IL Life, Accident, and Health Insurance Law

The fine for engaging in an unfair trade practice after being issued a cease and desist order is A) $2,000 per violation B) $1,500 per violation C) $2,500 per violation D) $1,000 per violation

$1,000 per violation Explanation The Director may issue cease and desist orders against offenders who engage in unfair trade practices. Refusal to obey these orders subjects offenders to a fine of $1,000 for each violation.

As established by law, the annual fee for an insurance producer's license is: A) $40 every year. B) $10 every year. C) $100 every 2 years. D) $180 every 2 years.

$180 every 2 years. Explanation The fee for an insurance producer's license in Illinois is $180 every two years. All fees go into a special state fund, known as the Insurance Producer Administration Fund. The fund pays the Department's expenses in executing, administering, and enforcing the state's insurance laws.

The Director of Insurance in Illinois may issue a temporary license for a period of up to: A) 365 days. B) 120 days. C) 180 days. D) 60 days.

180 days. Explanation The Illinois Director of Insurance may issue a temporary license to transact insurance business to certain individuals. This license may be issued for up to 180 days, and at the Director's discretion, renewed for an additional 180 days without requiring an examination. The Director may also grant a 90-day temporary license for insurance producer applicants, as long as the applicant meets the necessary requirements.

An insurance producer must complete how many hours of continuing education in each compliance period? A)24 B)25 C)20 D)15

24 Explanation Before each license renewal, an insurance producer must complete at least 24 hours of education in a classroom, seminar, webinar, or via a self-study form of instruction. Three of the 24 required hours must consist of an approved ethics course delivered in a classroom.

In Illinois, how many hours of continuing education must a resident insurance producer complete in each compliance period? A)15 hours. B)24 hours. C)20 hours. D)25 hours.

24 hours. Explanation Before each license renewal, all resident insurance producers in Illinois must complete at least 24 hours of continuing education (CE). Three (3) of the 24 hours must consist of classroom ethics and all continuing education courses must be approved by the Director of Insurance before producers can take them for credit.

How many hours of course study must an Illinois resident insurance producer complete to satisfy the ethics continuing education requirement for license renewal? A)5 B)24 C)10 D)3

3 Explanation Before each license renewal, all resident insurance producers in Illinois must complete at least 24 hours of continuing education (CE). Three (3) of the 24 hours must consist of classroom ethics and all continuing education courses must be approved by the Director of Insurance before producers can take them for credit

Suppose an insurer offers coverage to a small employer in Illinois. This carrier must offer coverage to: A) all of the employer's eligible employees and their dependents. B) certain eligible classes of employees of the employer only. C) certain highly-compensated employees of the employer only. D) all small employers in Illinois.

A) all of the employer's eligible employees and their dependents. Explanation If a small employer insurance carrier offers coverage to a small employer, the carrier must offer coverage to all of the employer's eligible employees and their dependents. The carrier may not offer coverage to only certain members of an eligible class of a small employer group, except in the case of a late enrollee. Reference: See State Supplement. This content is not in the License Exam Manual

As defined by law, the term advertisement covers all of the following EXCEPT: A) an insurance policy. B) prepared sales talks. C) training materials for insurance sales personnel. D) television scripts.

A) an insurance policy. television scripts. Explanation The term advertisement is broadly defined to include printed and published material, descriptive literature used in direct mail, newspapers, magazines, radio and television scripts, billboards, prepared sales talks and presentations, as well as other material used for recruiting, training, and educating sales personnel. The insurance policy itself, however, is a legal document; specifically, a contract.

Offenders who refuse to obey the Director's cease and desist order for engaging in unfair trade practices are subject to a fine of: A)$1,000 for each violation. B)$5,000 for each violation. C)$1,000 maximum. D)$5,000 maximum.

A)$1,000 for each violation. Explanation Any offenders who refuse to obey the Director's cease and desist order for engaging in unfair trade practices are subject to a fine of $1,000 for each violation.

A producer must inform the Director of Insurance of any change to his residential address within how many days of the change? A)30 days. B)90 days. C)180 days. D)60 days.

A)30 days. Explanation The law requires a producer to give the Director written notice of a new residential address within 30 days of the change.

An applicant for an insurance producer license may be granted a temporary insurance producer license that normally expires after: A)90 days. B)60 days. C)45 days. D)30 days.

A)90 days. Explanation The director may grant a temporary insurance producer license to an applicant for an insurance producer license, without requiring an examination, for a period of 90 days.

Which of the following statements accurately describes the writing of controlled business in Illinois? A)A producer may not write controlled business in excess of 50% of his total insurance business. B)A producer may not write controlled business in excess of 10% of his total insurance business. C)It is illegal in all instances. D)A producer may not write controlled business in excess of 25% of his total insurance business.

