HEALTH LAW
f a group policy is discontinued, the prior insurer is still liable for claims that occur during the grace period of the policy and: A: may charge premiums during the grace period B: may not charge premiums during the grace period C: may limit benefits D: None of the Above
A Under discontinuance and replacement the existing insurer must provide coverage during grace period, but they are entitled to all premium for coverage during the grace period.
Written defamation is known as A: Libel B: Slander C: Rumor D: Twisting
A It is libel when unfounded written statements are made to intentionally injure the reputation of another.
Which insurers must participate in the Life and Health Guarantee Associations? A: all admitted insurers B: all insurers from all states C: Only property insurers D: Only Casualty insurers
A All admitted/licensed insurers must help pay claims under the Life and Health Guarantee Association is in place to protect insureds and beneficiaries against insurer insolvency.
A producer is found guilty of rebating. Under what circumstance would this be held against the insurance carrier? A: If the carrier was aware of the producer and their rebating activities and did not report or try to prevent it. B: Such activity is automatically held against the carrier. C: If the carrier knew nothing about the producer rebating taking place. D: If the carrier is a stock insurance company.
A Charges can be brought against any insurer or general agent if there is proof these entities were aware of ongoing rebating practices of the producer who is found guilty.
An employee of an insurance company is instructed by her superior to enter false information in the official company records pertaining to financial matters of the firm. Which of the following statements is true concerning this action? A: This is the unfair trade practice of falsifying records and it is a felony action. B: This is an example of restraint of trade between two insurance companies punishable by loss of certificate of authority. C: This is an example of twisting which is a felony. D: This is the unfair trade practice of falsifying records and it is a misdemeanor action.
A Intentionally falsifying insurance company records to deceive financial status is an unfair practice and those who engage in the activity are guilty of a felony offense.
Promising a prospective insured that if they buy a policy that they will become an owner of the insurer is an example of A: an unfair trade practice. B: unfair discrimination C: an unfair claims practice D: restraint of trade.
A It is an unfair trade practice to promise or imply ownership of an insurance company based on the purchase of an insurance policy.
The minimum fine for a misrepresentation found in a company brochure is: A: $200 B: $500 C: $5,000 D: $10,000
A The fine for misrepresentation is no less than $200 nor more than $10,000 which is paid into the county in which the State Attorney has completed successful prosecution.
If a man or woman explains the difference of one type of life insurance compared with another to a person interested in purchasing insurance, this activity is known as A: Negotiation B: Selling C: Procuring D: Soliciting
A. "Negotiate" means to confer directly with or to offer advice directly to a purchaser or prospective purchaser of a particular policy of insurance concerning any of the substantive benefits terms or conditions of the policy.
A licensing candidate must have obtained a license from the Department of Insurance A: within one year from the first date of class attendance in the line of authority obtained. B: within one year from passing the state exam. C: within one year from successfully completing the prelicensing course. D: within 90 days from successfully completing the prelicensing course.
A. Once the licensing candidate first attends a prelicensing class, they must have their state producer license within one year from that date.
When a non-financial conduct examination is held and the party examined makes a written request for a hearing, at least how many days notice must the Director provide of time and place of a hearing as designated in the notice? A: 10 days B: 15 days C: 20 days D: 30 days
A. The party examined who requested a hearing must be given at least 10 days notice of a hearing time and place in the notice issued by the Director.
Which statute establishes certain definitions and wording that cannot be legal used in a contract? A: Minimum Standards B: Exclusions C: Preexisting Conditions D: Entire Contract
A. The purpose of Minimum standards is to establish certain provisions and wording be included as well as disclosing certain information to the policyholder while excluding restrictive definitions.
L is caught improperly using notes at her state insurance licensing examination. What action is likely if L applies for a producer license? A: Her license will be suspended upon issuance. B: Her license request will be denied. C: She will be issued a license but put on immediate probation. D: She will be arrested.
B
Under a Long Term Care policy, any existence or symptoms care or treatment or a condition for which medical advice was recommended or received can only be excluded as a preexisting condition on policy if loss occurred within ______ before effective date of coverage. A: 3 months B: 6 months C: 12 months D: 24 months
B A preexisting condition diagnosis/loss must occur within 6 months before effective day of coverage for a Long Term Care Policy.
