Chapter 12 - Washington laws

Replacing an existing life insurance policy with a new one may result in - Capital gains taxation - Small business taxation - An illegal transaction - A surrender charge

A surrender charge

Violations of US Code Title 18 section 1033, may result in - Fine and/or imprisonment - Cease and desist order - Suspension of producer's license - Loss of company appointments

Fine and/or imprisonment

XYZ Life Insurance company's home office located in Ohio and is incorporated in Ohio. In Washington, they are considered to be - Assessment Mutual Company - Non-Admitted - Foreign - Domestic

Foreign

Transacting insurance included any of the following EXCEPT - Selling insurance - Preliminary negotiations - Delivering insurance contracts - Gathering prospective buyer information

Gathering prospective buyer information

What is a certificate of authority? - A document indicating an insurer's membership in the guarantee fund - The approval by the department of insurance for an insurer to use its advertising - The license required for an insurer to conduct business in the state - An insurer's contract with its agents

The license required for an insurer to conduct business in the state

Which federal government agency enforces the security laws enacted by Congress? - The Variable Investment Commission - The Securities Investment Commission - The Securities Exchange Commission - The National Securities Regulatory Commission

The Securities Exchange Commission

Crimes that involve the business of insurance and affect interstate commerce fall under US Code 1033. Any violations would be prosecuted by - The US Attorney General - The Commissioner of Insurance - The Insurance Department - The FBI

The US Attorney General

An insurer must send a notice of appointment for a producer within __ days from the date of an executed agency contract or after submitting the first application to the insurer. - 10 - 15 - 20 - 25

15

All of the following statement regarding the reinstatement of a life insurance policy are correct EXCEPT - A policy may be reinstated after it has been in effect for 3 years - All back premiums must be paid before a policy may be reinstated - A policy may be reinstated without proof of insurability - Once a policy has been surrendered for its cash value, it may not be reinstated

A policy may be reinstated without proof of insurability

Making an oral or written statement that is intended to injure a person engaged in the insurance business is called - False advertising - Defamation - Rebating - Twisting

Defamation

A producer who is licensed in Washington but resident in another state is called a - Nonresident producer - Foreign producer - Reciprocal producer - Limited lines producer

Nonresident producer

When replacing a life insurance policy, a producer must provide the applicant with a - Notice Regarding Replacement - Notice Regarding Reinstatement - Notice Regarding Reduction - Notice Regarding Retention

Notice Regarding Reinstatement

When must a claim on a life insurance policy be paid after proof of loss has been received by the insurer? - Promptly - Within 10 days - Within 20 days - Within 30 days

Promptly

The primary purpose of replacement regulation is to - Protect the renewal commissions of the existing producers - Protect policyowners from misrepresentation and loss of benefits - Protect insurance company home offices from loss of in-force business - Inform consumers of the availability of additional policy coverages

Protect policyowners from misrepresentation and loss of benefits

All of the following are Unfair Claims Settlement Practices EXCEPT - Misrepresenting the policy provisions relating to coverage at issue - Attempting to settle the claim on basis of an application altered without notice, knowledge, or consent of the insured - Refusing to pay a claim on basis of an application altered without notice, knowledge, or consent of the insured - Refusing to pay a claim without conducting a reasonable investigation based on all available information - Providing claim payments to insureds accompanied by a statement setting forth the coverage under which payment is made

Providing claim payments to insureds accompanied by a statement setting forth the coverage under which payment is made

A producer who shares commissions with a client may be guilty of - Fraud - Redlining - Rebating - Comingling

Rebating

Any inducement offered to the insured in the sale of insurance products that is not specified in the policy is called - Rebating - Twisting - Misrepresentation - Defamation

Rebating

Barry offers Chris his mountain cabin for the weekend to secure his order for his insurance business. This is an example of - Bartering - Rebating - Reduction - Twisting

Rebating

A producer's fiduciary responsibility includes which of the following activities? - Recording the receipt and distribution of premiums due to an insurer - Properly remunerating persons who furnish leads on prospects - Providing needed insurance to prospective insureds through any sources that are available - Guaranteeing payment to insureds for losses covered by policies that the producer sold

Recording the receipt and distribution of premiums due to an insurer

In the state of Washington, a licensed producer - Represents the insurer - May modify insurance contracts - Approves insurance contracts - Represents the insured

Represents the insurer

A producer found to have engaged in an unfair method of competition may be - Charged 30% of the claim as punitive damages - Barred from seeking an appeal - Imprisoned for a max of 90 days - Subject to license suspension or revocation

Subject to license suspension or revocation

The life insurance buyer's guide includes information about all of the following EXCEPT how to - Take civil action against an insurer - Decide how much life insurance to buy - Compare life insurance policy rates - Compare life insurance policy requirements

Take civil action against an insurer

Replacing an insurance policy from one insurer to another based on misrepresentation is called - Unfair discrimination - Misrepresentation - Twisting - Rebating

Twisting

A temporary license is valid for a maximum of __ days. - 30 - 60 - 90 - 180

180

A life insurance policy becomes incontestable after it has been in force for - 30 days - 6 months - 2 years - 3 years

