Chapter 10 - Colorado Laws and Rules Pertinent to Insurance

A producer that only sells insurance to family members is said to be engaging in family business controlled business domestic business personal business

controlled business

A producer must remit premiums to the insurer within ___ days after receipt. 10 15 30 45

45

A producer who violates a cease and desist order may, after a hearing, be fined up to 250 500 750 1000

500 (individual violation)

How does the commissioner attain this position? elected by the NAIC elected by CO residents appointed by governor appointed by state senate

appointed by governor

When may the Commissioner conduct an examination if an insurance policy? max once per year mac every 3 yrs max every 5 years as often as deemed necessary

as often as deemed necessary

A producer license may be suspended or revoked if the producer is found to be engaging in: - misrepresentation - converting a term life policy to a whole life policy - selling with a nonresident license - replacement

- misrepresentation

As a condition to be approved for a loan, a creditor may require the borrower to... - obtain an insurance policy through an insurer of the borrower's preference - obtain an insurance policy through an insurer of lender's preference - obtain an insurance policy through the lender - obtain an insurance policy for more than the loan amount

- obtain an insurance policy through an insurer of the borrower's preference

USA Patriot Act was signed in to a law as a response to The McCarran-Ferguson Act 1945 The Fair Credit Reporting Acts of 1970 9/11 terrorist attacks 1945 end of WWII Act

9/11 terrorist attacks

In Colorado, what is required to be covered in an individual and group medical expense policies? epilepsy diabetes accidental death in bitro fertilization

DIABETES

paying insurance premiums on a more frequent basis will cause the policy to have ... lower premiums higher premiums average premiums graded premiums

higher premiums

Upon request, when must the Colorado Supplement to the Summary of Benefits and Coverage Form be provided within 7 business days within 10 business days within 15 business days within 30 business days

within 7 business days

Which of the following is an example of defamation? - a pamphlet listing a competitor's financial rating - a brochure including an untrue statement regarding a competitor's ability to pay claims - a verbal statement of a competitor's complaint ratio - a truthful estimate of the dividends

- a brochure including an untrue statement regarding a competitor's ability to pay claims

An insurer cannot deny a claim unless... - the Commissioner gives a written approval - it exceeds a specific dollar amount - there is a reasonable explanation of the claim - the policy has exceeded its contestable period

- there is a reasonable explanation of the claim

A company that has not been authorized to operate in Colorado is known as: - a prohibited entity - a non admitted insurer - an alien company - an undesirable carrier

- a non admitted insurer

According to the Colorado Fraud Statute, all of the following must contain a warning against insurance fraud except: - applications - policies - certificates of authority - claim forms

- certificates of authority

A fiduciary responsibility is defined as: - the responsibility the producer has to the appointing insurer - the responsibility of the insured to pay premiums in a timely fashion - a relationship of special trust and confidence when a person is entrusted with another's funds - the relationship between the broker and the insurer whose products are sold

- a relationship of special trust and confidence when a person is entrusted with another's funds

If a producer is found to be writing primarily controlled business, - the producer will be forced to return all commissions to the insurer - the commissioner will have the producer imprisoned - the commissioner will not renew the license - the producer must assign a portion of the business to another producer

- the commissioner will not renew the license

Renewing a producer's license requires __ hours of continued education every 2 years. 12 18 24 36

24

An insurer that terminates a producer's appointment must inform the Commissioner within how many days? 15 30 45 55

30

Which of the following documents are NOT required to mention to the Colorado fraud Statute? - policies - certificates of authority - claim forms - applications

- certificates of authority

From what point must the insurer pay interest on the proceeds of a death claim? - date insurer is notified of the death claim - date claim is received by insurer - date is postmarked - date of death

- date of death

In Colorado, which of the following is true regarding the commingling of an insurer's funds with the funds of the producer? - it it ok with the insured's written approval - it is ok with the insurer's written approval - it is never ok - It is ok if records are kept on the transaction

- it is never ok

All of the following are considered a form of advertisement EXCEPT: - communication or materials used within an insurer's own organization - newspapers - free lunch seminars - telemarketing scripts

- communication or materials used within an insurer's own organization

Which of the following offers an insurance applicant the right ti review the contract and receive a full refund? - free look period - probation period - elimination period - refund period

- free look period

If an insurance company wishes to discriminate rates based on gender, it must: - receive prior approval from the Department of Insurance - allow for no more than a 10% rate difference - be justified by actuarial statistics - disclose the rate difference on the application

- be justified by actuarial statistics

If a producer completes an insurance application, collects the initial premium, and issues the appropriate receipt, - coverage will begin the day of the application - coverage will be contingent upon the insurer's underwriting policies - coverage will begin when the policy is delivered - coverage will begin 14 days after free look period

- coverage will be contingent upon the insurer's underwriting policies

Which of the following Is an example of a misrepresentation? - failing to affirm or deny coverage of claims within a reasonable time - returning a portion of a premium as inducement to purchase insurance - making malicious statements about an insurer - describing a universal policy as a security

- describing a universal policy as a security

An insurer can deny a claim under a long-term care insurance policy for any material misrepresentation made by the insured if It has been in effect for - fewer than 6 months - more than 6 months - at least 1 year - no more than 2 years

- fewer than 6 months

All of the following penalties apply to anyone giving intentional false testimony during an insurance examination EXCEPT: - fine up to 5000 - imprisonment up to 3 months - guilty of a misdemeanor - guilty of a felony

- guilty of a felony

Circulation of a maliciously critical statement about any insurer's financial condition to injure the insurer is called: conservation unfair discrimination defamation coercion

defamation

T calls to file a claim on his health insurance policy. Within how many days must the insurer provide T's proof of loss forms? 10 days 15 days 20 days 30 days

