Life Insurance - Chapter 5
Who must be a member of insurance guaranty associations?
All insurers authorized to write insurance within a state
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
What type of licensee represents the insured?
Broker
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
What is controlled business?
Insurance on the producer's own life or property, or the lives or property of the producer's family or business associates
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
What is the major difference between a stock company and a mutual company?
Ownership
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
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
What is the purpose of a cease and desist order?
To prevent a producer or insurer from further violating laws or transacting insurance
What is the purpose of insurance guaranty associations?
To protect policyowners, 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 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)
When can the Commissioner or Director examine insurers?
Whenever deemed necessary, but at least once every few years
What level of authority is given to the Office of Insurance Regulation with respect to examination of insurer's activities to determine compliance Unfair Trade Practice laws?
Absolute
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
What are the 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
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
What illegal act does a producer commit when the producer represents a policy in a more favorable light than the policy really is?
Misrepresentation
Can insurers 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
Who can usually be granted a temporary license?
Producer's spouse or designee in case the licensed producer dies or becomes disabled
An agent transacts business for Insurer A and Insurer B, both selling life insurance, and for Insurer C, selling health insurance. How many appointments must the agent hold?
Three - one for each insurer
To whom may a certificate of authority be issued?
To an insurer authorized to transact business in this state
What are the most common penalties for violations of insurance statutes?
A cease and desist order, a fine, and license suspension or revocation
Who is an insurance agent?
A person authorized to sell, solicit and negotiate insurance contracts
For what reason can a temporary license be issued?
For continuation of business 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
What type of licensee represents the insurance company?
The agent
