Iowa Laws, Rules, and Regulation Pertinent to Life Only

What is controlled business?

Insurance on the producer's own life or property, or the lives or property of the producer's family or business associates

Can insurers advertise the existence of the guaranty association during solicitation and sale of insurance policies?

No

Who must be notified of a producer's change of address?

The Department Insurance -Commissioner/ Director/ Superintendent

To whom may a certificate of authority be issued?

To an insurer authorized to transact business in this state

When is controlled business legal?

When the commissions from controlled business do not exceed the aggregate commissions on all the other business (specific limits may vary from state to state)

When can the Commissioner or Director examine insurers?

Whenever seemed necessary, but at least once every few years

What are the most common penalties for violations of insurance statutes?

a cease and desist order, a fine, and license suspension or revocation

Who is an insurance agent?

a person authorized to sell, solicit, and negotiate contracts

The commissioner is conducting an examination of a domestic insurance company. Who is responsible for the cost of the examination? a. the company being examined b. the entity that requested exam c. the department of insurance d. the insurance guaranty association

a. the company being examined

Who must be a member of insurance guaranty associations?

all insurers authorized to write insurance within a state

To be eligible to purchase a group insurance policy, a nonprofit industrial association must be incorporated for how long? a. 5 years b. 10 years c. 1 year d. 3 years

b. 10 years

In Iowa, a group insurance policy issued to trustees of a fund established by two or more employees must cover how many eligible, insurable employees at the time of the issue? a. 50 b. 100 c. 1,000 d. 10

b. 100

Conversion privilege in group life insurance policies must be exercised within what period of time after termination of group coverage? a. 10 days b. 31 days c. 90 days d. 6 months

b. 31 days

If a person is suspected of violating insurance laws, what can the commissioner issue that would order the person to stop violating the violations? a. limitation of power statement b. cease and desist order c. stop-action order d. suspension of authority

b. cease and desist order

Which of the following is true about credit life insurance? a. debtor is the policy beneficiary b. creditor is the policyowner c. debtor is the annuitant d. creditor is the insured

b. creditor is the policyowner

All of the following statements are correct regarding credit life insurance EXCEPT

benefits are paid to borrowers beneficiary

What type of licensee represents the insured?

broker

Circulating deceptive sales material to the public is what type of unfair trade practice? a. coercion b. misrepresentation c. false advertising d. defamation

c. false advertising

Which of the following terms means a result of calculation based on the average number of months the insured is projected to live due to medical history and mortality factors? a. risk exposure b. morbidity c. life expectancy d. mortality rate

c. life expectancy

During a sales presentation a producer intentionally makes a statement which may mislead the insurance applicant. This describes a. twisting b. coercion c. misrepresentation d. defamation

c. misrepresentation

After a hearing, civil penalties imposed by the commissioner for each unfair method of competition may NOT exceed a. $1,500 b. $5,000 c. $500 d. $1,000

d. $1,000

Within how many months must a person be expected to die from a sickness in order to be classified as terminally ill? a. 3 b. 6 c. 12 d. 24

d. 24

The Commissioner may examine an insurer as often as deemed necessary, but domestic insurers must be examined once every a. 2 years b. 3 years c. 4 years d. 5 years

d. 5 years

Violation of life insurance replacement rules may result in which of the following penalties for an insurance producer and/or insured? a. monetary fine b. suspension or revocation of license c. forfeiture of commissions d. any or all of the above

d. any of the above

A banker is ready to close on a customer's loan. The bank is prepared to offer the loan but only if the customer purchases a life insurance policy from the bank in the amount of the loan. This is an example of a. loading b. defamation c. twisting d. coercion

d. coercion

What entity was created to protect insureds against insurer insolvency? a. the NAIC b. the Insurer insolvency protection agency c. the iowa insurance division d. the iowa life and health guaranty association

d. the iowa life and health guaranty association

In the agent/insurer relationship, who is considered the principal?

insurer

Which of the following is TRUE regarding the insurance amount in a credit life policy?

the creditor can only insure the debtor for the amount owed

Who is responsible for the contents of insurance advertisements?

the insurance company

Who is responsible for the costs associated with the examination of insurers?

the insurer being examined

How must a replacing producer to an applicant wishing to replace existing life insurance?