15 days

When an employee's coverage terminates under a group health policy, the employee must be offered continuation coverage for: 60 days 180 days 365 days 18 months

18 months

When may the Commissioner issue an emergency cease and desist order? - if there is suspicion of an insurance policy being replaced - if there is a suspicion of an unauthorized person engaging in insurance business without being licensed - when an insurance agency does not reach their annual sales quota - for any reason the commissioner sees appropriate

- if there is a suspicion of an unauthorized person engaging in insurance business without being licensed

If an insurer is authorized to conduct business in another state and wished to conduct business in Colorado, it must: - receive a certificate of authority from the Federal Gov. - receive a certificate of authority from a reciprocal state - receive a certificate of authority from a bordering state - receive a certificate of authority from Colorado

- receive a certificate of authority from Colorado

If a producer is going to deposit any premium into a bank account prior to remitting the funds to the insurer, he/she must use a - separate insurance trust account - joint savings account - combined trust account - bonded insurance trust account

- separate insurance trust account

Which of the following is a duty of the commissioner? writing insurance laws setting insurance rates reviewing/approving licensing applications setting sales quotas

reviewing/approving licensing applications

All accident and health issued in Colorado that provide major medical services must offer policyholders the opportunity to purchase: disability coverage double indemnity coverage home health care coverage supplemental coverage

home health care coverage

statements made on an insurance application that are believed to be true to the best of the applicant's knowledge are called: representations consideration warranties guarantees

representations

Ultimately, who is responsible for producer-generated advertisement? producer insurer department of insurance life and health guaranty association

insurer

If a producer chooses to conduct business under an assumed name, when must notification be given to the Commissioner? - no notice is required - no later than 30 days after using the assumed name - prior to using the assumed name - at the time of the license renewal

- prior to using the assumed name

Which of the following is CORRECT regarding a producer's fiduciary responsibility with the client's funds? - a producer may commingle personal funds with funds paid by or to a client with the client's written permission - a producer may commingle personal funds with funds paid by or to a client with the insurer's written permission - a producer may commingle personal funds with funds paid by or to a client with prior approval from the department of insurance - a producer may never commingle personal funds paid by or to a client

- a producer may never commingle personal funds paid by or to a client

Which of the following is NOT required to be disclosed to an applicant for health insurance? - standard compensation schedule for the product being sold - any change to the standard compensation - any contingent compensation received - the insurance producer will release a commission from the carrier

- any contingent compensation received

A health insurer may exclude medical coverage for any claims that result from: - snowmobiling - skydiving - snow-skiing - off highway vehicle riding

- skydiving

How long must a replacing insurer maintain the records of a replacement transaction? 2 yrs 3 yrs 4 yrs 5 yrs

5 yrs

The primary difference between the Colorado Partnership LTC policy and other LTC policies is: Medicaid asset protection optional inflation protection higher daily benefits longer lifetime benefits

Medicaid asset protection

Who is not eligible to receive commissions from the sale of an insurance product? licensed home office employee corporate executive personal producer general agent

corporate executive

Which of the following is NOT a required provision for an accident and health policy? reinstatement grace period incontestable insurance with other insurers

insurance with other insurers

Which information is NOT included in the Colorado Supplement to the Summary of benefits and coverage form? insurer's prior year financials deductibles covered cancer screenings balanced billing

insurer's prior year financials

A verbal or written statement which misleads a policy's features, benefits, or coverage is considered: coercion rebating defamation misrepresentation

misrepresentation

Which of the following coverage exclusions or limitations is permitted under a long-term care policy issued in Colorado? preexisting conditions Alzheimer's disease senile dementia Parkinson's disease

preexisting conditions

In Colorado, all of the following are considered unfair trade practices EXCEPT: misrepresentation rebating replacement coercion

replacemen

Licensing is required for all of the following EXCEPT: limited lines credit surplus lines travel ticket selling selling prepaid legal services

selling prepaid legal services

In regards to maternity care, which of the following is not required to be covered in the state of colorado? injuries or sickness congenital defects standard newborn circumcision birth abnormalities

standard newborn circumcision

What is the maximum amount the commissioner can fine an insurer for each violation of a cease and desist order? $500 $1,000 $5,000 $10,000

$10,000

When a claim has been denied, the insurer must: - cancel the policy - refund all paid premiums - notify the producer - issue a statement to the policy owner explaining coverage, provision, or laws on which denial was based

- issue a statement to the policy owner explaining coverage, provision, or laws on which denial was based

In addition to suspending/revoking licenses and issuing fines, the commissioner has the authority to do all of the following EXCEPT: - issue orders to carry out his duties - issue prison sentences - disclose information to any law enforcement agency to use in any criminal or civil investigation or prosecution - conduct hearings

- issue prison sentences

Which of the following is an example of rebating? - returning a portion of a premium as inducement to purchase insurance - cancellation of an insurance policy without cause - sale of mass-marketed insurance products - offer of temporary coverage

- returning a portion of a premium as inducement to purchase insurance

A license is deemed to be used for a controlled business if, during the immediately preceding 12 - month period, - the licensee wrote more than 10 policies on controlled business - the licensee's total premiums on controlled business exceeded the total premiums on all other businesses - the licensee wrote policies totaling more than $25,000 on controlled business - the licensee's total premiums on controlled business made up more than 25% of his total premium

- the licensee's total premiums on controlled business exceeded the total premiums on all other businesses

The commissioner may issue an emergency cease and desist order without a hearing for all of the following circumstances EXCEPT: - selling insurance without a license - engaging in fraudulent activity - endangering the public - writing controlled business

- writing controlled business