What action must the Director take toward the subject of a completed market conduct examination? A: Allow the subject at least 30 days to request a hearing. B: Notify the person examined of the contents of a verified report before it is made public. C: Issue a final written order immediately if any code violation is found during the examination. D: Any violation will result in a civil fine ranging from $1,000 to $50,000.
B All subjects of a market conduct examination must be notified of the contents of a written report and afforded the opportunity for hearing on the matter to object to the contents therein.
All of the following statements pertaining to a surety bond and an association are true, EXCEPT: A: Producers can meet the bond requirement with a bond in the name of an association. B: The association must be in existence for at least 7 years C: The association must have common membership. D: The association must have been formed for a purpose other than obtaining a bond.
B An association must have been in existence for at least 5 years in order to purchase a surety bond in their own association name.
f an applicant is under age 65, they must apply for a supplement within _______ of enrolling for Part B. A: 3 months B: 6 months C: 12 months D: 18 months
B An eligible applicant who is under age 65 and applies for a Medicare supplement within 6 months of enrolling under Part B.
Which of the following insureds would be eligible for a Medicare supplement if they were under age 65? A: an insured who is collecting disability B: end stages of renal failure C: All of the above D: None of the Above
B An under 65 insured is eligible for a Medicare supplement if they qualify for Medicare which would require the insured to be on social security disability for 2 years or more or be at the end stage of a renal impairment.
How many classroom hours are required for a property insurance prelicensing course? A: 5 B: 7.5 C: 12.5 D: 20
B Each of the four main lines of licensing authority: Life, Health, Property and casualty require 20 total course hours of which 7.5 must be classroom hours.
All of the following are considered to be prohibited agent practices for Medicare Supplements EXCEPT: A: saying that a policy is approved by the Federal Government B: giving the insured a policy checklist at the point of sale C: describing him/herself as a Medicare advisor D: stating that the policy will be paid for by local or state government
B Giving a policy checklist at the point of sale is a requirement under law of an agent. Generally, the agent can never associate supplements to government entities or state that a government agency approves of a particular company or supplement.
The Director A: is elected by the people of Illinois every 2 years. B: is appointed by and serves at the pleasure of the Governor. C: is elected by the people of Illinois every 4 years. D: is appointed by the President of the United States.
B In Illinois, the position of Director of Insurance is by appointment by the Governor to serve for any length of time the Governor deems appropriate.
An agent told a prospective insured that he was a representative of Medicare there to sell a supplement directly from the government. The Director was notified of this action by the consumer and has decided to fine the producer the maximum amount under law. What would be the maximum fine for such an offense? A: $500 B: $5,000 C: $10,000 D: $15,000
B Other than a producer or insurer marketing a supplement not approved for sale, all of the other violations may incur a minimum fine of $500 and a maximum of $5,000.
Of the following statements regarding a producer hearing to determine whether or not rebating was occurring, which is FALSE? A: Self-incrimination CAN NOT be used as a defense. B: A participant in such a hearing is immune from perjury charges even if perjury is committed in the hearing. C: A participant in such a hearing is immune from prosecution. D: A producer found guilty of rebating can be fined.
B Perjury by a participant in a rebate hearing is not immune for prosecution for perjury.
Under law, a LTC policy must provide consecutive coverage for at least: A: 6 months B: 12 months C: 24 months D: 36 months
B Under law, a Long Term Care policy must provide at least 12 consecutive months of coverage.
Q has just finished the first year as an insurance producer in which Q placed $50,000 of premium on the life of Q's spouse and another $40,000 of premium of the life of several doctors with whom Q is unrelated. Based on these numbers, Q A: will receive a performance citation from the companies represented. B: will have his producer license denied upon a renewal request when the Director learns Q violated the controlled business law. C: has done an excellent job. D: has violated no insurance rules or regulations
B Writing insurance business on the spouse of a producer is controlled business. The law allows controlled business but not if it exceeds 50% of the total premium collected in the first year after becoming licensed, a condition which can lead to license denial upon a renewal request.