A)A producer may not write controlled business in excess of 50% of his total insurance business. Explanation The Director of Insurance will not grant or extend a license if (one) during either of the two years immediately preceding the extension date of the license, the total amount of premiums on insurance from controlled business exceeded the total amount of premiums from all other insurance, or (two) during the 12 months immediately following the issuance of the license, the total amount of premiums from controlled business would exceed the total amount of premiums on all other insurance business of the applicant or licensee.

When is an insurance producer exempt from the bond requirement? A) After certifying to the Director of Insurance that he is acting solely for an insurance company, which has assumed the same responsibility that a surety would assume under a bond. B) When his license applies to only one class of insurance. C) When he holds a nonresident license. D) After he signs a personal bond waiver.

A)After certifying to the Director of Insurance that he is acting solely for an insurance company, which has assumed the same responsibility that a surety would assume under a bond. Explanation Insurance companies that appoint agents to act on their behalf bond their agents by assuming responsibility for the acts of their agents, for the contracts they accept from their agents, and for monies their agents collect from applicants and policyholders.

Which of the following statements about nonresident agents is CORRECT? A)An individual who holds a producer license in his or her home state and whose state accepts Illinois agents as nonresidents may apply for a nonresident license in Illinois. B)A nonresident agent must take the same prelicensing education that resident agents complete. C)A nonresident agent must take the Illinois licensing examination to transact insurance in Illinois. D)A nonresident agent must file an affidavit with the Insurance Department that appoints the insurance director of his or her home state as an agent for service of process in any legal proceeding.

A)An individual who holds a producer license in his or her home state and whose state accepts Illinois agents as nonresidents may apply for a nonresident license in Illinois. Explanation A nonresident agent does not have to take the Illinois licensing examination if he or she passed the licensing examination in his or her home state. A nonresident agent is also exempt from the prelicensing education requirement in Illinois. All nonresident agents must file an affidavit with the Insurance Department of Illinois that appoints the Illinois Director of Insurance as their agent for service of process in any legal proceeding.

A business entity acting as an insurance producer must obtain what kind of license? A)Insurance producer license B)Limited lines producer license C)Temporary producer license D)Nonresident producer license

A)Insurance producer license Explanation A business entity acting as an insurance producer must obtain an insurance producer license.

A Medicare supplement policy is issued on May 1st. Until what date may the insurer exclude coverage of preexisting conditions, if it chooses to use the maximum time allowed under Illinois law? A)June 1st. B)August 1st. C)May 1st of the following year. D)November 1st.

A)June 1st. Explanation A Medicare supplement insurer may not exclude coverage of preexisting conditions longer than 6 months after the date the policy was issued.

In the context of a health maintenance organization (HMO), a subscriber is: A) a person who contracts with the HMO to provide or arrange for health care for beneficiaries of the contract. B) an individual who has become a shareholder in a health care plan. C) the authority of record. D) a person who has enrolled in a health care plan.

A)a person who contracts with the HMO to provide or arrange for health care for beneficiaries of the contract. Explanation A subscriber is a person who has entered into a contract with an HMO for the provision or arrangement of at least basic health care services to beneficiaries of the contract, the enrollees in the HMO.

All of the following are exempt from the insurance licensing requirements of Illinois EXCEPT: A) a temporary producer. B) an individual who administers an employee benefit plan. C) a salaried employee of a producer. D) an individual who takes an application for a group health plan

A)a temporary producer. Explanation A temporary producer must be licensed by the insurance director. The licensing requirements for a temporary producer differ slightly from those for a regular producer and are generally less stringent.

An insurer is NOT required to present an applicant with a copy of the Notice to Applicant Regarding Replacement of Accident and Health Insurance before issuing a(n): A)basic hospital policy. B)accident only policy. C)major medical insurance policy. D)surgical-expense policy.

A)basic hospital policy. Explanation An insurer or its agent need not present the replacement notice when selling or issuing an accident-only policy or single-premium nonrenewable policy.

Applicants for licensing as insurance producers must meet all of the following requirements EXCEPT: A)be age 21. B)complete an approved prelicensing course of study. C)be competent, trustworthy and have a good business reputation. D)comply with the bond requirement.

A)be age 21. Explanation In order to qualify for an insurance producer's license, an applicant must be at least 18 years old.

To fully satisfy the insurance prelicensing education requirements in Illinois, an applicant for a resident insurance producer license must successfully: A) complete a minimum of 20 total hours, with at least 7.5 of those hours completed in a classroom setting. B) complete a minimum of 24 hours of self study. C) complete a minimum of 24 total hours, with at least 8 of those hours completed in a classroom setting. D) complete a minimum of 20 total hours of self study.

