Insurance license chapter 5

To protect the general public

What is the main purpose of requiring licenses for persons who transact insurance?

The policy will go into effect when the first premium is paid and the policy has been delivered

When does an insurance policy go in effect?

Officers, directors, or employees of an insurer or of an insurance producer who do not receive commission on policies written or sold, and whose duties are of strictly clerical, administrative, and managerial nature are exempt from licensing requirements

Who is exempt from the licensing requirement in this state?

12 months

Within what maximum time period can a producer reinstate a lapsed license without having to retake a written examination?

Rebating

An agent who offers a cash reward to a prospect for buying a policy is guilty of?

Owned by the stockholders who provide the capital necessary to establish and operate the insurance company and who share in any profits or losses

Stock companies

180 days

A temporary license is normally valid for how many days?

Insurer is an insurance company that is incorporated outside the US

Alien

Suggesting negotiations in settlement the claims

All of the following are unfair claims settlement practices except?

Defamation

An agent who deliberately makes a malicious statement about another insurance company is guilty of an illegal trade practice called?

The appearance or the assumption of authority based on the actions, words, or deeds of the principal of circumstances the principal created

Apparent authority

Insurance coverage that provides protection against the risk resulting from the cost of burial expenses

Burial

Any coverage written on a producer's own life, health or property, and/or that of the producer's immediate family or business associates

Controlled business

Insurer is an insurance company that is incorporated in this state

Domestic

The authority a principal intends to grant to an agent by means of the agent's contract

Express authority

Coverage for the direct and consequential loss or damage to property of every kind, as well as coverage again liability

Fire and Casualty

Insurer is an insurance company that is incorporated in another state or territorial possession

Foreign

An organization formed to provide insurance benefits for members of an affiliated lodge, religious organization, or fraternal organization with a representative form of government

Fraternal benefit society

Coverage for the mutual benefit of fraternal members and their beneficiaries that pays benefits in case of death, disability, and funeral expenses

Fraternals

A contract through which a person may indemnify the warranty holder for a predetermined fee, and for a specified time period, against the cost of repair or replacement

Home warranty

The Commissioner is elected at the general election for a 4-year term

How is the Commissioner of Insurance selected for the office, and how long is the term?

Within 30 days of the change

How long does a producer have to notify the Commissioner about a change of name or address?

30 days

If an insurer does not renew an agent's appointment, within how many days must the insurer notify the Commissioner?

Stop committing a particular violation

If the Commissioner issues a cease and desist order, that means the insurer must?

Agent's retirement

In this state, a temporary license may be issued for all the following reasons except?

30 days

Insurance producers must report their change of business or residence address within?

•solicitations •negotiations •sale(effectuation of a contract of insurance) •advising and individual concerning coverage or claims

Insurance transaction includes any of the following:

Coverage on human lives, and coverage for sickness, bodily injury or accidental death, and disability

Life

Industrial fire, industrial life and accident and Health, trip accident and baggage, surety, title, crop, travel, car rental and credit

Limited lines

Owned by the policyowners and issue participating policies

Mutual companies

•rebates of premiums payable on the policy •special favors or services •advantages in the dividends or other benefits •stocks, bonds, securities, and their dividends or profits

Rebates may include

Any transaction in which new life insurance or new annuity is purchased

Replacement

A misrepresentation, or incomplete or fraudulent comparison of insurance policies that persuades an insured/owner, to his or her detriment, to cancel, lapse, switch policies, or take out a policy with another insurer

Twisting

Attempting to obtain a license through fraud or misrepresentation, violating any insurance law or regulations, or failure to pay state income taxes are some of the examples

Upon what grounds can the Commissioner revoke or suspend a producer license?

License suspension, revocation or denial, monetary fines, and/or imprisonment

What are the applicable penalties for violating the Insurance Code of this state?

Regulate the affairs of the Insurance Department, license producers and insurers, prescribe forms and procedures, aid in interpretation of laws

What are the broad powers and duties of the Commissioner?

Licensees must complete 24 hours of continuing education, including 3 hours in ethics, for a license period of more than 18 months. Producers whose license period is less than 18 months only need 12 hours of CE, without ethics requirements

What are the continuing education requirements for producers in this state?

1. Give applicant a Notice Regarding Replacement 2. Obtain a list of all existing life insurance policies to be replaced 3. Give the applicant the original or copy of written or printed communications used for presentation to the applicant 4. Submit to the replacing insurance company, with the application, a copy of the replacement notice

What are the four steps a producer must follow when replacing an existing policy?

Express, implied, and apparent

What are the three types of agent authority?

Rebating includes premiums payable on the policy, special favors or services, advantages in dividends or benefits, stocks, bonds, securities, and their profits (and similar inducements)

What constitutes rebating?

Basic information about life insurance policies and comparison of policy cost

What information does a Buyer's Guide provide?

Solicitation, negotiating prior to execution of a contract, execution of a contract, and the transaction of any matters that arise as a result of the contract, as well as the actual process of insuring

What is included under the term insurance transaction?

An admitted or authorized insurer is qualified and received a Certificate of Authority from the DOI to transact insurance in the state. An non-admitted or non-authorized insurer is an insurance company that has not applied for, or has been denied a Certificate or Authority and may not transact insurance

What is the difference between an authorized/admitted and unauthorized/nonadmitted insurer?

Member insurers

Which of the following provides funding for the Mississippi Life and Health Guaranty Association?

A salaried employee who solicits insurance

Which of the following would be required to be licensed as an insurance producer?

A producer who handles insurer funds in a trust capacity

Who is a fiduciary?

Controlled business is any coverage written on a producer's own life, health or property, and/or that of the producer's immediate family or business associates

What is controlled business?

The location of incorporation: a domestic insurer is incorporated in this state; a foreign insurer is incorporated in another state; and an alien insurer is incorporated outside the US

What is the difference between domestic, foreign, and alien insurance companies?

A temporary license may be issued for the continuation of business in the event of the producer's death, disability, or military service, and it may remain in effect for 180 days

What is the main purpose of a temporary license, and how long can it be in effect?

To protect policyowners, insureds, and beneficiaries from financial losses caused by insurers who become insolvent or otherwise unable to perform their contractual obligations

What is the purpose of the Life and Health Insurance Guaranty Association?

An applicant must be at least 18 years old, file an application with the Department and the required fees, complete pre-licensing education and pass an examination.

What qualifications must a candidate for a producer license meet in this state?

Amend rules and regulations

Which of the following is a duty of the Commissioner of insurance in this state?

Authorized

Which of the following is not an example of a company's location of incorporation?

An agent who resides in another state, but is licensed to write insurance in this state

Who is considered a nonresident agent?