Life insurance 5-6

who is responsible for the contents of insurance advertisements?

the insurance company

who is responsible for the costs associated with the examination of insurers?

the insurer who is being examined

which of the following must an insurer obtain in order to transact insurance within a. given state A. Business entity license B. Insurer's license C. Certificate of authority D. Producer's certificate

C. Certificate of authority

in this state, free-look periods for insurance policies last A. 20 days B. 5 days C. 10 days D. 15 days

10 days

who is an insurance agent?

A person authorized to sell, solicit and negotiate insurance contracts

which of the following entities is not an insurer but an organization formed to provide insurance benefits for members of an affiliated lodge or religious organization A. Fraternal benefit society B. Mutual company C. Stock company D. reciprocal association

A. Fraternal benefit society

all of the following statements are correct regarding credit life insurance EXCEPT A. benefits are paid to the borrower's beneficiary B. the amount of insurance permissible is limited per borrower C. the premiums are usually paid by the borrower D. benefits are paid to the creditor

A. benefits are paid to the borrower's beneficiary

when replacement is involved, a producer must do all of the following EXCEPT A. receive a confirmation from the existing insurer B. give the policyholder a memorandum comparing the existing and new policies C. file a comparison memorandum with the company the producer represents D. file a comparison memorandum with the existing insurer

A. receive a confirmation from the existing insurer

who typically pays for creditor insurance? A. the borrower B. the lender C. taxpayer D. the government

A. the borrower

who is considered a nonresident agent?

An agent who resides and is licensed in another state, but who is authorized to transact insurance in this state

If an insurer holds a Certificate of Authority, it is known as what type of insurer?

Authorized or admitted

a failure to report insurance fraud to the Commissioner is considered a/an A. unfair trade practice B. misdemeanor C. felony D. concealment

B. misdemeanor

what is the major difference between a stock company and a mutual company? A. types of whole life policies B. ownership C. amount of death benefit D. number of producers

B. ownership

a participating insurance policy may do which of the following? A. require 80% participation B. pay dividends to the policyowner C. provide group insurance D. pay dividends to the stockholder

B. pay dividends to the policyowner

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. replacement rule C. reinstatement rule D. conversion rule

B. replacement rule

which of the following is TRUE regarding the insurance amount in credit life policy? A the amount of coverage can be greater than the amount owed B. the creditor can only insure the debtor for the amount owed C. the creditor may insure the debtor for an unlimited amount of coverage D. allowable amount of coverage is determined by the State Insurance Commissioner

B. the creditor can only insure the debtor for the amount owed

A paid-up nonforfeiture benefit will become effective as specified in the policy, unless the person entitled elects another available option within how many days after the due date of the premium in default? A. 15 days B. 30 days C. 60 days D. 90 days

C. 60 days

If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered A. a required disclosure B. a legal representation of the Association C. an unfair trade practice D. a misrepresentation

C. an unfair trade practice

credit insurance protects which of the following? A. patients who have prepaid for medical care B. borrowers against inflation C. lenders D. borrowers against creditor insolvency

C. lenders

which term describes the benefits of a life insurance policy that the policyowner does not automatically relinquish even if the policy lapses? A. constant values B. non surrender values C. nonforfeiture values D. permanent values

C. nonforfeiture values

when an applicant for life insurance is taken that replaces an existing life insurance policy, the applicant must be given a memorandum that includes all of the following EXCEPT A. insurer's name B. date of application C. premium mode D. the face amount of the policy

C. premium mode

the type of insurance sold to a debtor and designed to pay the amount due on a loan if the debtor dies before the loan is repaid is called A. credit health B. decreasing whole life C. multiple protection insurance D. credit life

D. credit life

which of the following is TRUE about credit life insurance? A. debtor is the annuitant B. creditor is the insured C. debtor is the policy beneficiary D. creditor is the policyowner

D. creditor is the policyowner

to what organization must all admitted insurers belong? A. the Arkansas Insurers Association B. the Commissioner's Association C. the Arkansas Insurance Department Association D. the Life and Disability Insurance Guaranty Association

D. the Life and Disability Insurance Guaranty Association

if a producer, broker, or solicitor has a change of business address, who should be notified? A. the NAIC B. policyowner C. the guaranty association D. the commissioner

D. the commissioner

which of the following entities keeps a file of all of an insurer's advertisements? A. State Insurance Board B. Commissioner C. State government D. the insurer

D. the insurer

a temporary license may be used without examination to all of the following, EXCEPT A. the legal guardian of a disabled producer B. the designee of a producer entering active service in the U.S. Navy C. the surviving spouse of a deceased producer D. the spouse of a retired producer

D. the spouse of a retired producer

for what reason can a temporary license be issued?

For continuation of business in case the licensed producer dies or becomes disabled

what is a controlled business?

Insurance on the producer's own life or property, or the lives or property of the producer's family or business associates

Who can usually be granted a temporary license?