A)complete a minimum of 20 total hours, with at least 7.5 of those hours completed in a classroom setting. Explanation The minimum prelicensing study requirement in Illinois for a resident insurance producer license is 20 total hours, with at least 7.5 of those total 20 hours required having been completed in a classroom setting. This requirement applies to all of the major lines of insurance - property, casualty, life, and accident/health.

Making a derogatory statement about an insurer's financial condition in order to injure the insurer's business reputation is an illegal trade practice known as A)defamation B)boycotting C)coercion D)discrimination

A)defamation Explanation Defamation is defined as oral or written statements that are false, maliciously critical, or derogatory to the financial condition of an insurer or intended to injure any person engaged in the insurance business. Defamation is prohibited in Illinois.

The Buyer's Guide is intended to: A)explain the 3 basic kinds of life insurance and demonstrate how to use cost indexes. B)compare available life products by price. C)warn consumers away from the purchase of term life insurance. D)direct the consumer to the best kind of life insurance to purchase.

A)explain the 3 basic kinds of life insurance and demonstrate how to use cost indexes. Explanation The Buyer's Guide is intended to explain the three basic kinds of life insurance (term, whole life and endowment) and how to use the cost indexes. The guide also points out that a policy with a small index number generally is a better buy than a comparable policy with a larger index number.

All of the following statements about rebating are correct EXCEPT: A)while it is unlawful for an agent to give a rebate, it is not illegal for an insured or insurance applicant to accept a rebate. B)an agent or broker who is found guilty of rebating may not receive any commission for selling a policy associated with the rebate. C)any company or person convicted of a rebating violation will be guilty of a Class B misdemeanor. D)paying a bonus to policyholders out of the insurance company surplus is not classified as rebating.

A)while it is unlawful for an agent to give a rebate, it is not illegal for an insured or insurance applicant to accept a rebate. Explanation It is illegal for an insured or applicant to accept any kind of rebate or valuable consideration other than that which is specified in the policy.

The penalty for knowingly violating the laws governing the sale of Medicare supplements in Illinois can include: A) imprisonment for up to 3 years. B) a fine of up to $10,000. C) fines from $250 to $2,500. D) fines from $100 to $1,000.

B) a fine of up to $10,000. Explanation Companies or producers who violate any law regulating the sale of Medicare supplement policies may be fined from $500 to $5,000 for each offense. A company or producer that knowingly sells a Medicare supplement policy that has not been approved by the Director of Insurance commits a Class 3 felony and may be fined up to $10,000.

What is the daily fine that may be assessed against a person who disobeys a cease and desist order of the Director of Insurance? A)$50.00 B)$100.00 C)$200.00 D)$500.00

B)$100.00 Explanation A person who violates a cease and desist order of the Director of Insurance is subject to a fine of $100 for every day the violation continues, up to a maximum of $5,000.

In the case of a deceased licensed insurance producer, the Director of Insurance initially may extend a temporary insurance producer license to the administrator or executor for a maximum period of A)120 days. B)180 days. C)1 year. D)90 days.

B)180 days. Explanation The Director of Insurance may issue a temporary insurance producer license for up to 180 days and, at his discretion, may renew the temporary producer license for an additional 180 days without requiring an examination. A temporary license is no longer valid after the administrator or executor disposes of the deceased's insurance business.

How long does an insurance producer's license remain valid in Illinois? A) For as long as the fee is paid and the education requirements are met. B) For as long as the 4-year licensing period, after which it must be renewed with another round of license testing. C) For as long as the appointing insurance company pays the appropriate fee each January 1. D) Until revoked by the appointing insurer.

B)For as long as the 4-year licensing period, after which it must be renewed with another round of license testing. Explanation Unless denied a license, persons who have met the licensing requirements will be issued a 2-year insurance producer license. An insurance producer license will remain in effect unless revoked or suspended, as long as the fee is paid and education requirements for resident individual producers are met by the due date.

Regarding company claims practices, which of the following statements is NOT correct? A)Companies may not influence an insured to settle a disability claim on a lump-sum basis. B)If a claim remains unresolved for 30 working days from the date it is filed, the company must provide the claimant with a reasonable written explanation for the delay. C)"Reasonable promptness" in settling claims is defined as a maximum of 15 working days from the time a communication is received from a claimant or insured. D)A company may require an insured to submit to a polygraph test as a condition for paying a claim.

B)If a claim remains unresolved for 30 working days from the date it is filed, the company must provide the claimant with a reasonable written explanation for the delay. Explanation Insurers are specifically prohibited from requiring an insured from taking a polygraph or similar test as a condition for paying a claim.