2 years

Lapsed individual life insurance may be reinstated at any time within - 2 years - 3 years - 4 years - 5 years

3 years

An insurer must submit all policy forms and applications to the Commissioner at least __ days before they can be used. - 30 - 60 - 90 - 120

30

Every producer licensed in Washington must notify the Commissioner within __ days of any change of address - 15 - 20 - 25 - 30

30

If an insurer terminates a producer's appointment, it must notify the Commissioner within how many days of the termination? - 15 - 25 - 30 - 60

30

Each policy of life insurance shall contain a provision that a grace period shall be allowed within which the payment of any premium after the first may be made. The standard grace period shall be - 15 days - 30 days - 45 days - 60 days

30 days

Group life insurance policies must include a provision entitling policyholders to grace period of - 10 days - 31 days - 90 days - 1 year

31 days

A life insurance policy loan shall bear interest at a specified rate, NOT in excess of - 6% - 8% - 10% - 12%

8%

The Commissioner of Insurance along with the Department of Insurance are responsible for - Administering Washington's insurance laws - Hiring industry lobbyists - Making insurance laws - Establish sales quotas

Administering Washington's insurance laws

A company that is chartered and organized in any country other than the United States is called a(n) ____ company. - Alien - Foreign - Domestic - Nonadmitted

Alien

Before a licensed producer is eligible to transact insurance sales, they must be - Appointed by an insurance company - Trained by an authorized insurance company - Approved by the governor - Assigned an insurance mentor

Appointed by an insurance company

Funding for the Washington Life and Disability Guaranty Association is derived from - Washington Insurance department - Assessments on member companies - The Washington General Treasury - A special legislative appropriation

Assessments on member companies

The purpose of advertising regulation is to - Assure full and truthful disclosures to the public - Ensure that the prospect has all the required information to make an informed decision - Ensure that the insurance company is supervising the agents properly - Assure that spokespersons are properly compensated

Assure full and truthful disclosures to the public

An insurance company that has qualified and received a Certificate of Authority from the Insurance Department to sell insurance in this state is called a(n) - Fraternal organization - Nonadmitted insurer - Unauthorized insurer - Authorized insurer

Authorized insurer

What enables applicants to compare different life insurance policies and help them choose which policy is best for their needs? - Policy summary - Buyer's summary - Buyer's guide - Policy guide

Buyer's guide

Which of the following is an example of replacement? - Canceling a term insurance policy to purchase a long-term care policy - Canceling a whole life policy to purchase a term policy - Canceling a term policy to purchase a disability policy - Canceling a major medical insurance policy to purchase a disability policy

Canceling a whole life policy to purchase a term policy

According to the Fair Credit Reporting Act, an insurer does NOT need to - Inform the application that an investigation is being conducted - Discuss any credit history inconsistencies with the applicant - Inform the applicant about the scope of investigation - Notify the applicant if an application is denied

Discuss any credit history inconsistencies with the applicant

A Fraternal Benefit Society has each of the following characteristics EXCEPT - Incorporated - Without capital stock - Exists for profit - Exists for the benefit of its members

Exists for profit

When determining whether an annuity is suitable for a client, the producer should ask about which of the following? - Financial objectives - Trusts - Wills - Power of attorney

Financial objectives

No insurer, producer, broker, solicitor, or person in connection with an insurance transaction shall offer or promise to buy, sell, give or allow the prospective insured employment, stock or special favors. This is the definition of - Churning - Twisting - Inducement - Enticement

Inducement

Which of the following is CORRECT regarding disclosure regulation? - It only applies to individual annuities - It requires the delivery of a buyer's guide and disclosure document to applicants - It establishes maximum standards for disclosure to annuitants - It is intended to protect insurers

It requires the delivery of a buyer's guide and disclosure document to applicants

An insurer would be committing Unfair Discrimination if coverage was denied based upon - HIV positive result - Marital status - Diabetes - A mental disorder

Marital status

The Life and Disability Guaranty Association provides funds to carry out its powers and duties by assessing - Taxpayers - Policyowners - Beneficiaries - Member insurers

Member insurers

A licensee who informs an insured of inaccurate terms, benefits, or advantages of any policy is committing which of the following violations? - Discrimination - Misrepresentation - Fraud - Defamation

Misrepresentation

Falsifying the terms, benefits, advantages, or conditions of an insurance policy is an example of which of the following? - Forgery - Coercion - Concealment - Misrepresentation

Misrepresentation

When an insurance appointment with a producer is terminated, the party that must notify the producer of the termination is the - Insurer - Local agency - Commissioner - National Association of Insurance Commissioners (NAIC)

National Association of Insurance Commissioners (NAIC)

When a producer is replacing an existing ordinary life insurance policy, the producer must take all of the following actions EXCEPT - Give the applicant a Notice Regarding Replacement of Life Insurance - Give the applicant the original or a copy of the proposals used in the sales presentation - Obtain the beneficiary's signature on a summary of all policies to be replaced - Submit to the producer's insurance company a copy of the Notice Regrading Replacement of Life Insurance signed by the applicant

