Chapter Exam - Hawaii Rules and Laws

Who is a mutual insurance company owned by?

Its policyholders

Which Unfair Trade Practice involves a producer suggesting that an insurance policy is like a share of stock?

Misrepresentation

A producer who is a resident in another state but licensed to transact insurance in Hawaii is called a(n) _____ producer.

Nonresident producer

An individual covered under a Group Life insurance policy is considered to be a(n) _____

certificate holder the policyowners for group life insurance policys are usually employers

What is the maximum penalty that could be imposed on a producer for an unintentional violation of Hawaii insurance law?

$1,000 Any person who violates the insurance laws of Hawaii without knowledge or intent may be punished for each violation by a penalty of not more than $1,000. Willful violations may result in a fine up to $5,000 per violation.

According to Hawaii law, a Group Life insurance policy requires a minimum of how many insureds?

10 A group life insurance policy requires a minimum of 10 employees covered as of the date issue

A group life insurance policy insured may assign up to ____ of the insured's coverage.

100% There are no restrictions regarding the assignment of coverage under a Group Life Insurance policy.

In Hawaii, which of the following is considered an Unfair Trade Practice?

Coercion

As a condition for a loan, a bank requires the borrower to purchase credit insurance from a specific company. What is the bank guilty of?

Coercion Coercion = the practice of persuading someone to do something by using force or threats. A creditor who requires a debtor to obtain insurance from a particular company or agent as a condition for a loan is guilty of coercion.

The phrase "transacting business" includes

Collecting premiums

B is a producer who primarily write insurance business on his family. Which of the following is B engaged in?

Controlled business Producers who write insurance primary on themselves and their family are engaged in controlled business

Which of the following is NOT a situation that involved life insurance policy replacement?

Converting a term policy to a permanent policy with the same insurer Converting a term policy to a permanent plan with the same insurer is not considered a replacement

How often must the Commissioner examine each domestic company?

Every five years Commissioner must examine each domestic insurance company at least every five years

A producer must complete ___ hour(s) of ETHICS per continuing education reporting period.

3 hours Producers must complete 24 hours of continuing education every 2 years to keep their license active. 3 of those hours must be in ETHICS.

A producer must notify the Commissioner within _____ days of an address change.

30 days

With whom may a producer share commissions with?

A licensed producer with the same license type A producer may share commissions with a licensed producer with the same license type

What is Hawaii's definition of Life insurance replacement?

A transaction in which a new policy is bought and an old policy is terminated Replacement regulation defined replacement as exchanging (or altering) an existing policy for a new policy

Who would be given and exemption from licensing requirements in Hawaii?

An employee of a licensed producer who only answers the phone and schedules appointments

Which of the following is a requirement to attain a nonresident producer license?

Be licensed as a producer in the producer's state of domicile domicile = the country that a person treats as their permanent home, or lives in and has a substantial connection with

An example of life insurance policy replacement would be?

Cash surrender an existing whole life policy and purchasing a new whole life policy

Any insurer incorporated outside of Hawaii and conducting business in Hawaii is referred to as a(n) ____ company.

Foreign insurer Insurance company that is incorporated in another state

How is the Life and Health Insurance Guaranty Associated funded?

From member companies Funding for the guaranty associations comes from assessments on solvent insurers.

If a producer commits an act of coercion or intimidation, how would the producer's insurance company be held responsible for this act?

If the insurer approves the act A company can be held responsible for any act of boycott, coercion, or intimidation by its producer if the company approves or acquiesces to such act.

Premiums collected by an insurance producer must be maintained in a fiduciary capacity. At what point MUST these premiums be remitted to the insurer?

In the ordinary course of business

An individual who has a contract with an insurance company to represent it is called a(n) _____

Producer or insurance producer person required to be licensed pursuant to the laws of this state to sell, solicit, or negotiate insurance

Defamation occurs when a producer makes a false statement intended to

malign another insurer Producers making false statements intended to malign another insurance company may be found guilty of defamation

An example of rebating would be....

returning a portion of a premium as inducement to purchase insurance

Which of these is NOT a required group life policy provision? A. Free-look B. Grace Period C. Conversion D. Right to Loan Proceeds

Right to Loan Proceeds

A mutual insurance company and stock insurance company have one main difference between them. What is the major contrast?

Stock company is owned by its shareholders. Mutual company is owned by its policyholders.

An example of unfair discrimination would be

charging a higher rate for insurance based on an insured's race, religion, or national origin It is considered unfair discrimination

A brochure that includes an untrue statement regarding a competitor's ability to pay claims is an example of which of the following Unfair Trade Practices?

Defamation

How often must an insurance producer's license be renewed?

Every two years Producers must complete 24 hours of continuing education every 2 years to keep their license active. 3 of those hours must be in ETHICS.

What must be signed by both the producer and applicant when an existing life insurance policy is being reissued with a reduction in cash value?

Notice Regarding Replacement When a policy has been reissued with any REDUCTION in cash value, that is considered a replacement.

What is the purpose of the Life and Health Insurance Guaranty Association?

Protects policyowners against insolvent (unable to pay debts owed) insurance companies

Convincing a prospective insured to buy an insurance policy based on exaggerations is called

misrepresentation It is illegal to issue, publish, or circulaye any illustration or sales material that is false, misleading, or deceptive as to policy benefits or terms, the payment of dividends, etc. This also refers to oral statements. Committing this illegal act is called misrepresentation

An example of rebating would be

offering a client something of value not stated in the contract in exchange for their business rebating can be defined as offering a prospect something of value that is not specified in a contract in order to induce the purchase of that contract

A(n) _______ sells, solicits, or negotiates insurance on behalf of insurance companies.

producer an individual who in any manner sells, solicits, or negotiates insurance on behalf of insurance companies for compensation is an insurance producer.

Life insurance replacement regulation protects the interests of

the policyowner replacement regulation is designed to protect the interest of the policyowner, since it's usually not in their best interest to replace existing coverage

Group Life policies in Hawaii are required to contain a conversion privilege that allows for conversion

to an individual policy for a stated period of time

If an insurance company engages in boycott, coercion, or intimidation that leads to the unreasonable restraint of trade it would be breaking Hawaii insurance laws covering _______

unfair and deceptive practices