Producer's spouse or designee in case the licensed producer dies or becomes disabled

Who must be notified of a producer's change of address?

The Department of Insurance (Commissioner/Director/Superintendent)

To whom may a certificate of authority be issued?

To an insurer authorized to transact business in this state

what is the purpose of a cease and desist order?

To prevent a producer or insurer from further violating laws for transacting insurance

When is controlled business legal?

When the commissions from controlled business do not exceed the aggregate commissions on all the other business (specific limits may vary from state to state)

what are the most common penalties for violations of insurance statutes?

a cease and desist order, a fine, and license suspension or revocation

what type of licenses represents the insured?

broker

what are producers required to do in order to renew their license?

complete continuing education hours and pay a renewal fee

If a producer makes maliciously critical statements about another insurer, what is this illegal practice called?

defamation

Two individuals who are in the same risk and age class are charged different rates for their insurance policies due to an insignificant factor. What is this called?

discrimination

Insurers are classified according to their domicile. What are the three types of insurers?

domestic, foreign, and alien

in general, who can be excluded from producer licensing examination requirements?

insurance company officers, directors, or an other employees who do not transact insurance and who do not receive commissions for their services

in the agent/insurer relationship, who is considered principal?

insurer

in the agent/insurer relationship, who is considered the principal?

insurer

Who may share in the commission from the sale of a life insurance policy?

only producers properly licensed for the type of insurance transaction

Who owns stock companies?

stockholders

what type of licensee represents the insurance company?

the agent

which of the following best describes an insurance company that has been formed under the laws of this state? A. alien B. foreign C. domestic D. sovereign

C. domestic

on a participating insurance policy issued by an usual insurance company, dividends paid to policyholders are A. paid at a fixed rate every year B. taxable as ordinary income C. guaranteed D. not taxable since the IRS treats them as a return of a portion of the premium paid

D. not taxable since the IRS treats them as a return of a portion of the premium paid

What illegal act does a producer commit when the producer represents a policy in a more favorable light than the policy really is?

misrepresentation

on its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. what is the company guilty of?

misrepresentation

which of the following is NOT an unfair trade practice? A. negotiating claims B. misrepresentation C. false advertising D. boycott, coercion, and intimidation

A. negotiating claims

when must a Life insurance producer inform their prospective customer that they are acting as a life insurance producer and disclose the full name of insurance company that they represent? A. prior to commencing a sales presentation B. no later than the time of policy deliver C. prior to accepting the initial premium payment D. no later than the end of the 10 day free-look period

A. prior to commencing a sales presentation

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 must request the permission of the existing insurer D. the producer has no specific duties

A. the producer must provide the applicant with a Notice Regarding Replacement

if an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered what type of insurer?

Authorized or admitted

all of the following are considered unfair trade practices in the business of insurance EXCEPT A. rebating B. defamation C. sharing commissions D. boycott

C. sharing commissions

an insurance company is domiciled in Montana and transacts insurance in Wyoming. which term best describes the insurer's classification in Wyoming? A. domestic B. unauthorized C. foreign D. alien

C. foreign

what is the purpose of insurance guaranty associations?

to protect policy owners, insureds and beneficiaries from financial losses caused by insolvent insurers

What type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?

twisting

When can the Commissioner or Director examine insurers?

whenever deemed necessary, but at least once every few years

When doing business in this state, an insurance company that is formed under the laws of another state is known as which type of insurer? A. nonadmitted B. foreign C. domestic D. alien

B. foreign

which of the following best describes the unfair practice of defamation? A. refusing to deal with other insurers B. making derogatory oral statements about another insurer's financial condition C. assuming the name and identity of another person D. issuing false advertising material

B. making derogatory oral statements about another insurer's

a producer's daughter, who is unlicensed, works part time in her father's insurance agency. She may perform all of the following activities EXCEPT A. assist the producer in completing applications for insurance B. call prospects and collect expiration dates on their existing policies C. collect premiums for in-force policies and explain coverages written by the producer D. make appointments for clients to meet with the producer

C. collect premiums for in-force policies and explain coverages written by the producer

a person takes out a loan in order to pay off his house. he dies several years later, having paid off only a small portion of the debt. which of the following is true? A. the lender will not recover this money B. the federal government will pay the balance to the lender C. if the lender has credit insurance, this amount will be paid to the lender D. the state government will pay the balance to the lender

C. if the lender has credit insurance, this amount will be paid to the lender

in which of the following situations is it legal to limit coverage based on marital status? A. legal separation during the application process B. divorce within the last six months of applying for insurance C. it is never legal to limit coverage based on marital status D. excessive number of divorces, as defined by the Insurance Code

C. it is never legal to limit coverage based on marital status

all of the following are unfair claims settlement practices EXCEPT A. failing to adopt and implement reasonable standards for settling claims B. failing to acknowledge pertinent communication pertaining to a claim C. suggesting negotiations in settling the claim D. refusing to pay claims without conducting a reasonable investigation

C. suggesting negotiations in settling the claim

all of the following are true of group life insurance EXCEPT A. premium rates are based upon the average age, gender, and purpose of the group B. when the insured terminates a membership in the group, the coverage can be converted to whole life C. the insureds each own their own contracts D. underwriting has little to do with the insured's health

C. the insureds each own their own contracts

If the Commissioner/Superintendent finds a licensee engaging in an unfair method of competition or an unfair practice, what order will be issued?