Obtain the beneficiary's signature on a summary of all policies to be replaced

No existing producer's license will be revoked until - The producer has been afforded a right to a hearing on the charges - At least three violations have been incurred - A cease and desist order has been issued - A jury has decided upon such action

The producer has been afforded a right to a hearing on the charges

An insurer may pay a commission in which of the following scenarios? - To a licensed non-appointed producer who has sold, solicited, or negotiated a policy of insurance on behalf of the insurer - To an unlicensed person who has sold, solicited, or negotiated a policy of insurance on behalf of the insurer - To a licensed producer who is appointed with the insurer - When a policy is cancelled back to inception

To a licensed producer who is appointed with the insurer

Using misrepresentation or inaccurate comparison to induce a person to terminate or borrow against their current insurance policy to take out an insurance policy with another insurer is called - Twisting - Sliding - Coercion - Rebating

Twisting

The renewal period for a producer's license is a - One-year term - Two-year term - Three-year term - Four-year term

Two-year term

Under Washington law, the Buyer's Guide and Policy Summary MUST be delivered - With or prior to the policy delivery - No later than 10 days after the policy delivery - No later than 20 days after the policy delivery - No later than 30 days after the policy deliver

With or prior to the policy delivery

After collecting an insurance premium from an applicant, the producer must deliver or mail - The policy - A receipt for the policy - A policy summary and buyer's guide - A notice regarding replacement

A receipt for the policy

Which of the following acts by an insurer, if committed without just cause and performed with such frequency as to indicate standard operating procedures, constitutes an Unfair Claims Settlement Practice? - Unknowingly misrepresenting pertinent facts or policy provisions to claimants - Failing to adopt and implement reasonable standards for the prompt investigations of claims - Discouraging policyowners from initiating lawsuits by offering a quick and fair claim settlement investigating a claim without the knowledge and permission of the claimant - Investigating a claim without the knowledge and permission of the claimant

Failing to adopt and implement reasonable standards for the prompt investigations of claims

Which of the following is an example of an Unfair Claim Settlement Practice? - Failure to settle a claim based on all available information - Failure to provide a reasonable basis for the denial of a claim upon request - Failure to make an offer of coverage on a claim - Failure to notify a claimant of her right to make claim

Failure to provide a reasonable basis for the denial of a claim upon request

Which of the following would be considered an Unfair Claim Practice? - Implementing standards for proper investigation - Denying a claim after reasonable investigation of the facts - Misrepresenting insurance policy provisions affecting a loss - Acting promptly on claims communication

Misrepresenting insurance policy provisions affecting a loss

During the first two years of a life insurance policy is in force, the insurer may contest a policy for all of the following reasons EXCEPT - Misstatement of age in the application - Material misrepresentation in the application - Fraud in the purchase of the policy - Material concealment in the purchase of a policy

Misstatement of age in the application

Suitability is - Converting a term policy to a whole life policy - Obtaining information from the applicant to determine whether an insurance or annuity product is appropriate - Properly applying the insurer's underwriting guidelines to an applicant - Delivering the Buyer's Guide and Policy Summary to the applicant

Obtaining information from the applicant to determine whether an insurance or annuity product is appropriate

Which one of the following is a domestic insurer? - One formed under the laws of Washington - One formed under the laws of a state or government of the United States other than Washington - One formed under the laws of a country other than the United States of America - One formed under the laws of Washington or under the laws of a state geographically bordering Washington

One formed under the laws of Washington

A life insurance agent is required to give a disclosure notice about information practices to an applicant or proposed insured - After the insurer requests a full medical exam - When the insurer requests an attending physician's report - Prior to or at the time of signing the application - At time of policy delivery

Prior to or at the time of signing the application

The PRIMARY purpose of the Fair Credit Reporting Act is to - Forewarn an insurer about an applicant's recent bankruptcy - Protect consumers from insurers who have filed for bankruptcy - Protect consumers with guidelines regarding credit reporting and distribution - Alert insurers regarding applicants who may have poor credit histories and may be adverse risk to the company

Protect consumers with guidelines regarding credit reporting and distribution

Under federal law, an individual convicted of a felony involving dishonesty may engage in the business of insurance ONLY after: - Paying a fine of at least $5,000 - Serving five years in prison - Completing two years of community service - Receiving written consent from the state insurance regulatory agency

Receiving written consent from the state insurance regulatory agency

According to the Washington Insurance Code, which of the following MUST a producer do when replacing a Life Insurance policy? - Notify the beneficiaries of all the policies or annuity contracts proposed to be replaced - Notify the insurer whose policy is being replaced, but not the insurer replacing the policy - Submit to the replacing insurer a list of all Life Insurance policies or annuity contracts proposed to be replaced - Forward the signed and completed Disclosure Statement to the replacing insurer and not provide the applicant with a copy

Submit to the replacing insurer a list of all Life Insurance policies or annuity contracts proposed to be replaced