Which of the following individuals is NOT eligible to receive a temporary license to conduct insurance business? A) Administrator of the estate of a deceased producer. B) Nonresident producer. C) Legal guardian of a producer who is mentally incapacitated. D) Spouse of a deceased producer.

B)Nonresident producer. Explanation The first three individuals are eligible to receive a temporary license to conclude the business of a producer who is dead or disabled. Other eligible persons include the employee or officer of a corporation or next of kin of a producer who, as the result of death or mental or physical disability, is unable to continue his business. The temporary license is meant to either conclude the producer's business or maintain it until he is able to resume work.

Which of the following coverages must be included in all Medicare supplement policies sold in Illinois? A) The cost of prescription drugs. B) The deductible amount for Medicare Part A. C) Hospitalization coverage for an additional year after Medicare benefits expire. D) Skilled nursing coinsurance coverage.

B)The deductible amount for Medicare Part A. Explanation The core plan must continue Part A eligible hospital expense coverage for a maximum of 365 days after Part A coverage ends.

Oral or written statements that are false or derogatory to the financial condition of an insurer is A)defamation B)misrepresentation C)rebating D)coercion

B)misrepresentation Explanation Oral or written statements that are false or derogatory to the financial condition of an insurer is defamation.

The head of the Illinois Department of Insurance is: A) the Insurance Commissioner. B) the Director of Insurance. C) the Insurance Chief. D) the Insurance Superintendent.

B)the Director of Insurance. Explanation The Director of Insurance is the head of the Illinois Department of Insurance and is appointed by the governor. He has the rights, powers, and duties necessary to enforce and execute the Illinois insurance laws.

An applicant for an insurance producer's license may be granted a temporary insurance producer's license that normally expires after how many days? A)90 B)30 C)60 D)45

C) 60 Explanation The Director may grant a temporary insurance producer license to an applicant for an insurance producer license, without requiring an examination, for a period of 90 days.

Which of the following is NOT included in the general powers of the Director of Insurance? A)Instituting such actions or other lawful proceedings as deemed necessary to enforce the state insurance laws and regulations. B)Conducting examinations as needed to determine whether a person or company has violated an insurance law or regulation. C)Developing and writing insurance education courses. D)Making rules and regulations as necessary to implement the insurance laws.

C) Developing and writing insurance education courses. Explanation The Director of Insurance has the power to make rules and regulations as needed to implement the insurance laws, conduct investigations to determine whether an insurance law or regulation has been violated or to administer the laws efficiently, and initiate legal proceedings when necessary to enforce the laws and regulations.

When life insurance is replaced, the replacing insurer must do all of the following EXCEPT: A) furnish applicants with a copy of the Buyer's Guide. B) require that agents comply with replacement regulations. C) forward the Notice Regarding Proposed Replacement of Life Insurance or Annuity to the existing insurer within 30 days of receiving the replacement application. D) keep replacement notices on file for at least 3 years.

C) forward the Notice Regarding Proposed Replacement of Life Insurance or Annuity to the existing insurer within 30 days of receiving the replacement application. Explanation The replacing insurer must forward the Notice Regarding Proposed Replacement of Life Insurance or Annuity to the existing insurer within three business days of receiving the replacement application. The replacing insurer must maintain a file containing the replacement notice for at least three years.

After receiving a department of insurance examination report, a producer has how many days to request a hearing about the facts and evidence in the report? A)30 days. B)14 days. C)10 days. D)15 days. Explanation

C)10 days. Explanation The Director of Insurance shall allow a producer an opportunity to demand a hearing with reference to the facts and other evidence contained in the examination report. The producer may request a hearing within 14 calendar days after he or she receives the examination report by giving the Director written notice of that request, together with a written statement of the person's objections to the report.

The law requires that a licensed insurance producer advise the Insurance Director in writing of a change in his or her residential address within how many days of such change? A) 45 B) 21 C) 30 D) 15

C)30 Explanation A licensed insurance producer must advise the Director of a change in his residential address within 30 days of the change.

A licensed insurance producer, limited insurance representative, or temporary insurance producer who is convicted of a felony must report the conviction to the Director of Insurance within how many days of the judgment date? A)45 days. B)14 days. C)30 days. D)21 days.

C)30 days. Explanation Anyone convicted of a felony while serving as any kind of licensed insurance producer in Illinois must report the conviction to the Director of Insurance within 30 days of the judgment and must submit a copy of the judgment, the probation or commitment order, and any other relevant documents at the same time.

