Chapter Exam - Laws and Rules
All individual's life policies sold in Minnesota MUST have a grace period of
1 month
A hearing must be held no later than ___ days after the request for the hearing is received by the Commissioner of Commerce
10
A producer must report a felony conviction to the Commissioner of Commerce within ___ days of the conviction
10
An individual life insurance policyowner is allowed ___ days from policy delivery to return the contact for a full refund
10
The free-look period for life insurance policies issued in MN is ___ days
10
Within how many days must a license notify the Commissioner of Commerce of a change in address?
10
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.
15
What is the MINIMUM age for an individual to be a licensed MN insurance producer?
18
What is the MINIMUM age for an individual to be a licensed Minnesota insurance producer?
18
How many days is a temporary producer's license valid?
180
Every ___ year(s) a producer must complete 24 hours of Continuing Education
2
A producer must complete ___ hour(s) of ethics per continuing education reporting period
3
Minnesota requires that an insurance producer must complete ___ hours of continuing education on the subject of law and ethics every reporting period
3
A policyowner has a right to return a life insurance policy within ___ days for a full refund when replacement is involved
30
Backdating a life insurance application for coverage is allowed if the policy application wasn't backdated more than ___ months.
6
A life policy loan in MN can't charge a fixed rate of interest higher than
8%
Which of the following is considered to be misrepresentation?
A producer guaranteeing a policy's dividends
A producer is attempting to replace an existing life insurance policy with a new one. What must this producer submit as part of the application
A signed statement by the applicant regarding the replacement
At what point may a producer sell products for an insurance company?
After being appointed by the insurer
What does a certificate of authority allow?
An insurance company to conduct insurance business
An example of false advertising would be
An insurer exaggerating its dividends in a magazine advertisement
___ is the authority given to a producer to sell, solicit, or negotiate polices on behave of the insurer
Appointment
___ is the authority given to a producer to transact business on behalf of the insurer.
Appointment
Which of the following is a requirement to attain a nonresident producer license?
Be licensed as a producer in the producer's state of domicile
An example of Life insurance policy replacement would be which of the following?
Cash surrender an existing life policy and purchasing a new life policy
Which of the following permits an insurance company to transact business in MN?
Certificate of authority
J is a producer who recently told a claimant that his rights might be impaired if he does not complete a release form within a specified time. What could this producer be found guilty of?
Coercion
Which of these actions does NOT constitute life insurance policy replacement?
Convert term coverage to a whole life policy
Which of these is NOT a duty of the Commissioner of Commerce?
Create new insurance laws
What is one of the roles of the Commissioner of Commerce?
Enforce state insurance laws
How often must an insurance producer's license be renewed?
Every two years
Which of the following would be a valid reason for the Commissioner of Commerce to deny an insurance license?
Failing to report a felony
what is an organization that solicits insurance only to its members?
Fraternal benefit society
How is the MN Life and Health Insurance Guaranty Associated funded?
From member companies
The Commissioner of Commerce is appointed by the ___
Governor
During the course of an insurance business transaction, who does the producer legally represent?
Insurance company
During an insurance transaction, who does the producer represent?
Insurer
The MN Life and Health Insurance Guaranty Association has regulations that apply ONLY to
Life and Health policies issued by companies authorized in Minnesota
A Minnesota producer must do which of the following to continue as a residential licensee?
Meet continuing education requirements
Which Unfair Trade Practice involves a producer suggesting that an insurance policy is like a share stock?
Misrepresentation
Which type of insurance company allows their policyowners to elect a governing body?
Mutual
What must be signed by both the producer and applicant when an existing life insurance policy is being reissued with a reduction in cash value?
Notice Regarding Replacement
Which of these contracts are affected by replacement regulations?
Ordinary Life Insurance
Which of the following would be a valid reason for suspending or revoking an insurance producer's license?
Participating in the act of twisting
Which action will a life insurance company most likely take if an insured dies and it's discovered that the insured's age was misstated on the application?
Pay an amount the premiums would have purchased at the insured's actual age
Who is a mutual insurance company owned by?
Policyholders
A producer charged an insurance applicant an administrative fee. At what point must the producer give a written disclosure for this fee?
Prior to any services being rendered
Who signs a "Notice Regarding Replacement" form when an application is taken for a new life insurance policy that replaces an existing one?
Producer and applicant
Which of the following is NOT a valid reason for the Commissioner of Commerce to revoke a producer's license?
Producer is insolvent
Which of the following actions by a producer would NOT result in a license suspension or revocation?
Producer representing a foreign insurance company
Which of the following actions by a producer would NOT result in a license suspension or revocation?
