Life Insurance - Ch. 7

What is the maximum civil penalty for violating Insurance Information and Privacy Protection laws? - $500 - $1,000 - $10,000 - $50,000

$10,000 in addition to a cease and desist order, the Director may issue a civil penalty between $500 and $10,000 for each violation

What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act? - $100 per violation - revocation of license - $2500 - $1000

$2500

Which of the following shows the types of insurance an insurer is permitted to transact? - Director's Commendation - Line Application - Insurance License - Certificate of Authority

Certificate of Authority

An insurance policy or countersignature endorsement must be signed by any of the following EXCEPT - bail bond agent - managing general agent - licensed insurance producer - director of insurance

director of insurance

The following are all causes for the Insurance director so suspend or impose conditions up on the continuance of a producer's license EXCEPT - conviction of a felony involving moral turpitude - evidence that the producer is a poor personal credit risk - misappropriation or illegal withholding of the policyholder's money - obtaining a license through fraud

evidence that the producer is a poor personal credit risk

FBI

federal bureau of investigation - a government agency that serves as a criminal investigative unit and an internal intelligence agency

Which of the following best describes a misrepresentation? - discriminating among individuals of the same insuring class - issuing sales material with exaggerated statements about policy benefits - making a deceptive or untrue statement about a person engaged in the insurance business - making a maliciously critical statement that is intended to injure another person

issuing sales material with exaggerated statements about policy benefits

Procure

obtain

Commission

payment to the agent by the insurance company for placing insurance, usually a percentage or the policy premium

Cease and desist

to stop or discontinue

Insolvent

unable to meet financial obligations

The Director may require a producer to submit fingerprints in all of the following situations EXCEPT - upon license renewal - in the process of a merger - upon insurer insolvency - upon license suspension

upon insurer insolvency

A producer's insurance license was due for renewal but she failed to pay the required license renewal fee. Seven months later, the producer decided to pay her renewal fee. How much can she expect to pay in addition to the renewal fee? - $0 - $100 - $200 - $350

$100 - within a year after expiration, qualified producers may still renew the license if they pay a renewal fee and a late fee of $100

If a producer changes his or her residential address, the Director must be notified of the change within how many days? - 30 - 60 - 90 - the Director only needs to be notified if the address of the producer's business, not residence, changes

30

How many days after an initial pretrial hearing date, does an insurance producer have to report any criminal prosecution to the Director? - 10 - 15 - 45 - 30

30 - the report must include a copy of the initial complaint filed, the order resulting from the hearing and all other relevant legal documents

Which of the following statements does NOT accurately describe an insurance broker? - brokers must have a written agreement with an insured when they receive any fees or compensation for services - a broker does not represent individual clients - a broker is not a direct representative of an insurer - a broker cannot bind coverage

a broker does not represent individual clients - unlike a producer, a broker represents his/her clients (policyholders) and is not a direct representative of any insurance company - brokers must have a written agreement with an insured when they receive fees or compensation for services - brokers cannot bind coverage

Injunction

a court issued order to stop committing an act or violation

Any person who knowingly attempts to obtain money, goods, or any other thing of value with the intent to cheat and defraud is guilty of - a misdemeanor - nothing - a felony - twisting

a felony

Statute

a formal written law enacted by legislature; insurance statues can be found in the state Insurance Code

Home state

a state in which an insurer is organized and has its main place of business

Which of the following would NOT be accepted as a document showing that an applicant for a license is in the United States legally? - a tribal certificate of Indian blood - a valid credit card with a major United States credit company - a United States certificate of citizenship - a United States passport

a valid credit card with a major United States credit company

Inducement

an offer that attempts to influence the other party

In Arizona, the Director of Insurance is - appointed by the insurance and industry committee of the state legislature - elected by the state legislature's banking and insurance committee - elected by Arizona voters - appointed by the Governor

appointed by the Governor - to serve a 6 year term

In Arizona, the Director of Insurance serves - at the pleasure of the governor - as long as elected by the general public - a term of 4 years - a term of 8 years

at the pleasure of the governor

Property and casualty producers can usually do something for their clients that life and health producers cannot provide. What is this service? - all producers have the same powers - bind coverage - solicit applications - add riders

bind coverage

In life insurance, producers are permitted to share or split commissions, providing that - the insurance department knows of the arrangement - there is a written agreement between the producers - both are properly licensed for the line of insurance - the insured knows and agrees to the arrangement

both are properly licensed for the line of insurance

Which of the following would NOT be considered an exception to the National Do Not Call List? - calls based from outside of the United States - calls for which the consumer has given prior written permission - calls which are not commercial or do not include unsolicited advertisements - calls by or on behalf of tax-exempt nonprofit organizations

calls based from outside of the United States

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 an insurance policy from the bank in the amount of the loan. This is an example of - coercion - loading - defamation - twisting

coercion

Which of the following terms describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance? - slandering - defamation - undercutting - twisting

defamation

Transacting insurance could include all of the following EXCEPT - receiving an application for insurance - effectuating a contract - designing insurance advertisements - negotiating insurance

designing insurance advertisements

Who requires that a prospective producer take and pass a written examination on the kinds of insurance business specified in the application? - insurance company - state legislature - no exam is needed - director

director

Coercion

forceful act of threat aimed to influence a person to act against his or her will

Which of the following is an example of a "gene product"? - stem cell treatments - bovine growth hormones - gene fragments - tests of an individuals DNA

gene fragments

Which of the following is designed to protect security and confidentiality of nonpublic information and the security of the information system? - information security program - investigative consumer report - fair credit reporting act - cybersecurity event

information security program - administrative, technical, and physical safeguards that a licensee uses to access, collect, distribute, process, protect, store, use, transmit, dispose of, or otherwise handle nonpublic information