Which of the following statements regarding the payment of commissions is NOT correct? A)A person may not accept commissions for selling insurance if he is required to be licensed but is not. B)A producer may not share commissions with unlicensed persons. C)A producer may not share commissions with a licensed nonresident producer. D)A producer may share commissions with another licensed producer.

C)A producer may not share commissions with a licensed nonresident producer. Explanation It is not against the law to share commissions with nonresident producers who are appropriately licensed when the transaction occurs.

Which of the following persons needs to be licensed in order to transact insurance business? A)A salaried officer of an insurance company who does not receive commissions for his work B)A person who enrolls individuals in group insurance plans C)A resident individual who sells homeowners insurance to the public D)A clerical employee of a producer who takes insurance applications

C)A resident individual who sells homeowners insurance to the public Explanation Individuals who are not directly involved in selling, negotiating, or making insurance contrats are not required to obtain producer licenses.

The replacement regulations apply to which of the following? A)Credit life insurance. B)Whole life insurance. C)Nonrenewable term life insurance. D)Group life insurance.

C)Nonrenewable term life insurance. Explanation Credit, group and nonrenewable term life insurance are exempt from the replacement regulations. Also exempt are transactions in which the issuing and replacing insurers are the same or the conversion from one insurance policy to another is transacted by the same company.

The Illinois Guaranty Fund was established to protect all of the following EXCEPT: A) policyowners. B) beneficiaries. C) annuitants. D) insurance companies.

C)annuitants. Explanation The purpose of the Illinois Guaranty Fund is to protect policyowners, insureds, beneficiaries, annuitants, and their assignees from the insolvency of insurers and the inability of insolvent insurers to perform their contractual duties.

All of the following insurance products are exempt from Illinois life insurance replacement regulations EXCEPT: A)transactions where the existing and replacing insurer are the same insurer. B)life insurance or annuities used with benefit plans qualified for tax-exempt premiums. C)convertible term life insurance policies. D)group life insurance or group annuities.

C)convertible term life insurance policies. Explanation Illinois life insurance replacement regulations do not apply to transactions involving credit life insurance; group life insurance and group annuities; policies issued in connection with a pension, profit-sharing, or other benefit plan that qualifies for tax deductibility of premiums; registerd contracts, except that the appropriate prospectus or offering circular shall be given to the applicant; nonconvertible term life insurance that expires in five years or less and that cannot be renewed; transactions where the replacing insurer and the existing insurer are the same; or transactions where the total cash surrender value of all existing policies affected by the replacement is less than $500 and the sum of their face amounts is less than $5,000.

Advertising for accident and health insurance policies cannot use terms which: A)give detailed explanations about policy exceptions, reductions, or limitations. B)disclose modification of benefits or premiums because of age. C)lead consumers to believe that a policy will enable them to profit from hospitalization. D)plainly state the limited nature of policies.

C)lead consumers to believe that a policy will enable them to profit from hospitalization. Explanation As a rule, the content of all advertisements must be sufficiently clear to avoid deception or the tendency to mislead or deceive. Therefore, advertisements for accident and health insurance policies cannot use terms such as "tax free," "extra cash," "extra income" or other words which could lead consumers to believe that they could make a profit from being hospitalized.

Premium funds held by insurance producers or registered firms must be deposited in: A) insurance company accounts. B) the insurance producer's personal savings account or firm account for safekeeping. C) premium fund trust accounts. D) state banks.

C)premium fund trust accounts. Explanation Funds received from applicants or policyholders and held by producers for longer than 15 days before remittance to insurers must be placed in a premium fund trust account, which must be established and maintained with an Illinois-based financial institution.

All of the following acts are illegal under the insurance laws of Illinois, EXCEPT: A)falsifying records with intent to injure or defraud any company or person. B)misrepresenting the assets of an insurance company. C)replacing a life insurance policy with another. D)misrepresenting terms of an insurance policy.

C)replacing a life insurance policy with another. Explanation Replacement is any transaction in which new life insurance is to be purchased and existing life insurance will consequently be lapsed or surrendered, converted into paid-up insurance, amended or reduced in face amount, or pledged as collateral for a loan or subject to borrowing more than 25% of its existing cash value. Replacement is not illegal; in some cases, it may even be advisable. Nevertheless, Illinois law regulates replacement transactions in order to protect the consumer. In situations where replacement is not warranted, it can become the illegal practice of twisting.

All of the following individuals are required to become licensed or registered in order to transact insurance business in Illinois EXCEPT: A) registered firms. B) limited insurance representatives. C) salaried employees in the office of a licensed producer whose compensation does not vary by amount of premiums received. D) nonresident producers who hold the CLU designation.

