Chapter 6 Quiz

an Agent has been convicted of a crime punishable by 1-year imprisonment. Within how many days must the agent notify the department of insurance?

30 days

What is the minimum age that a person can obtain a life insurance license? A) 18 B) 21 C) 23 D) 25

A) 18 A person must be at least 18 years old in order to obtain a life insurance agents li

What term is used for replacing insurance policies for the sole purpose of making commissions?

Churning

a producer who fails to separate premium monies from his own personal funds is gulity of

Commingling

Applications to an insurer must include all of the following information, EXCEPT

Credit history report Licensed agents may not submit applications to an insurer or furnish a copy of an application to a prospective insured unless the name of the insurer is legibly typed or printed on the first page of the applcation form at the time coverage is bound or the prremium is quoted. the application must also disclose the name and the license id # of the agent as shown on the agents license

Which of the following authorities grants and revokes licenses? A) Federal Insurance Bureau B)National Association of Insurance Commisioners C)Guaranty Association D) Department of Financial Services

D) Department of Financial Services The Department is responsible for issuing, reissuing, and terminating licenses

It would be considered unfair discrimination to ask an insurance applicant about which of the following and then use that information as a rating factor to determine insurability? A) Age B) Occupation C) Address D) Sexual Orientation

D) Sexual Orientation It would be considered unfair discrimination to ask an applicant for their sexual orientation, as well as using sexual orientation as a rating factor to determine insurability

The agent in charge of an agency must hold which of the following licenses?

General Lines

Insurance contracts are agreements between which 2 parties?

Insurer and policy owner

What level of authority is given to the Office of Insurance regulation with respect to examination of insurer's activities to determine Unfair Trade Practice laws? A) Absolute B) Voluntary C) Limited D) Civil

A) Absolute Florida statutes provide the Office of Insurance Regulation with an absolute right to examine the affairs of every person (insurers and licenses) involved in the business of insurance to see if they are engaged in any unfair trade practices.

The Office of Insurance Regulation is responsible for all of the following insurer activities EXCEPT... A) Issues of securities B) Viatical Settlements C) Policy forms D) Premium financing

A) Issues of Securities The Office of financial Regulation is responsible for all activities of the Financial Services Commission relating to the regulation of banks, credit unions, finance companies, and the securities industry. All the other listed activities are the responsibility of the Office of Insurance Regulation

If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered A) An unfair trade practice B) A misrepresentation C) A required disclosure D) A legal representation of the association

A) an unfair trade practice

Which of the following is another term for authorized user? A) Legal B)Admitted C)Certified D) Licensed

B) Admitted Insurers who meet the state's financial requirements and are approved to transact business in the state are considered authorized or admitted into the state as a legal insurer

When transacting business in this state an insurer formed under the laws of another country is known as a/an A) Admitted insurer B) Alien insurer C) Domestic insurer D) Foreign Insurer

B) Alien insurer Alien insurer is defined as an insurer formed under the laws of another country

What is a foreign insurer? A) An insurer w/ licensed agents who are citizens in more than one country B) An insurer with a home office in another state C) An insurer with a home office in another country D) An insurer w/ licensed agents doing business in other countries

B) An insurer w/ a home office in another state A domestic insurer's home office is in this state, a foreign insurer's is in another state, and an alien insurer's is in another country

How often must domestic insurance companies be examined by the Chief Financial Officer in Florida? A) Annually B) At lease every 5 years C) Every 2 Years D) Not more frequently than every 3 years

B) At least every 5 years Examinations must be conducted at least once every 5 years, or as frequently as deemed appropriate by the office

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? A) Adverse selection B) Discrimination C) Law of large numbers D)Misrepresentation

B) Discrimination Permitting individuals of the same class to be charged a different rate for the same insurance is the unfair trade practice of discrimination

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 Fraternal insurers operate on the basis of a lodge or charitable organization, but they may also sell formal insurance plans for the benefit of their members, but they are formed only for the purpose of providing insurance

All of the following would be considered an insurance transaction EXCEPT A) Negotiating Coverage B) Obtaining an insurance license C) Soliciting a policy D) Advising a policy

B) Obtaining an insurance license A insurance transaction means the carrying on of business in insurance, which could include the solicitation of a policy, advising, negotiation, or inducement related to coverage or claims. Obtaining an insurance license is a prerequisite to transacting insurance

Under special circumstances, continuing education requirements may be extended beyond the 2-year period for a maximum period of A) 6 months B) 9 months C) 12 months D) 3 months

C) 12 months Excess classroom hours accumulated during any 2-year period may be carried forward to the next 2 year period. If good cause is shown, the department may grant an extension not to exceed 1-year

Which of the following persons is required to hold a producer license? A) A person who takes messages related to claims B) A person who administers employee benefits C) A person who negotiated insurance contracts D) A person who creates insurance advertisments

C) A person who negotiates insurance contracts Persons who perform clerical tasks that are not related to soliciting or negotiating insurance contracts are not required to be licensed

If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered... A) A required disclosure B) A legal representation of the Association C)An unfair trade practice D) A misrepresentation

C) An unfair trade practice It is an unfair trade practice to make any statement that an insurer's policies are guaranteed by the existence of the Insurance Guaranty Association. Though it is illegal to advertise , the statement is still true and would not be considered a misrepresentation

Which of the following is NOT true regarding Certificate of Authority ? A) It is equivalent to an insurance license B) It is issued by the the state department of insurance C) It is issued to group insurance participants D) It may be neccessary for transacting business in a different state

C) It is issued to group insurance participants Before insurers may transact business in a specific state, they must apply for a license or Certificate of Authority from the state department of insurance and meet any financial (capital and surplus) requirements set down by any state

An insurance agent likes to add additional coverages to applicants policies and charge them for such coverages without their knowledge. The agent is guilty of .. A) Rebating B) Defamation C) Sliding D) Misrepresentation

C) Sliding Charging an applicant for a specified additional coverage or product, in addition to the cost of the coverage applied for, without the applicant's knowledge or consent

Which of the following must an insurer obtain in order to transact insurance within a given state?

Certificate of authority All insurers (domestic, foreign or alien) must obtain a certificate of authority before transacting insurance within a given state

Who might receive dividends from a mutual insurer?

Policyholders A mutual insurer has no stock, and is owned by the policyholders. Since they may receive a dividend (not guaranteed), such policies are known as participating policies. Dividends received by policyholders of a mutual insurer are not taxable.

Pertaining to insurance, which of the following is an example of a producer's fiduciary responsibility?

Promptly forwarding premiums to the insurance company Fiduciary refers to a position of trust. When an agent is handling the premiums that belong to an insurance company, they are acting in a fiduciary capacity.

What method do insurers use to protect themselves against catastrophic losses?

Reinsurance