the producer must provide the applicant with a notice regarding replacement

Two individuals who are in the same risk and age class are charged different rates for their insurance policies due to an insignificant factor. What is this called?

discrimination

Insurers are classified according to domicile. What are the three types of insurers?

domestic, foreign, and alien

For what reason can a temporary license be issued?

for continuation of business in case the licensed producer dies or become disabled

In general, who can be excluded from producer licensing and examination requirements?

insurance company officers, directors, or any other employees who do not transact insurance and who do not receive commissions for their services

Which of the following best describes a misrepresentation?

issuing sales material with exaggerated statements about policy benefits

On its advertisements, a company claims that is has funds in its possession that are, in fact, not available for the payment of losses or claims. What is the company guilty of?

misrepresentation

What illegal act does a producer commit when the producer represents a policy in a more favorable light than the policy really is?

misrepresentation

During replacement of all life insurance, a replacing insurer must do which of the following?

obtain a list of all life insurance policies that will be replaced

Who may share in the commission from the sale of life insurance policy?

only producers properly licensed for the type of insurance transaction

Who can usually be granted a temporary license?

producer's spouse or designee in case the licensed producer dies or becomes disabled

All of the following are true regarding rebates EXCEPT

rebates are allowed if it's in the best interest of the client

An agent offers a client free tickets to a sporting event in exchange for the purchase of an insurance policy. What is the agent guilty of?

rebating

If the Commissioner/Superintendent finds a licensee engaging in an unfair method of competition or an unfair practice, what order will be issued?

cease and desist order

Which of the following is NOT a producer's responsibility when making recommendations for an annuity exchange?

always comply with the NASD conduct rules

Who is considered a nonresident agent?

an agent who resides and is licensed in another state, but who is authorized to transact insurance in this state

In Iowa, group insurance may be written to provide insurance coverage for

any group that conforms to one of the descriptions of eligible groups as established by the insurance division that receives special approval from the commissioner

If an insurer holds a Certificate of Authority, it is known as what type of insurer

authorized or admitted

If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered what type of insurer?

authorized or admitted

Which of the following entities is not an insurer but an organization formed to provide insurance benefits for members of an affiliated lodge or religious organization? a. reciprocal association b. fraternal benefit society c. mutual company d. stock company

b. fraternal benefit society

Which of the following means having an illness or sickness that can be reasonably be expected to result in death in 24 months or less? a. malignant illness b. terminal illness c. chronic illness d. fatal illness

b. terminal illness

Which of the following terms is used to describe a person, other than the viator, that enters or effectuates a viatical settlement contract? a. viatical settlement effectuator b. viatical settlement provider c. viatical settlement purchaser d. viatical settlement broker

b. viatical settlement provider

Which of the following documents must be provided to the policyowner or applicant during policy replacement? a. buyers guide or policy summary b. policy illustrations c. notice regarding replacement d. disclosure authorization form

c. notice regarding replacement

What documents is required for an insurance company to transact insurance?

certification of authority

What are producers required to do in order to renew their license?

complete continuing education hours and pay a renewal fee

An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of? a. unfair claims b. twisting c. defamation d. false advertising

d. false advertising

Which of the following insurance providers must be nonprofit and sell insurance only to its members? a. service b. mutual c. reciprocal d. fraternal

d. fraternal

An agent offers his client free tickets to a sporting event in exchange for the purchase policy. The agent is guilty of a. coercion b. twisting c. controlled business d. rebating

d. rebating

A producer in another state wants to become a producer in Iowa. The other state gives the same privileges to Iowa producers wanting to be licensed in that state as it does its own producers. Iowa therefore extends the privileges of its producers to the prospective producer of the other state. What is that called? a. fair exchange b. equanimity c. equal privilege d. reciprocity

d. reciprocity

If a producer makes maliciously critical statements about another insurer, what is this illegal practice called?

defamation

Who owns stock companies?

stockholders

What type of licensee represents the insurance company?

the agent

What is the purpose of a cease and desist order?

to prevent a producer or insurer from further violating laws for transacting insurance

What is the purpose of insurance guaranty associations?

to protect policyowners, insureds and beneficiaries frim financial losses caused by insolvent insurers

What type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?

twisting