ETHICS FINAL EXAMS

10. A France-based insurer would like to do business in California. What document must it first receive? (Choose from the following options) 1. Certificate of Authority 2. Transcontinental Commerce Clearance 3. Alien Insurer License 4. International Certificate of Incorporation

1. Certificate of Authority

22. An insurance company that is NOT authorized to do business in the State of California is known as a(n) (Choose from the following options) 1. Nonadmitted company. 2. Surplus company. 3. Foreign company. 4. Alien company.

1. Nonadmitted company.

3. All of the following are TRUE statements regarding the requirements of an insurer to offer earth movement coverage in California EXCEPT (Choose from the following options) 1. Coverage may be provided in the policy of residential property insurance which specifically provides coverage for loss or damage caused by the peril of earthquake alone or in combination with other perils. 2. Only authorized agents which hold an "earth movement certificate" through the department of insurance are able to market residential property insurance which provides coverage for earth movement. 3. No policy of residential property insurance may be issued or delivered or initially renewed in this state by any insurer unless the named insured is offered coverage for loss or damage caused by the peril of earthquake. 4. Coverage may be provided in the policy of residential property insurance which specifically provides coverage for loss or damage caused only by the peril of earthquake by itself.

2. Only authorized agents which hold an "earth movement certificate" through the department of insurance are able to market residential property insurance which provides coverage for earth movement.

5. Under the file-and-use law, an insurer (Choose from the following options) 1. Markets a plan without submitting a rate plan. 2. Submits a rate plan to the Commissioner and immediately begins marketing the plan. 3. Waits for the Commissioner's approval on a submitted rate plan before marketing a plan. 4. Begins marketing a plan before submitting the rate plan to the Commissioner.

2. Submits a rate plan to the Commissioner and immediately begins marketing the plan.

4. Signing and dating a delivery receipt for a life insurance policy helps to establish all of the following timeframes EXCEPT (Choose from the following options) 1. The Right of Rescission. 2. The Grace Period. 3. The Incontestability Period. 4. The Free Look Period.

2. The Grace Period.

16. All of the following may recommend life insurance contracts for their prospects, clients, and proposed insureds EXCEPT (Choose from the following options) 1. Life and Disability Analyst. 2. Life agents. 3. Brokers. 4. Life solicitors.

4. Life solicitors.

28. Which of the following information would NOT be included in property insurance policies? (Choose from the following options) 1. A list of policy provisions 2. A list of coverages 3. The insured's name 4. The insured's address

4. The insured's address

11. All of the following statements are TRUE regarding the California Earthquake Authority EXCEPT (Choose from the following options) 1. The authority is authorized to transact insurance in this state as necessary to sell policies of basic residential earthquake insurance, and is permitted to sell policies for any other line of insurance coverage. 2. Authority policies can be marketed by the participating insurer that writes the underlying policy of residential property insurance. 3. The state of California has created the California Earthquake Authority, which must be administered under the authority of the Commissioner. 4. The authority is authorized to transact insurance in this state as necessary to sell policies of basic residential earthquake insurance.

1. The authority is authorized to transact insurance in this state as necessary to sell policies of basic residential earthquake insurance, and is permitted to sell policies for any other line of insurance coverage.

9. A type of policy that is used to provide a specific amount of replacement cost for a given risk after it has been destroyed is called a(n) (Choose from the following options) 1. Valued policy. 2. Pro-forma appraisal policy. 3. Equitable sum policy. 4. Specific risk policy

1. Valued policy.

20. Which of the following actions would NOT be considered a form of "adverse underwriting decisions" for a policy involving individually underwritten coverage? (Choose from the following options) 1. Failure of an agent to apply for coverage that an applicant requests 2. An insurer giving an insured a "preferred" rating due to health and lifestyle conditions 3. A declination to cover an applicant 4. Termination of existing coverage of an insured risk

2. An insurer giving an insured a "preferred" rating due to health and lifestyle conditions

7. Which of the following would qualify as an implied warranty in an insurance contract? (Choose from the following options) 1. Statements in the policy 2. An oral representation by the applicant 3. The applicant's signature 4. Contract's legal purpose

2. An oral representation by the applicant

27. Representations are written or oral statements made by the applicant which (Choose from the following options) 1. Are immaterial to the actual acceptability of the insurance contract. 2. Are considered true to the best of the applicant's knowledge. 3. Are guaranteed to be true. 4. Are found to be false after further investigation.

2. Are considered true to the best of the applicant's knowledge.

25. When would a misrepresentation on the insurance application be considered fraud? (Choose from the following options) 1. Any misrepresentation is considered fraud. 2. If it is intentional and material 3. Never; statements by the applicant are only representations. 4. When the application is incomplete

2. If it is intentional and material

17. Insurance is a contract by which one seeks to protect another from (Choose from the following options) 1. Hazards. 2. Loss. 3. Exposure. 4. Uncertainty.

