health insurance license

An applicant's statements on

· an insurance application are representations, not warranties.

The Commissioner is the chief officer of the North Carolina Insurance Department

· and is elected to a four-year term by voters.

It is unlawful for a person to act as an agent

· broker, limited representative, adjuster, or appraiser without a license.

Producers may never

· commingle premiums with personal funds.

Insurance contracts are defined by several unique attributes

· contracts of adhesion · aleatory · personal · unilateral · conditional

Producers must act

· in good faith and with integrity in their dealings with both their customers and their principals.

Errors and omissions (E&O) insurance

· protects producers who are sued because a mistake was made, but does not protect those who willfully engage in an unfair trade practice.

If the insurer accepts the application as applied for

· the insurer has accepted the applicant's offer.

If the insurer issues a policy on a basis other than as applied for

· the insurer has rejected the applicant's offer and made a counteroffer.

Insurance is primarily a state-regulated industry

· though there are some important federal laws that impact insurance sales.

Implied Authority

- For the sake of effective business practices, insurers allow their producers to engage in many sales-related activities not expressly listed in any agreement but that are recognized as essential to the job. This is implied authority.

Private insurance providers

- Private insurers come in different forms. While most people are familiar with commercial insurance companies, there are other types of organizations that also sell insurance.

Express Authority

- The contract between the producer and insurer sets forth certain acts and duties the producer is expressly authorized to perform. This is express authority.

1. All of the following are part of a producer's responsibilities to an applicant EXCEPT:

a. research other insurance companies' insurance products if requested by the applicant

Producers must notify the Department of Insurance of a change in residential or e-mail address

within 10 days.

The Buyer's Guide explains the

· general features, benefits, and conditions of the type of insurance being considered.

Jerry owns a life insurance policy with premiums payable directly to the insurer's home office. However, for the past five years Jerry has sent his payments to his agent, who then forwards them to the insurer. The insurer had accepted this arrangement but then tries to cancel Jerry's policy when it learns he had died while the premium was being forwarded by the agent. The insurer will probably not be able to cancel the policy in this case because of which of the following legal principles

a. Estoppel

1. An insurance company that primarily sells life insurance policies designed for burial and last expense purposes, and whose agents typically collect premiums in person, is known as a:

a. Home service insurance company

1. Linda is an administrative assistant at ABC Insurance Company and is also studying to become a producer. She routinely accepts premiums and makes cold calls soliciting insurance on behalf of her boss, a licensed producer. Which statement is correct

a. Linda must be licensed in order to accept premiums and solicit insurance

1. What will result if an insured decides to stop paying premiums for his or her insurance policy?

a. The insurance company is released from its promise to pay benefits and the contract expires

1. Which of the following contract characteristics is unique to insurance contracts but NOT all contracts?

a. Unilateral

1. Which of the following does NOT provide independent ratings of insurance companies' financial strength and claims-paying abilities?

a. each state's Department of Insurance

1. An insurance producer tells a life insurance applicant that he has the authority to waive the medical exam that is normally required by the insurer with every application. The insurer may be required to accept the application without a medical exam due to the producer's:

agreements

1. The contract between the producer and insurer, setting forth certain acts and duties the producer is specifically authorized to perform, describes the producer's:

express authority

A person cannot make a false or misleading statement or comparison about an insurance policy in order to induce someone to

lapse, surrender, terminate, retain, or convert an insurance policy or buy a policy with another insurer

1. From an insurance risk perspective, an applicant engaging in adverse selection is demonstrating which type of hazard?

moral hazard A conscious willingness to defraud insurers, perhaps by lying on an application or claim form, is a moral hazard, as is adverse selection, which is the tendency of someone at a high risk of loss to try and buy insurance.

Stock insurance companies

owned by stock holders who purchase shares of stock as an investment

Most states now refer to agents and brokers by the collective term

producer

1. A person who refuses to engage is risky activities like rock climbing for fear of injury or death is demonstrating which risk management technique?

risk avoidance Refusing to engage in a risky activity is a form of risk avoidance

Agents

someone represent insurer exclusively

1. As a risk management technique, which of the following best illustrates risk transfer?

Robert purchases life insurance because he figures doing so is far less expensive than trying to save all the money his survivors would need upon his death Purchasing insurance is a risk transfer technique because it transfers to a third party (the insurer) the financial risk associated with premature death.