C)salaried employees in the office of a licensed producer whose compensation does not vary by amount of premiums received. Explanation Salaried employees in an insurance producer's office or other office who do clerical and administrative work and whose salaries do not depend on commissions are exempt from the insurance licensing requirement in Illinois.

An insurance producer's license remains in effect as long as she does all of the following EXCEPT: A)pay the renewal fees. B)meet the bond requirement. C)take the renewal examination every two years. D)fulfill the continuing education requirement.

C)take the renewal examination every two years. Explanation Meeting the bond requirement, paying the renewal fees, and fulfilling the continuing education requirement are all that are required to maintain an insurance producer's license. There is no requirement to take additional examinations to maintain the license.

Which of the following statements regarding accelerated life insurance benefits is NOT correct? A) Requesting an acceleration, the insurer must send a written statement showing the effect the payment will have on cash value, face value accumulation account, death benefit, premium, policy loans, and liens. B) They may be payable to an insured in the advanced stages of AIDS and who is expected to live no more than 1 year or so. C) When accelerated benefits are paid, the insurer must send a revised benefits page for the insured policy, describing the amount of remaining (unpaid) benefits. D) They may be payable to an insured who has undergone surgery for a triple heart bypass and will have to remain on medication for the remainder of his life but who can live at home and continue to work.

D) They may be payable to an insured who has undergone surgery for a triple heart bypass and will have to remain on medication for the remainder of his life but who can live at home and continue to work. Explanation In order to qualify for early payment of a policy's face amount, an insured must either suffer from a terminal medical condition (that will result in death within 24 months or requires institutionalization until death) or have a qualified covered condition (such as a heart attack, stroke, life-threatening cancer, kidney failure, major organ transplant, and the like) that requires skilled nursing care.

An insurance producer who, for the first time, misappropriates insurance funds amounting to $150 or less would be guilty of: A) a Class 3 felony. B) a Class 4 felony. C) a Class 2 misdemeanor. D) a Class A misdemeanor.

D) a Class A misdemeanor. Explanation An insurance producer who knowingly misappropriates or converts to his own use or illegally withholds fiduciary monies amounting to $150 or less is guilty of a Class A misdemeanor. Repeated occurrences of such acts raise the crime to a Class 4 felony. Reference: See State Supplement. This content is not in the License Exam Manual

The Illinois Guaranty Fund applies to all of the following EXCEPT: A) annuity contracts. B) variable life insurance contracts. C) life and health insurance contracts. D) supplemental life and health insurance contracts.

D) supplemental life and health insurance contracts. Explanation The fund covers direct life and health insurance contracts, annuity contracts, supplemental insurance contracts, contracts to furnish health care services and subscription services. It does not cover a health maintenance organization, the portion of a variable life or annuity contract not guaranteed by the insurer, the portion of any policy whose risk is borne by the policyholder, a reinsurance contract carried by an insolvent insurer, or a burial or fraternal society insurance contract or contracts issued by a dental, vision or pharmaceutical service plan corporation.

An insurance producer who violates, or aids or abets any violation of, an order issued by the head of the Insurance Department may have his or her license suspended or revoked and be fined a MAXIMUM penalty of: A)$1,000.00 B)$500.00 C)$100.00 D)$5,000.00

D)$5,000.00 Explanation An insurance producer who violates a cease and desist order is subject to a fine of $100 per day for every day the violation continues, up to a maximum of $5,000. The director may also revoke or suspend any license or certificate of authority.

An agent-solicited Medicare supplement insurance policy must contain a printed notice that the insured, if not satisfied for any reason, is entitled to return the policy for a refund of the premium within: A)14 days. B)10 days. C)7 days. D)30 days.

D)30 days. Explanation All Medicare supplement insurance policies must provide a period of at least 30 days after the policy is delivered, during which time the insured can return the policy for a full refund if not satisfied.

How often must the commissioner examine the books, records, and documents of domestic insurers? A)A least once every three years. B)No more than once every ten years. C)No more than once every seven years. D)At least once every five years.

D)At least once every five years. At least once every five years. Explanation The commissioner examines domestic insurers at least once every five years. The commissioner may examine all other insurers whenever he or she decides that it is necessary.

Suppose an application for Medicare supplement insurance was taken on March 16th. The insurer issued the policy on March 28th, and it was delivered to the policyowner on April 5th. Under these circumstances, when does the policy's "free look" period end? A) April 27th. B) April 15th. C) March 26th. D) May 5th.

D)May 5th. Explanation Medicare supplements must allow policyholders a minimum of 30 days for a "free look" after the policy is delivered.

How long must an insurance company maintain documentation of an advertisement used in promoting a life insurance policy or annuity? A)Four years. B)Five years. C)Seven years. D)Three years.

