Chapter 5: North Carolina Regulations for Life

What are some situations which could result in producer license suspension?

- applicant lied on their license application - licensee violated insurance law - licensee illegally withheld money received - used fraudulent or dishonest practices - forged a person's name on an insurance app

Who can receive a temporary agent's license? How long does this license last?

- spouse or personal representative of a licensed agent who has died or become mentally or physically disabled - employee of a licensed agent who has died or become disabled - designee of an agent entering active military service can last up to 180 days

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

1) give applicant a Notice Regarding Replacement 2) obtain a list of all existing life insurance policies to be replaced 3) give applicant original copy of written or printed communications used for presentation to the applicant 4) submit the application and a copy of the replacement notice to the replacing insurance company

How many hours of continuing education will you need to complete? How often?

24 hours every 2 years

Failure to notify the Commissioner of changes to a licensee's address within 10 business days may result in an administrative fee of A) $50 B) $75 C) $100 D) $500

A) $50

Any person who violates cease and desist order of the Commissioner pertaining to consumer information privacy may be subject to which of the following penalties? A) a monetary fine up to $10,000 for each violation B) imprisonment for up to 5 years C) imprisonment for up to 1 year D) a monetary fine up to $5,000 for each violation

A) a monetary fine up to $10,000 for each violation

Which of the following best describes an insurance company that has been formed under the laws of this state? A) domestic B) sovereign C) alien D) foreign

A) domestic

Circulating deceptive sales material to the public is what type of Unfair Trade Practice? A) false advertising B) defamation C) coercion D) misrepresentation

A) false advertising

All statements of the insured in any application for a policy of insurance are deemed A) representations B) warranties C) representations or warranties depending on what question is asked D) statements

A) representations

The regulation of the insurance industry primarily rests with A) the state B) the NAIC C) private insurers D) the federal government

A) the state

Under the L&H Guaranty Association, the max benefit one contract holder may receive in benefits, regardless of the number of contracts held is A) $1 million B) $5 million C) $100K D) $300K

B) $5 million

If an insurer accepts premium payments by credit card, who is responsible for paying the fees charged by a credit card company? A) credit card company B) insurer accepting payment C) policyowners as part of their premium D) insured making the payment

B) insurer accepting payment

All of the following identify purposes of the Insurance Information and Privacy Act EXCEPT: A) to limit the disclosure of the information collected in connection with insurance B) to establish fair and marketable advertisement procedures C) to establish standards for collection, use, and disclosure of information D) too minimize intrusiveness of insurance collection practices

B) to establish fair and marketable advertisement procedures

The required privacy disclosure notice must be provided by insurer to current policyholders at least once in any period of A) 3 months B) 6 months C) 12 months D) 24 hours

C) 12 months

Stating that an insurer's policies are guaranteed by the existence of the Life and Health Guaranty Association is: A) only required of some lines of insurance B) permitted C) an unfair trade practice D) mandatory

C) an unfair trade practice

If a life insurance policy contains a minimum 10-day unconditional refund provision (free look), when is the latest that the buyer's guide and policy summary must be delivered A) before accepting the initial premium B) within 30 days of the policy delivery C) at the time of policy delivery D) within 10 days of the policy delivery

C) at the time of policy delivery

Which of the following must an insurer obtain in order to transact insurance within a given state? A) business entity license B) insurer's license C) certificate of authority D) Producer's certificate

C) certificate of authority

Which of the following statements regarding insurable interest in viatical settlements is correct? A) it must exist at the time of the insured's death B) it is not necessary unless the Viator is not a resident of NC C) it must exist at the time of the issue of the original life policy D) it must exist at the time of the sale by the viator

C) it must exist at the time of the issue of the original life policy

The Commissioner must examine every domestic insurer at least once every A) year B) 2 years C) 3 years D) 5 years

D) 5 years

When transacting business in this state an insurer formed under the laws of another country is known as a/an: A) domestic insurer B) foreign insurer C) admitted insurer D) alien insurer

D) alien insurer

If a licensee is convicted of a criminal violation the licensee insurance license is A) automatically revoked B) not affected C) suspended after a hearing D) automatically suspended

D) automatically suspended

The Commissioner is empowered to adopt rules and regulations governing the transactions by all of the following individuals and entities EXCEPT: a) agents B) brokers C) insurers D) policyholders

D) policyholders

Whenever an insurer knows that a person has violated either the fraudulent claims or embezzlement provisions, it is the insurer's duty to notify which of the following? A) the department of justice B) the policyowners C) the attorney general D) the insurance commissioner

D) the insurance commissioner

Define an unfair trading practice of twisting:

a misrepresentation that persuades an insured/owner to their detriment, to cancel, lapse, or switch policies from one to another

What statements must the replacing insurer submit with each application to the replacing insurer?

a statement signed by the applicant as to whether replacement of existing life insurance or annuity is involved in the transaction, and a signed statement as to whether the producer knows replacement is or may be involved in the transaction

Describe the differences between agent a broker

agents: solicit application and negotiate policy of insurance and represent insurers broker: licensed agents who procure insurance for other people through duly authorized agent of an insurer; represents insured or their beneficiaries

What is defamation?

an oral or written statement that is made that is intended to injure a person engaged in the insurance business

Who is the head of the Insurance Department, and what specific duties do they hold?

chief officer is called Commissioner of Insurance and is responsible for - transaction of insurance in the state - enforcing and carrying out provisions of insurance code - examining financial reports - reporting insurance law violations to the Attorney General

Under what circumstances (if any) if rebating legal?

it is always illegal

Under what circumstances would it be legal to publish false information is it benefits the agency? What term refers to this practice?

it is always illegal and is called misrepresentation

When does the grace period go into effect? How long does it last?

the day a premium payment was due and lasts for 31 days