1. Which insurance company function calculates company mortality and morbidity rates as well as the dividends on participating life insurance policies?

a. Actuarial division

Best Insurance Company is incorporated in Canada and just applied for a license to transact insurance in North Carolina. Which type of insurer is Best Insurance Company considered in North Carolina

a. Alien

Applicant makes

an offer through the application and premium deposit

An insurer may not limit coverage,

charge a different premium, or refuse to insure or continue to insure an individual solely because of blindness or partial blindness, deafness or partial deafness, race, color, or national or ethnic origin.

Broker represents customers

multiple insurers - contracts with every insurer doing business Agents and brokers= producers subject to insurance laws, obligated to respect rules

Mutual insurance companies

§ Mutual insurance companies are owned by their policyowners. Ownership is represented by the policy, not shares of stock. Life stock insurers, mutual insurance companies have minimum financial capital requirements and are governed by a board of directors. But a mutual company's board of directors is elected by the policyowners § Mutual companies issues participating policies, which pay policy dividends to their policy owners. Policy dividends, which cannot be guaranteed, are typically not taxable since they are viewed as a return of excess premiums. Policy dividends are covered in a later lesson § In recent decades many mutual insurance companies have transformed themselves into stock companies through a complex and lengthy process known as demutualization

A person who refuses to produce books and records or who knowingly makes a false statement in them will have his or her license suspended or revoked and will be guilty of

· Class 1 misdemeanor.

Acting as an agent, broker, or other licensee without a license is a

· a Class 1 misdemeanor.

When acting in good faith

· a person who reports insurance fraud is immune from any liability for providing information to or cooperating with the Commissioner or law enforcement agencies.

Insurance contract attributes

· contract of adhesion, aleatory, personal, unilateral, conditional

There are three levels of agent's authority

· express (defined in agent's contract), implied (accepted part of the job), and apparent (non-approved actions that can be binding on the insurer).

An insurer may not discriminate between

· individuals of the same class in the amount of premium charged, benefits payable, or other terms and conditions of an insurance policy.

The policy summary provides detailed

· information about the specific policy that is being purchased.

Group life and accident and health insurance policies

· must use an accidental results definition when paying benefits due to accidents.

The Commissioner may suspend or revoke the license

· of anyone who does not keep records of their insurance transactions.

The applicant's consideration is the initial premium payment

· the insurer's consideration is its promise to pay the policy benefits.

A lender may not require that a borrower purchase insurance from

· the lender as a condition of making, renewing, or refinancing a loan.

A person who knowingly presents a false insurance claim

· with the intent to defraud or deceive, or who assists another in doing so is guilty of a Class H felony.

An insurer must send a claimant the forms for filing proof of loss

· within 15 days after receiving notice of a claim.

Insurance provider

- This lesson looks at the different organizations providing insurance protection today, sorted into two groups: private insurers and government programs

admitted insurer

- is a company that has received a certificate of authority form a state where it wants to sell insurance. An insurer must hold a certificate of authority (that is, be admitted) in every state where it transacts business

non-admitted insurer

- is one that is not certified to do business in a state. Only through a surplus lines broker can be a non-admitted insurer transact business in a state. Unless it involves surplus lines insurance, producers face penalties if they solicit or sell insurance for a non-admitted company

To be considered legal, a contract requires five things:

1. offer 2. acceptance 3. consideration 4. competent parties 5. legal purpose

1. Which of the following statements about utmost good faith in insurance contracts is correct?

a. Both the insured and insurer must act in utmost good faith

Commercial insurance companies

Most insurance coverage in the united states is written by commercial insurance companies. There are two types

1. For an insurance perspective, underwriting is best defined as

The process of determining if an applicant Is an insurable risk Through the underwriting process, insurance company underwriters determine if the risk proposed for insurance should be accepted or rejected. That is, they determine if the applicant represents an insurable risk.

1. Which of the following is an example of an unauthorized insurance company in Illinois?

a. Company B, an Iowa-based company that does not hold a certificate of authority in Illinois and sells products that are not approved by the Illinois insurance department b. An unauthorized company is one that is presenting the products it sells as "insurance" when in fact it is not an admitted company and its products are not approved by the state insurance department

4. The purpose for the Buyer's Guide, which must be given to every insurance prospect in the first meeting with a producer, is to:

a. explain the general features, benefits, and conditions of the type of insurance being considered

As a contract of adhesion

ambiguities in the contract must be interpreted to the benefit of the policyowner.