A producer who makes misleading comparisons between a product an insured owns and a policy the producer is trying to sell as a replacement is an activity known as A: Misappropriation B: Twisting C: Defamation D: Rebating
B. Twisting is a special type of misrepresentation utilized when an unethical producer is trying to convince an insured to drop their current policy in favor of the what the producer is selling, while providing misleading information.
Which of the following would be a reason for a long term care policy to be nonrenewed? A: mental impairment of the insured B: physical deterioration of the insured C: willful/knowledgeable nonpayment of premium D: All of the Above
C A long term care policy cannot be cancelled or nonrenewed because of physical or mental deterioration of the insured. Of the listed answers, nonpayment of premium would be the only allowable reasons for nonrenewal.
If a producer is convicted of a felony in what manner is the Director informed? A: Through the appropriate criminal computer database, automatically. B: By the federal or state court system in which the felony conviction is recorded. C: By the producer. D: The State Police.
C A producer has a duty under law to report any felony conviction to the Director within 30 days of the entry date of the judgment of the felony conviction.
Which of the following persons is NOT exempt from being producer licensed? A: The president of a life insurance company. B: The underwriter at the home office of a property insurer. C: A funeral director who solicits the sale of a life policy. D: A secretary at the home office of an insurance company
C All persons who work with or for an insurance company, who are not being paid a direct commission based on the sale, solicitation or negotiation of an insurance contract are exempt from licensing requirements.
Any untrue statements which unfairly damage the business reputation of another company or their representatives is defined as: A: Rebating B: Misrepresentation C: Defamation D: Twisting
C Defamation is when an agent or company intentionally provides untrue information in the course of business to place the producer or company in a more favorable light.
Long Term Care coverage may be marketed to individuals or groups. A qualifying group that is considered to be an association plan must originate with at least how many members? A: 2 or more B: 20 or more C: 100 D: 500
C For a group LTC plan that is issued to an association, the group must have at least 100 members and have existed for a reason other than buying insurance.
If a long term care partnership policy allows the insurer to offer inflation protection and it is not required under law, the insured must be: A: under age 61 B: at least 61 but less than 76 years old C: 76 years or older D: None of the Above
C If an insured is 76 years or older inflation protection on partnership long term care is optional for the insurer to add.
Medicare Supplements have a free look period of: A: 10 days B: 20 days C: 30 days D: 40 days
C Medicare Supplements have a free look period of 30 days from delivery for a full refund of all premiums paid.
Which of the following losses are excluded under minimum standard law? A: hospitalization B: accidental injuries C: eye care D: None of the Above
C Mental disorders, cosmetic surgery, alcoholism, self-inflicted intentional injury, sex change surgery, smoking cessation classes and eye/dental care are all examples of allowed exclusions under IL minimum standards.
Other than when an agent or insurer sells a supplement not approved by the director, all other violations may incur a maximum fine of: A: $500 B: $1,000 C: $5,000 D: $10,000
C Other than a producer or insurer marketing a supplement not approved for sale, all of the other violations may incur a minimum fine of $500 and a maximum of $5,000.
Which statement pertaining to license suspension, revocation or denial is NOT TRUE? A: All revoked licenses must be surrendered to the Director either by mail or in person. B: A business entity license can be revoked if a manager was aware that a producer was in engaged in a violation but did not report the activity or take corrective action. C: A license suspension cannot be less than six months nor longer than two years in durations. D: A cause for termination can be the failure of a producer to satisfactorily repay an Illinois Student Loan.
C. A producer license suspension is for a period of time deemed appropriate by the Director; there is no statutory minimum or maximum suspension period.
The civil fine amount that may be imposed for not complying with a lawful subpoena of the Director is A: 500 B: 1000 C: 2000 D: 5000
C. Ref. 5/403 stipulates a $2,000 civil fine.
How many separate accounts exist under the life and health guarantee association? A: 4: Variable, HMO, Life, and Health B: 3: Variable, Life, and Health C: 2: Life and Health D: 1: Life and Health
C. There are two separate accounts for Guarantee Associations, Life and Health.
Producer K is convicted of a felony on March 1 and the conviction judgment is entered officially on August 1. By which date must K report this felony conviction to the Director? A: K is required to do nothing as this information will be automatically forwarded to the Director by a uniform criminal computer database. B: K is not required to report anything until all of K's appeals rights have been exhausted through all state and/or federal courts. C: No later than March 31. D: No later than August 31.
