Chapter 12 Questions

be formed under Pennsylvania insurance laws.

A domestic insurance company in Pennsylvania MUST a. be formed under Pennsylvania insurance laws. b. own real estate in Pennsylvania. c. write insurance on risks located only in Pennsylvania. d. honor the charter of the National Association of Insurance Commissioners (NAIC).

2 years.

A life insurance policy becomes incontestable after it has been in force for a. 30 days. b. 6 months. c. 2 years. d. 3 years.

solicit, receive and forward applications to the insurer.

A life insurance producer licensed in the Commonwealth of Pennsylvania is authorized to a. approve the payment of a claim. b. reinstate an insurance contract after the expiration date. c. solicit, receive and forward applications to the insurer. d. replace a policy without notifying the insurer.

the Pennsylvania Guaranty Association.

A producer does NOT have a fiduciary responsibility to a. applicants b. insureds. c. insurers. d. the Pennsylvania Guaranty Association.

has been afforded a right to a hearing.

A producer's license may only be suspended or revoked if the producer a. has been afforded a right to a hearing. b. has engaged in replacement of an existing policy. c. filed for bankruptcy. d. did not meet a sales quota.

A prospective producer who is currently enrolled in a pre-licensing insurance class

A temporary license may be issued without state examination to all of the following EXCEPT a. Producer's spouse b. Executor of producer's estate c. Employee of the producer d. A prospective producer who is currently enrolled in a pre-licensing insurance class

stock

A(n) ___ company is owned exclusively by shareholders. a. mutual b. mixed c. stock d. interactive

Blind trust data that does not include names and addresses

According to Pennsylvania law, which of the following is NOT considered to be personally identifiable financial information? a. Information obtained from an insurance application b. Consumer report information c. Account balance information d. Blind trust data that does not include names and addresses

Producer's commission rate

Advertising material for a life insurance policy does NOT need to contain which of the following? a. Producer's commission rate b. The company's true corporate name c. Statements that dividends are not guaranteed d. Whether a spokesperson is paid

2

After an annuity has been in force for ___ year(s), it becomes incontestable. a. 1 b. 2 c. 3 d. 4

viatical settlements.

Agreements made by terminally ill persons to sell their life insurance policies at a discount in order to pay medical expenses are called a. repurchase agreements. b. viatical settlements. c. nonforfeitures. d. living wills.

10 days.

Every Pennsylvania insurer, upon receiving notification of a claim, must acknowledge receipt of the notice within a. 10 days. b. 15 days. c. 30 days. d. 45 days.

25%

An Accelerated Death Benefit in Pennsylvania must be at least what percentage of the total death benefit? a. 15% b. 25% c. 50% d. 75%

alien insurer.

An insurer formed according to the legal requirements of another country is considered a(n) a. reciprocal insurer. b. alien insurer. c. foreign insurer. d. international insurer.

a rebate.

Charging a client less premium than what is stated in their insurance policy is called a. misappropriation. b. misrepresentation. c. intimidation. d. a rebate.

licensed and appointed Producers.

Commissions may be shared by a. a licensed Producer and family member. b. licensed and appointed Producers. c. a licensed Producer and prospective prospect. d. a Producer and non-licensed employee.

administrative penalty.

For Pennsylvania Insurance Code violations, the Commissioner may assess a(n) a. prison sentence. b. administrative penalty. c. insurer appointment termination. d. monetary award for paid and suffering.

Home state

For licensing purposes, if an applicant has a home or office location in the state of Pennsylvania, this would be consistent with which of the following? a. Territory b. Delivery state c. Home state d. Non-resident requirement

Signing a prospect's name without their knowledge or presence

In Pennsylvania, a producer may have their license revoked for which of the following acts? a. Loss of insurer appointment b. Failing to renew license on a timely basis c. Sharing commissions with another licensed producer d. Signing a prospect's name without their knowledge or presence

Six months

In Pennsylvania, an insurer may backdate policy issue not more than how many months from the date of a life insurance application? a. One month b. Three months c. Six months d. Nine months

Confirm previous exam scores

In Pennsylvania, which of the following is NOT something a licensee must do to renew their insurance license? a. Confirm previous exam scores b. Submit proper paperwork c. Complete required continuing education d. Pay the proper fees

represents the insurer.