2. Loss.

23. According to the California Insurance Code, any agent violating the regulations relating to misrepresentation will be charged with a (Choose from the following options) 1. Felony, a fine not to exceed $5,000, and a possible 2 year imprisonment. 2. Misdemeanor, a fine not to exceed $25,000, and/or a possible 1-year imprisonment. 3. Misdemeanor, a fine not to exceed $500, and a possible 1-year imprisonment. 4. Felony, a fine not to exceed $2,000, and a possible 2-5 year imprisonment.

2. Misdemeanor, a fine not to exceed $25,000, and/or a possible 1-year imprisonment.

12. Which of the following does NOT need to be identified in an insurance policy? (Choose from the following options) 1. The first named insured 2. The insurer's financial rating 3. The stated periodic premium 4. A statement of insurable interest

2. The insurer's financial rating

29. HIPAA applies to groups of (Choose from the following options) 1. At least 100. 2. More than 2, fewer than 50. 3. 2 or more. 4. At least 10.

3. 2 or more.

15. The legal definition of "person" would NOT include which of the following? (Choose from the following options) 1. A business entity 2. A corporation 3. A family 4. An individual human being

3. A family

1. A person caught violating provisions regarding misrepresentation could be subject to (Choose from the following options) 1. A written warning from the Commissioner. 2. A permanent suspension of license. 3. A fine up to $25,000. 4. Imprisonment in a county jail for up to 3 years.

3. A fine up to $25,000.

8. If an agent wants to handle workers compensation cases, what type of license must he/she obtain? (Choose from the following options) 1. Industrial 2. Casualty 3. Accident and Health 4. Workers Compensation

3. Accident and Health

26. All of the following are fraud prevention systems and agencies EXCEPT (Choose from the following options) 1. The Arson Information Reporting System. 2. The Insurance Claims Analysis Bureau. 3. The Medical Information Bureau. 4. The Fraud Division of the Department of Insurance.

3. The Medical Information Bureau.

6. After an employee was laid off, he was informed of the right to convert the group coverage to an individual policy within 31 days. Twenty days into the conversion period, the employee suffered a heart attack and died before he could obtain individual coverage. What is the group policy insurer required to do? (Choose from the following options) 1. The insurer only has to pay the death benefit if ordered by the courts. 2. The insurer is only obligated to refund unused premiums. 3. The insurer must pay the death benefit under the former group coverage. 4. The insurer has no obligation to pay the claim.

3. The insurer must pay the death benefit under the former group coverage.

24. All of the following are true regarding representations EXCEPT (Choose from the following options) 1. They may be made before or at the time of policy issue. 2. They may be oral or written. 3. They may be altered or withdrawn after the issuance of the policy. 4. They are statements believed to be true.

3. They may be altered or withdrawn after the issuance of the policy.

21. Which type of insurance guarantees or indemnifies owners of real or personal property or the holders of liens or other interested parties against loss or damage suffered to said property? (Choose from the following options) 1. Surety insurance 2. Contract insurance 3. Title insurance 4. Commercial Property insurance

3. Title insurance

19. Which of the following would be among the prohibited provisions for long-term care insurance policies delivered to the insured in California? (Choose from the following options) 1. Canceling or failing to renew the policy due to changes in a person's health. 2. Having the premium increased in the event of a divorce. 3. Limiting benefits to skilled nursing facilities only. 4. All of these

4. All of these

30. Which of the following employers may purchase Workers Compensation coverage through the California State Compensation Insurance Fund? (Choose from the following options) 1. Monica is a construction subcontractor. 2. Melissa is a self-employed direct marketer. 3. Martin hires only casual employees. 4. All of these

4. All of these

13. For the purpose of a contract, which of the following could be considered a "person"? (Choose from the following options) 1. An association 2. A business trust 3. A limited liability corporation 4. Any of these would qualify as a person

4. Any of these would qualify as a person

14. An insured noticed that his policy stated that he "shall" keep all flammable liquids at least ten feet from an ignition source and "may" consider storing flammable liquids in another location. Based on the policy language, where must the insured keep flammable liquids in relation to ignition sources? (Choose from the following options) 1. In another location entirely 2. Anywhere within 10 feet 3. There is no specified area. 4. At least 10 feet away

4. At least 10 feet away

18. Which of the following best describes an insurance company that has been formed under the laws of this state? (Choose from the following options) 1. Sovereign 2. Alien 3. Foreign 4. Domestic

4. Domestic

2. The key factor of representation that allows the injured party to rescind the contract is (Choose from the following options) 1. If the representation is false in an immaterial point. 2. Representations are statement's believed to be true and hold no legal consequences. 3. The promise or assurance of the representation. 4. If the representation is false in a material point.

4. If the representation is false in a material point.