent on the same subject. According to the California Insurance Code, the accident and health agents who want to sell 24-hour care coverage must complete an approved CE course on workers compensation and general principles of employer liability. The required number of hours must be equal to, but no greater than the required prelicensing hours for a property or casualty broker-agent on the same subjects.
In property and casualty insurance, insurable interest is defined as the right of a person or entity to property in that such a loss to that property would cause a direct monetary loss to the person or entity. Which of the following statements is TRUE regarding insurable interest in property and casualty insurance?
If the insured has no insurable interest, the contract is void. The person or entity making a claim for the damaged property must have an insurable interest in the property. In most property insurance losses, the insured is the owner of the property. However, others might also have an insurable interest in the property; such as, a mortgagee has an insurable interest in real property to the extent of the outstanding mortgage.
Home Service insurance is a variation of which type of life policies?
Industrial Life insurance. Home Service insurance is a variation of industrial life insurance that is issued in small face amounts. The demand for these types of plans is very limited.
An insurance agent may NOT transact
Life insurance. According to the Code, an "insurance agent" may transact all lines of insurance other than life, disability or health. (CIC 1621)
The type of insurance that guarantees the behavior of persons and the performance of contracts other than insurance policies is known as
Surety insurance. Surety insurance includes the guaranteeing of behavior of persons and the guaranteeing of performance of contracts other than insurance policies and other than for payments secured by a mortgage, deed of trust, or other instrument constituting a lien or charge on real estate.
Any person who engages in any unfair method of competition or deceptive act is liable to the state for a civil penalty and a fine of $5,000 for each act. In addition, if it is determined that the act is willful the fine will NOT exceed
$10,000. As dictated by CIC 790.035 the penalty for engaging in unfair trade practices is $5,000 for each act. In addition, if it is determined that the violation was willful, the penalty shall be $10,000 for each act.
An insured files a fraudulent claim for $100,000. The maximum fine that the insured could be ordered to pay if convicted of insurance fraud is
$200,000. A person who commits insurance fraud may be punished by imprisonment and/or fine. The fine could be either the doubled value of the fraud (in this case $200,000), or up to $150,000 - whichever is greater.
The authority to transact disability insurance given by an insurer to a person acting as an agent by appointment shall be effective
As of the date the notice of appointment is signed by the insurer. According to CIC 1673, 1704-1705, the authority to transact disability insurance is effective on the date of appointment is determined.
Fraudulent activities in health care are estimated in billions of dollars annually. This results in
Increase in health care costs for everyone. Although there is no exact figure it is believed that fraudulent activities account for billions of dollars annually in added health care cost nationally. This results in a significant increase in health care costs for everyone. (CIC 1871)
All of the following are considered unfair trade practices in the business of insurance EXCEPT
Sharing commissions. Sharing commissions is allowed as long as both producers are properly licensed. All other choices are unfair trade practices.
If a licensee wants to terminate her agent's license but it is in the possession of her employer, which of the following is true?
She can terminate the license by sending the Commissioner a written notice. Licensees can terminate their licenses at any time, either by sending the license to the Commissioner or, if the license is in their employer's possession, by sending a written request to the Commissioner.
Which of the following is NOT covered under Plan A in Medigap insurance?
The Medicare Part A deductible. Medicare Supplement Plan A provides the core, or basic, benefits established by law. All of the above are part of the basic benefits, except for the Medicare Part A deductible, which is a benefit offered through nine other plans.
Which of the following is NOT true regarding fiduciary capacity of managing general agents (MGAs)?
They can have an appointment with only one admitted insurer in this state. MGAs can have a written management contract and an appointment with one or more admitted insurers that cover a substantial portion of the insurance business in the state of California.
Which type of insurance guarantees or indemnifies owners of real or personal property or the holders of liens or other interested parties against loss or damage suffered to said property?
Title insurance. Title insurance includes insuring, guaranteeing or indemnifying owners of real or personal property or the holders of liens or others interested parties against loss or damage suffered to said property.
ABC Insurance has determined that the premiums that it currently charges for its Safe Driver II plan need to be increased. ABC's underwriters have reevaluated the rate plan and sent the new rate schedule to each managing general agent for distribution to its agents. After two weeks of marketing the new plan, ABC filed the new plan with the Commissioner for approval. This method of rate plan marketing is considered
Use and file rate laws. Use-and-file laws require that rate plans be filed within a specified period, generally 15-30 days, after they are first used with the public.
A type of policy that is used to provide a specific amount of replacement cost for a given risk after an insured property has been destroyed is called a(n)
Valued policy. A valued policy provides for payment of the full policy amount in the event of a total loss WITHOUT regard to actual value or depreciation.