In the state of Pennsylvania, a licensed producer a. represents the insurer. b. may modify insurance contracts. c. approves insurance contracts. d. represents the insured.

Viatical Settlement

Life insurance may make an immediate benefit payment before the insured dies in which transaction? a. Viatical Settlement b. Accidental injury c. Modified Endowment Contract d. Absolute Assignment

A husband and wife

On occasion, insurable interest may exist in the absence of economic interest. Which of the following examples does this pertain to? a. Business associates b. Business competitors c. A husband and wife d. Students in a classroom

creditors.

Proceeds of a viatical settlement contract could be subject to the claims of a. creditors. b. children. c. spouse. d. beneficiary.

licensed producers not appointed by an insurer.

Producer commissions may NOT be paid to a. licensed and appointed producers. b. licensed and appointed producers who are sharing commissions. c. non-resident producers. d. licensed producers not appointed by an insurer.

24

Producers must complete a total of ___ Continuing Education credits for each two-year licensing period. a. 12 b. 24 c. 36 d. 48

Incarceration

The Pennsylvania Department of Insurance may take each of the following actions EXCEPT a. Issue Cease and Desist Order b. Impose fines c. Revoke licenses d. Incarceration

$300,000.

The Pennsylvania Life and Health Guaranty Association protects life insurance death benefit claims up to a. $500,000. b. $400,000. c. $300,000. d. $200,000.

Provide policy owner protection if an insurer becomes insolvent

What is the purpose of the Pennsylvania Life and Health Insurance Guaranty Association? a. Assist an applicant choose the best insurer b. Assist an applicant choose the right amount of coverage c. Provide each policy owner a buyer's guide and policy summary d. Provide policy owner protection if an insurer becomes insolvent

Insurance Department

When a licensee's address has changed, who must be notified of this change? a. The licensee's clients b. Beneficiaries c. Insurance Department d. Chamber of Commerce

unfair claim settlement.

When an insurance company consistently fails to provide reasonable explanations for the denial of a claim, this is called a(n) a. breach of contract. b. unfair claim settlement. c. fraudulent claim practice. d. unlawful Insurance act.

forward premiums to the insurer on a timely basis.

When collecting insurance premiums from a client, a producer MUST a. temporarily deposit the funds in a personal account. b. pay the client interest on any monies held. c. send receipt of payment to the Commissioner. d. forward premiums to the insurer on a timely basis.

Felony conviction

Which of the following constitutes grounds for suspending a Pennsylvania producer's license? a. Summary Action conviction b. Felony conviction c. Failure to comply with underwriting guidelines d. Failure to maintain Insurance transaction records for at least 10 years

Producer

Which of the following is a person who negotiates an insurance contract on behalf of an insurer? a. Negotiator b. Consultant c. Advisor d. Producer

Recording receipt and remittance of premiums due to the insurance company

Which of the following is an example of a producer's fiduciary duty? a. Recording receipt and remittance of premiums due to the insurance company b. Determine the rate classification of the insured c. Reviewing policy summary of benefits d. Witnessing applicant's signature

Shareholders

Which of the following is the Pennsylvania Insurance Department NOT responsible for? a. Regulations b. Producers c. Shareholders d. Reinsurers

The policy can be contested by the insurer only during the first two years of the contract

Which of the following statements about the contestability of a life insurance policy is true? a. The policy cannot be contested by the insurer once it is paid for and issued b. The policy can be contested by the insurer only during the first two years of the contract c. The policy can never be contested by the insurer d. The policy can always be contested by the insurer

Embezzlement

Which prohibited act involves a producer spending a client's insurance premiums for his/her own personal use? a. Rebating b. Misrepresentation c. Embezzlement d. Defamation

Producer

Who can receive an insurance commission? a. Advisor b. Producer c. Negotiator d. Consultant