12 - California Laws and Ethics Pertinent to Insurance
According to the California Insurance Code, what is "insurance"?
A contract
What is an insurance solicitor authorized to do?
Help an agent or broker sell insurance
Which of the following does NOT have to be included on life insurance policy illustrations?
"Statement that all values and benefits are guaranteed". Not all benefits and values are guaranteed in life insurance policies. Some have non-guaranteed values which must be described in the illustration.
According to the California Insurance Code, what is the maximum penalty per violation for anyone who unwillfully commits an unfair method of competition?
$5,000
Any changes in background information that occur after a producer application has been submitted or a license has been issued MUST be reported to the Insurance Commissioner within
30 Days
The free-look period for life insurance policyowners age 60 or older is
30 Days!
How long must life agents keep their transaction records?
5 years
What is an "insurance broker" according to California Insurance Code?
A person compensated for transacting insurance on behalf of another person with an insurer
What is the insurance term the State of California uses for an insurer that is eligible to transact business in this state?
Admitted
Which of the following is NOT considered to be an unfair claims settlement practice?
Advising a claimant to hire an attorney
According to the California Insurance Code, which of the following is NOT an example of an insurable event?
An insured suffers a financial loss in the state lottery
Life insurance surplus must be distributed to policyowners at what frequency?
Annually
Before an insurer is allowed to test an individual for HIV, what must be completed?
Consent form
According to the California code governing claim settlement practices, which of the following is NOT considered to be an act of unfair discrimination?
Denial of a claim based on reckless behavior
The California Insurance Code allows an individual how many days to cancel a life policy for a full-refund?
Every policy of individual life insurance shall have a notice stating that after receipt of the policy by the owner, the policy may be returned by the owner for cancellation by delivering it or mailing it to the insurer or to the agent through whom it was purchased. This period shall not be less than 10 days nor more than 30 days.
When handling premiums for an insured, an agent is acting in which capacity?
Fiduciary
The California Insurance Code has authorized standards for names used by life insurance agents. Which of the following, if any, are automatically acceptable for Lance Manyon, a holder of the CLU designation?
If the word "Insurance" is included in the name, the California Department of Insurance then checks to make sure one of the six definitive words ("Agency," "Services," "Marketing," "Sales", "Center" or "Solutions") is also included in the name. In this instance, Lance Manyon Insurance Services would be acceptable.
What prevents a life insurance policy from being rescinded by the insurer after being in force for two years?
Incontestability clause
Who does a life settlement broker represent?
Individual wanting to sell their life policy to a third party
According to the California Insurance Code, who is responsible for submitting a life agent's appointment?
Insurer
Which of the following does the California Insurance Code NOT require an insurance policy to specify?
Insurer's financial rating
Which of the following is NOT protected under the California Life and Health Guarantee Association?
Insurers
Which of the following is NOT a primary objective of insurance regulation?
Interpret policy provisions
The California Insurance Code requires that an insurer must have enough assets to cover its liabilities and for reinsurance of all outstanding risks. To remain solvent, it must also possess additional assets equal to what amount?
Its paid-in capital
What type of license is required for an individual who charges a fee to review an insured's existing life insurance policy?
Life and disability analyst
According to the California Insurance Code, what term is used to describe a fact so important it could affect the policy premium?
Materiality
Which word implies permissiveness according to the California Insurance Code?
May
Which of the following does the California Department of Insurance (CDI) have NO jurisdiction over?
Medicare
According to section 1729.2 of the California Insurance Code, which of these does NOT qualify as "background information"?
Misdemeanor charges filed, not resulting in a conviction
Which of the following acts is NOT a Federal offense committed by an insurance agent?
Misrepresentation on an insurance application
What is required after a life agent sells an insurance policy to an applicant without being appointed by the insurer?
Notice of appointment must be submitted to the Commissioner
What does the term "illustration" mean when used in the phrase "life insurance policy illustration", according to the California Insurance Code?
Presentation of policy features that includes non-guaranteed elements
Which type of jurisdiction requires an insurer to have its rates accepted by the Insurance Department prior to using them?
Prior approval
Which of the following is NOT considered to be an act of insurance solicitation?
Publishing a magazine where one of the advertisers is an insurer
Jim is applying to become an insurance agent and has a past misdemeanor conviction that was later expunged due to California Penal Code 1203.4. Which of the following statements is correct?
Pursuant to California Penal Code Section 1203.4, you are required to report a conviction that was later expunged.
When intentional concealment is involved, what course of action is the injured party entitled to?
Rescission of the contract
The California Life and Health Insurance Guarantee Association covers all of these types of policies, EXCEPT
Self-funded plans
Why is a life insurance policy's delivery date important?
The free-look period begins on the policy delivery date
All of these are reasons the Commissioner may disapprove a licensee's request to use a fictitious name EXCEPT
The name is the licensee's actual name
Under the California Insurance Code, a licensee's license number must be printed at what size on all price quotes, business cards, and printed material?
The same size print as the licensee's phone number, fax number or address
a life agent who has misappropriated fiduciary funds to his own use. What is Pete guilty of?
Theft
What does the term "indemnity" mean as it pertains to insurance?
To make whole
Insurance agents and brokers must make their insurance records available to the Commissioner
at all times
A person who asserts a right of recovery under an insurance policy is called
claimant
An agent's attempt to stop the replacement of an existing life insurance policy is known as
conservation
Failure to report background changes within 30 days as required under section 1729.2 of the California insurance code could subject a license or applicant to
could subject a licensee or applicant to formal disciplinary action, including a fine, suspension, denial, restriction, or revocation of the license.
In California, an insurer organized under the state laws of Oregon is called a(n)
foreign insurer
An individual who transacts life, disability, or life and accident and health insurance on behalf of an insurer is called a(n):
life agent
A representation may be altered or withdrawn
only before the insurance is in effect
Anyone employed in California to assist an insurance agent in transacting insurance is called an insurance
solicitor
An agent has advertised that the insurer to which the agent is appointed with is a member of the Insurance Guarantee Association. This agent has committed a(n)
unfair method of competition
Paul has an existing annuity and is sold a new one, in which the new policy holds no greater financial benefit to him than the existing contract. This is considered a(n)
unnecessary replacement
The California Insurance Code defines "policy" as a(n)
written contract