D)Three years. Explanation An insurance company is required to maintain a file of all advertisements for four years or until the next examination report of the insurer, whichever is the longer period of time.

Every health maintenance organization (HMO) must provide enrollees with all of the following EXCEPT: A)the exact monthly cost of these services. B)how and where enrollees can obtain the services of the HMO. C)evidence of coverage. D)a description of the HMO's services.

D)a description of the HMO's services. Explanation HMOs must provide enrollees with evidence of coverage, a description of services, and an explanation as to how enrollees may obtain these services. Information that describes the services and how they can be obtained must be provided at the time of enrollment and then on an annual basis.

In Illinois, reasonable promptness in claims settlement means: A)a minimum of 10 days from the date of the loss. B)a maximum of 15 working days from receipt of communication from a claimant or insured. C)a minimum of 90 days from the alleged date of the loss. D)a maximum of 45 days from the receipt of communication from a claimant or insured.

D)a maximum of 45 days from the receipt of communication from a claimant or insured. Explanation "Reasonable promptness" in replying to a claim is considered a maximum of 15 business days from the time a communication is received by the insurer from a claimant or insured. An insurer must affirm or deny liability on claims within a reasonable time and offer payment of approved claims within 30 days after affirming liability. If a claim remains unresolved for 30 business days from the date reported, the company must provide the insured or, when applicable, the insured's beneficiary, with a reasonable written explanation for the delay.

A producer may receive an insurance license in all the following lines of authority, EXCEPT; A) life B) personal lines C) health D) commercial lines

D)commercial lines Explanation The lines of authority for producers licenses are: life; variable life and variable annuity products; accident and health; property; casualty; and personal lines.

In the sale of Medicare supplement policies, producers must do all of the following EXCEPT: A)complete a policy check list (in duplicate). B)determine which, if any, policy is appropriate for the prospective applicant. C)identify themselves as insurance producers. D)explain that the Social Security Administration recommends that all seniors buy a Medigap policy to supplement Medicare.

D)explain that the Social Security Administration recommends that all seniors buy a Medigap policy to supplement Medicare. Explanation Agents who sell Medicare supplement policies must identify themselves and the insurers they represent and disclose their addresses and phone numbers. They must determine if a Medicare supplement is appropriate for the prospect, determine the applicant's medical history, and complete the policy checklist.

If statements on an accident and health policy application are conflicting or incomplete, the insurer is obligated to: A)issue the policy based on the application representations. B)reject the application entirely. C)deny all claims that may be made on the coverage. D)investigate further to clarify answers.

D)investigate further to clarify answers. Explanation: The insurer has an obligation to investigate conflicting or incomplete statements on the application. If there is no such investigation, the insurer has no grounds to deny a claim or rescind the policy because of an alleged preexisting illness or condition. The insurer may rescind a policy only if it can show that the insured withheld material information or answered material questions incorrectly, which would have caused the insurer to deny or restrict the amount of coverage or rate up the premium for the policy requested.

To have a long-term care partnership policy approved by the Illinois Director of Insurance, the insurer must: A)meet all cost guidelines. B)use the standardized long-term care product as specified by the state. C)license specific producers for the long-term care product. D)meet the producer training requirement for the long-term care partnership policy.

D)meet the producer training requirement for the long-term care partnership policy. Explanation Insurers seeking approval of a long-term partnership policy must provide the Director with written evidence that any producer who will market or sell such a policy has completed the required training in long-term care insurance and in the state program called the Long-Term Care Partnership Policy. Reference: See State Supplement. This content is not in the License Exam Manual

Accident and health insurance policy provisions that relate to all of the following must be disclosed in advertisements that are an invitation to contract EXCEPT: A) termination. B) cancelability. C) renewability. D) premium rates.

D)premium rates. Explanation The core plan must continue Part A eligible hospital expense coverage for a maximum of 365 days after Part A coverage ends.

Group health insurance policies must provide extended benefits to insureds who are disabled at the time of policy discontinuance until the earliest of any of the following occurrences EXCEPT: A) the date the maximum benefit is reached. B) the end of 12 months. C) the end of the total disability. D) the end of the calendar year.

D)the end of the calendar year. Explanation In the case of HMO plans and hospital or medical expense coverages, an extension will be considered reasonable if it extends coverage until the earlier of the end of 12 months, date the maximum benefit is reached, or end of total disability.

An insurance producer whose license is revoked or whose application for a license is denied will be ineligible to reapply for any license for: A)one year. B)three years. C)five years. D)two years.

D)two years. Explanation An insurance producer whose license is revoked or whose license application is denied may not reapply for any license for three years.