D A producer has a duty under law to report any felony conviction to the Director within 30 days of the entry date of the judgment of the felony conviction.
A producer is violating the rule against controlled business if they write too much insurance business on the risks of all of the following persons, EXCEPT: A: themselves B: their spouse C: their own business D: their parents
D Controlled business pertains to insurance written on the life, property or risks of the producer, their spouse or their employer.
All of the following insurance placements would be considered controlled business, EXCEPT: A: A producer places a group health insurance policy with his employer's business B: A producer places a group health insurance policy with his own business C: A producer places a life insurance policy on the life of her spouse D: A producer places a property insurance policy on the home of his uncle.
D Controlled business pertains to insurance written on the life, property or risks of the producer, their spouse or their employer.
The annual license fee for a certified provider is A: $500 per year plus $50 for each course certified B: $2,000 C: $1,000 D: $1,000 plus $20 for each certified course r
D Course providers pay $1,000 a year plus $20 per course that was certified that is being renewed.
A producer uses sign language to explain an insurance policy to a prospect who is hearing impaired and the producer is purposely communicating false information to make a sale. Has the producer broken any insurance rules or regulations? A: No, because using sign language is neither verbal nor written communication and the producer has discovered a legal loophole. B: Yes, the producer is engaging in twisting C: Yes, the producer is using the illegal tactic of diversion. D: Yes, the producer is guilty of misrepresentation.
D Each and every medium of communication is subject to the misrepresentation law, even nonverbal communication.
How many total course hours are required for Accident and Health insurance prelicensing? A: 5 B: 7.5 C: 12.5 D: 20
D Each of the four main lines of licensing authority: Life, Health, Property and casualty require 20 total course hours of which 7.5 must be classroom hours.
All of the following amounts of premiums which are misappropriated by a producer are considered to be a felony violation EXCEPT: A: $100 or less on at least two separate occasions. B: $3 on at least two occasions C: $151 D: $150
D Misappropriating more than $150 is a Class 3 felony.
A Temporary License (180 days) allows the holder to engage in all of the following activities, EXCEPT: A: a surviving spouse of a producer can use the authority to help effect the sale of the insurance business. B: make certain that insureds are paying renewal premiums in a timely manner. C: ask the Director to extend the authority if an anticipated agency sale is taking longer than 180 days. D: sell a new policy to an existing client.
D The 180 day temp license is strictly used to service existing customers and the sale, solicitation or negotiation of business is prohibited.
At his license revocation hearing, producer Q is found to have violated fifteen separate causes of conduct each of each is sufficient cause for license revocation. What is the maximum civil penalty that could be imposed on Q for these actions? A: $1,000 B: $5,000 C: $10,000 D: $100,000
D The maximum civil penalty for violations of a the Director's lawful order under the suspension, revocation and denial of license statutes is $100,000.
If an insured has premiums raised solely based on a disability, the insurer is guilty of: A: Rebating B: Defamation C: Guaranty Association law D: Unfair Practice
D Under law, Unfair Practices state that no company shall discriminate against an individual within a class because of handicaps, disability, blindness or partial blindness.
An insured has recently joined the Marine Corp and their insurance company has indicated to the insured that an increase in premium will result from this action. The insurance company A: is well within their rights to raise premium based on induction to military service as this represents a greater risk to the insurer. B: is allowed to increase rates based on military service in certain policy types. C: may face action by the Director because this is an example of an unfair claims practice. D: may face action by the Director because this is an example of unfair discrimination.
D. An insured cannot be charge on a higher premium basis for insurance coverage solely based on the fact they have joined any branch of the US military.
How many days does the Director have to issue a final written order once a hearing has been held pertaining to a market conduct examination? A: Within 20 to 30 days B: 30 days C: 60 days D: 90 days
D. The Direct has 90 days from the filing of an examination report or within 90 days after a hearing is held regarding a market conduct examination to issue a written order.