Producer sells a replacement policy that causes an insured to lapse an existing policy
a producer who illegally discounts insurance premium is said to be engaged in
Rebating
In order to terminate a producer's appointment, the insurer MUST
Send notice of the termination to the Commissioner of Commerce
Which of these actions by a licensee would NOT likely result in license suspension or revocation?
Sharing commission with another similarly-licensed agent
Which of the following is NOT considered rebating?
Sharing commissions with a producer licensed in the same line of business
a mutual insurance company and a stock insurance company have one main difference between them. What is this major contrast?
Stock company is owned by its shareholders. Mutual company is owned by its policyholders.
What would be a potential consequence for a producer who misappropriated insurance funds held in a fiduciary capacity?
The Commission of Commerce may suspend or revoke the producer's license
Which of the following statements is correct about the Commissioner of Commerce's authority to examine the business records of a producer?
The Commissioner of Commerce may examine them whenever it's deemed necessary
W gave W's age as 50 when W purchased a Life policy. At the time of W's death seven years later, the company discovered W's true age at issue had been 59. What would the normal procedure be under the misstatement of age provision in regard to the payment of the death claim?
The proceeds would be reduced based on whatever the premium would have been if purchased at age 59
Why would the Commissioner of Commerce issue a temporary license?
To allow the personal representative of a deceased producer to provide service to existing policyowners
Why would the Commissioner of Commerce examine the records of an insurance company?
To determine the solvency of the company
J is a producer who has induced an insured through misrepresentation to surrender an existing insurance policy. What is J guilty of?
Twisting
What is Minnesota's definition of Life insurance replacement?
a transaction in which a new policy is bought and an old policy is terminated
What is a definition of Life insurance replacement?
a transaction in which a new policy is bought and an old policy is terminated
A French insurance company conducting business in MN would be known in MN as a
alien company
A domestic insurance company in Minnesota MUST
be organized under Minnesota insurance laws
a domestic insurance company in MN MUST
be organized under Minnesota insurance laws
An insurance license applicant may be refused by the Commissioner of Commerce for
being convicted of a crime involving moral turpitude
An example of replacement is
canceling a term life policy to buy a whole life policy
When an Unfair Trade Practice has been discovered, the Commissioner of Commerce may issue a
cease and desist order
Minnesota's 10-day free-look period for life insurance policies begins at the
date of delivery
A credit life insurance policy covers the life of the
debtor
An insurance company that conducts business in MN and was incorporated in MN is called a ___ insurer
domestic
An example of unfair claims practice would be
failing to effectuate prompt, fair, and equitable settlements of a claim
An insurer incorporated outside of MN and conduction business in MN is referred to as a ___ company
foreign
In MN, an insurer licensed to conduct business in MN, but domiciled in New Jersey, is called a
foreign company
A hearing must be held before a producer's license can be suspended or revoked. Prior to the hearing, the Commissioner of Commerce is required to
give written notice to the producer
Commissioner of Commerce
has authority to review policy forms if they will be issued for delivery in Minnesota
A foreign insurance company doing business in Minnesota
is a company that was formed under the laws of another state
A license may be denied, suspended, or revoked if the licensee
is found guilty of misrepresentation
a stock insurance company
is owned exclusively by its shareholders
Credit Life insurance is
issued in an amount not to exceed the amount of indebtedness
An example of an unfair claims practice would be
mispresenting insurance policy provisions affecting a loss
Convincing a prospective insured to buy an insurance policy based on exaggerations is called
misrepresentation
During the course of an insurance transaction, if an agent makes a false or incomplete statement, he/she could be found guilty of
misrepresentation
An example of rebating would be
offering a client something of value not stated in the contract in exchange for their business
An example of unfair discrimination would be
offering different terms of coverage for different policyowners having the same risk classification
An individual who has a contract with an insurance company to represent is called a
producer
An applicant may NOT be refused insurance coverage due to
race
Backdating a life insurance policy is a tactic used to
reduce the premium
A producer has influenced an existing policyowner to convert an existing whole life policy to Reduced Paid-up insurance. The producer then sells the policyowner a new universal life policy. This transaction is called a
replacement
According to MN insurance law, group life insurance conversion privileges must NOT
require evidence of insurability
An example of rebating would be
returning a portion of a premium as inducement to purchase insurance
A life insurance policyowner recently died. The proceeds from the policy are NOT exempt from a creditor's claims when they are payable to
the insured's estate
Life insurance replacement regulation protects the interests of
the policyowner
Group Life policies in MN are required to contain a conversion privilege that allows for conversion
to an individual policy for a stated period of time
An example of an unfair claims settlement practice is
turning down a claim without providing the basis of denial
An individual received a quote from an insurance company that is a different rate from individuals in the same risk class. The insurance company may be accused of
unfair discrimination
T purchased a life insurance policy. T is entitled to review the policy and return it for a full refund
within 10 days after delivery of the policy