When is an insurer NOT required to state the coverage under which a claim payment is made? - insurers are always required to disclose the coverage under which a claim is paid - when the claim is paid to a beneficiary - when paying an inland marine claim - insurers are never required to state the coverage under which a payment is made

insurers are always required to disclose the coverage under which a claim is paid

Every office that transacts surplus lines insurance must have on staff a person who - is licensed as a surplus lines broker - serves as a liaison between the office and the Director - lobbies for favorable tax treatment by the state - updates all terms of insurance according to state law

is licensed as a surplus lines broker - in addition to being either a property or casualty insurance producer or a managing general agent for property or casualty insurance

Deficiency

lack or incompleteness

Which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices? - exaggerating the benefits provided in the policy - stating that the competitors will arbitrarily increase their premiums each year - making comparisons between different policies - stating that the insurance policy is a share of stock

making comparisons between different policies

Which of the following is a qualification for an adjuster's license? - must not have committed any act that is grounds for denial - must be at least 18 years old - must have a college degree - must be a resident of the county in which the adjuster is conducting business

must be at least 18 years old

Which of the following is a qualification for a producer's license? - must have a college degree - must be a resident of the country in which the producer is conducting business - must be free of any type of criminal conviction - must be at least 18 years old

must be at least 18 years old - before being licensed, a producer must be at least 18 years old, file an application with Director, pay appropriate license fee, submitted with the application and pass each examination which is required for the license being sought

Exempt

not subject to an obligation

When a new insurance company wishes to transact business in the state, it must do all of the following EXCEPT - obtain approval from the state insurance department or division - set certain capital and surplus requirements - obtain approval of each of its corporate officers and executives - apply for a license or certificate of authority

obtain approval of each of its corporate officers and executives

When a new insurance company wishes to transact business in the state, it must do all of the following EXCEPT - obtain approval from the state insurance department or division - set certain capital and surplus requirements - obtain approval of each of its corporate officers and executives - apply for a license or certificate or authority

obtain approval of each of its corporate officers and executives

The Gramm-Leach-Bliley Act was passed to - protect private customer information filed with a financial institution - define insurance as interstate commerce - allow consumers access to credit and private consumer reports - allow insurance companies access to medical information for underwriting purposes

protect private customer information filed with a financial institution

All of the following are true regarding rebates EXCEPT - rebates are allowed if it is in the best interest of the client - rebates are only allowed if specifically stated in the policy - rebating can be anything of monetary value given as an inducement to purchase insurance - dividends are not considered to be rebates

rebates are allowed if it is in the best interest of the client

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

rebating - when producers give or promise anything of value that is not specified in the policy, they are guilty of rebating

A producer in New Mexico wants to become a producer in Arizona. The Department will waive certain examination requirements, provided that New Mexico would waive these same requirements if an Arizona producer sought licensure in New Mexico. What term is used to describe this phenomenon? - fair exchange - equanimity - reciprocity - equality

reciprocity - when the state in which the person resides accords the same privilege to residents of Arizona

If after an examination and a hearing the Director determines that an insurer has failed to comply with the Insurance code statutes regarding extra fees or applying service charges, the Director will order the insurer to - refund the fee to the customer - be put on probation - cease its operations for a year - lower prices for future services to the customer

refund the fee to the customer - refund all or part of the fee/service charge & may impose civil penalties

The Federal Fair Credit Reporting Act - regulates consumer reports - protects customer privacy - regulates telemarketing - prevents money laundering

regulates consumer reports

If a producer waits more than 1 year to renew a license after it has expired, what is the producer required to do to be licensed again? - become appointed by an insurer - retake a licensing exam - pay a late fee of $100 - submit a license renewal application to the Director

retake a licensing exam

All of the following are considered business entities EXCEPT - limited liability partnerships - limited liability companies - corporations - sole proprietorships

sole proprietorships - "business entity" could apply to a corporation, association, or other legal entity permitted to conduct business - individuals and sole proprietorships are NOT considered business entities

Which of the following qualifications for selling insurance in the state of Arizona is NOT correct? - the applicant must have filed the application and passed the required examination - the applicant must be age 18 or older - the applicant must be a resident of the state of Arizona at the date of application for licensing and not hold a resident license in another state - the applicant must have two letters of recommendation attesting to trustworthiness, reliability, and good reputation

the applicant must have two letters of recommendation attesting to trustworthiness, reliability, and good reputation

Director

the head of the state Department of Insurance

Which of the following pays for the examination of an insurer's service fees to determine compliance with the State Insurance Code - the Director - the policyowners - the insurer - the Guaranty Association

the insurer - the insurer or insurance producer must pay the costs of the examination

If an insurance policy doe NOT have the proper countersignature - the insurer must issue a new policy - the insurer must receive the Director's approval on the policy - the policy will still be considered valid - the policy will have a 60 day waiting period before going into effect

the policy will still be considered valid

The producer or broker must keep at the place of business the usual and customary records pertaining to insurance transactions for at least - three years - five years - one year - two years

three years - state insurance laws require producers and brokers to maintain such records for AT LEAST 3 years

What is the purpose of a certificate of authority? - to show the lines of insurance an insurer is authorized to transact - to give the Director ultimate control over and insurer's actions - to show that an insurer is a member of the Guaranty Association - to allow the insurer specific liberties with regard to insurance code

to show the lines of insurance an insurer is authorized to transact

Although most domestic insurers must be examined at least once every 5 years, how often may the Director examine an insurer? - once every 2 years - once every 3 years - whenever necessary - once a year

whenever necessary