Cease and desist order

what document is required for an insurance company to transact insurance?

Certificate of Authority

all of the following could own group life insurance EXCEPT A. a group needing low cost life insurance B. an employer group C. an alumni group D. a debtor group

A. a group needing low cost life insurance

a purchaser of an individual long-term care insurance policy has the right to return the policy for a full refund of the premium if done within A. 30 days of its issue B. 30 days of its delivery C. 45 days of its delivery D. 45 days of its issue

B. 30 days of its delivery

An insurer that holds a Certificate of Authority in the state in which it transacts business is considered a/an A. self-insurer B. authorized insurer C. local insurer D. certified insurer

B. authorized insurer

which of the following is NOT allowed in credit life insurance? A. creditor becoming a policy beneficiary B. creditor requiring that a debtor buys insurance from a certain insurer C. creditor having a collateral assignment on the policy D. creditor requiring that a debtor has a life insurance

B. creditor requiring that a debtor buys insurance from a certain insurer

when handling premium funds, insurance producers are acting in a A. special capacity B. fiduciary capacity C. accounting capacity D. financial capacity

B. fiduciary capacity

which of the following types of insurance policies is most commonly used in credit life insurance? A. increasing term B. whole life C. equity indexed life D. decreasing term

D. decreasing term

who assumes control over na insurance company's funds and management if it becomes insolvent? A. the policyholders or stock owners of the company B. state attorney general C. national association of insurance commissioners D. department of insurance

D. department of insurance

the purpose of the Arkansas Life and Disability Insurance guaranty Association is to A. encourage life insurers to write substandard business B. allow producers to continue to solicit insurance, even if the company they represent is financially impaired C. protect the reputation of the Insurance Department if it issues a Certificate of Authority to a company that becomes insolvent D. help protect policy owners and beneficiaries against financial loss caused by the insolvency of an insurance company

D. help protect policy owners and beneficiaries against financial loss caused by the insolvency of an insurance company

which of the following is correct regarding credit life insurance? A. it is purchased on an installment basis B. it insures the life of a creditor C. it has a maximum term of 20 years D. it insures the life of a debtor

D. it insures the life of a debtor

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

D. obtain a list of all life insurance policies that will be replaced

all of the following are true regarding rebates EXCEPT A. rebates are only allowed fi specifically stated in the policy B. rebating can be anything of monetary value givens an inducement of purchase insurance C. dividends are not considered to be rebates D. rebates are allowed if it is in the best interest of the client

D. rebates are allowed if it is in the best interest of the client

Who must be a member of insurance guaranty associations?

all insurers authorized to write insurance within a state

When transacting business in this state an insurer formed under the laws of another country is known as a/an A. alien insurer B. domestic insurer C. foreign insurer D. admitted insurer

A. alien insurer

an employee is insured under the employer's group life insurance plan. all of the following statements about the coverage are true EXCEPT A. the employee would not need to prove insurability for a conversion policy B. if the employee quits, the employee may, within 31 days, request that the group coverage be converted to an individual policy C. should the employee convert the group coverage, the premium will be use upon attained age D. the employee may choose the type of insurance the conversion policy provides: term or permanent

D. the employee may choose the type of insurance the conversion policy provides: term or permanent

insurers must annually pay the divisible surplus, if any, that will accrue t the policyholders on the policy anniversary date. this must occur no later than the end of the A. first policy year B. second policy year C. third policy year D. fifth policy year

D. third policy year

for what reasons can a temporary license be issued? A. to solicit new business B. to negotiate new insurance contracts C. when a licensee is overwhelmed by existing business and needs temporary help D. to service existing business

D. to service existing business

the state provided for a temporary license for all of the following EXCEPT A. a producer's retirement B. the death of a producer C. a producer's disability D. a producer's time in the military service

A. a producer's retirement

although the commissioner must examine the affairs, transactions, records and assets of each authorized insurer as often as deemed advisable, each authorized insurer must be examined at least once every.. A. 3 years B. 5 years C. 7 years D. 10 years

B. 5 years

when an insured terminates membership in the insured group, the insured can convert to A. whole life insurance with proof of insurability B. term without proof of insurability C. term with proof of insurability D. whole life without proof of insurability

D. whole life without proof of insurability

can insurance advertise the existence of the guaranty association during solicitation and sale of insurance policies?

no, advertising of the existence of the guaranty association for the purposes of solicitation and sale of insurance policies by insurers is an illegal business practice

an agent offers a client free tickets to a sporting event in exchange for the purchase of an insurance policy. what is the agent guilty of?

rebating