What must be delivered with a policy that is issued on a basis that differs from the terms applied for? A)Revised Outline of Coverage. B)Physician report. C)Replacement Notice. D)Notice of insured right to cancel.

Explanation A revised Outline of Coverage must be delivered to the insured when the insurer issues a policy on terms that differ from those for which the insured applied. A specific notice above the company name on the outline must draw the insured's attention to the revised nature of the policy.

Which type of license is required to solicit industrial life insurance or industrial accident and health insurance? A) Insurance producer license. B) Temporary insurance producer license. C) Limited lines producer license. D) Industrial license.

Limited lines producer license. Explanation A limited lines producer is authorized to solicit certain lines of insurance, including industrial life, travel, and legal expense insurance and some limited health care plans.

If a licensee requests a hearing after an examination report, the Director will issue a written notice scheduling the hearing. Which of the following statements about the notice is NOT correct? A) The hearing date will be scheduled for between 20 and 30 days from the date of the notice. B) The notice will state the grounds or charges for which the license was revoked or suspended. C) The notice will identify the location of the hearing. D) The notice will state the possible criminal charges which may result from the licensee's actions.

The hearing date will be scheduled for between 20 and 30 days from the date of the notice. Explanation The notice need only state the grounds or charges on which the hearing is based, and the time and place of the hearing. Participants must receive written notice of the hearing at least ten days in advance

An insurance producer who, for the first time, misappropriates insurance funds amounting to $150 or less would be guilty of A) a Class 4 felony B) a Class A misdemeanor C) a Class 3 felony D) a Class B misdemeanor

a Class A misdemeanor Explanation If an insurance producer knowingly misappropriates or converts to his own use or illegally withholds fiduciary monies amounting to $150 or less, he is guilty of a Class A misdemeanor. Repeated occurrences of such actions are subsequently rated a Class 4 felony.

Which of the following individuals is allowed to receive commission or compensation for selling insurance? A) an unlicensed clerical employee B) a retired producer who was licensed at the time of the initial transaction C) a client if increasing coverage on an existing policy D) an attorney who referred an estate planning prospect to the producer

a retired producer who was licensed at the time of the initial transaction Explanation An insurer or producer may not pay a commission to a person for selling insurance if that person is required to be licensed but is not licensed. However, renewal or deferred compensation may be paid to a person for selling insurance if the person was licensed at the time of the initial sale.

At the time of application, all applicants for accident and health insurance except policies issued by direct response insurers must be given: A) an outline of coverage. B) a replacement notice. C) a notice of disclosure. D) a list of exemptions.

an outline of coverage. Explanation Every individual accident and health policy delivered in Illinois, other than direct response policies, must include an outline of coverage, which must be presented to an applicant at the time the application is taken.

Long-term care insurance policies sold in Illinois must include a renewability provision that is at least as favorable as a provision that makes the policy: A) renewable at the insurer's option. B) guaranteed renewable (premiums may be increased). C) cancelable (insurers may cancel at any time provided a minimum of 30 days written notice is provided the policyowner). D) noncancelable (premiums cannot be increased).

cancelable (insurers may cancel at any time provided a minimum of 30 days written notice is provided the policyowner). Explanation Long-term care policies sold in Illinois cannot be canceled or refused renewal. In other words, they must be "guaranteed renewable." Nevertheless, a policy may be canceled if the insured fails to pay premiums.

Under Illinois law, all of the following are defined as unfair claims practices by insurance companies EXCEPT: A) delaying an investigation or claim payment by requiring a duplicate verification of facts. B) compelling policyowners to go to court to recover amounts due them by offering them substantially less than the amounts recovered through litigation. C) failing to promptly acknowledge pertinent communications concerning claims. D) offering payment of approved claims within 30 days after affirming liability.

compelling policyowners to go to court to recover amounts due them by offering them substantially less than the amounts recovered through litigation. Explanation Illinois insurance law lists a substantial number of illegal and unfair claims practices. Payment of claims 30 days after establishing liability is, however, a reasonable and fair manner of settling claims.

To fully satisfy the insurance prelicensing education requirements in Illinois, an applicant for a resident insurance producer license must successfully: A) complete a minimum of 24 total hours, with at least 8 of those hours completed in a classroom setting. B) complete a minimum of 20 total hours, with at least 7.5 of those hours completed in a classroom setting. C) complete a minimum of 24 hours of self study. D) complete a minimum of 20 total hours of self study.

complete a minimum of 20 total hours, with at least 7.5 of those hours completed in a classroom setting. Explanation The minimum prelicensing study requirement in Illinois for a resident insurance producer license is 20 total hours, with at least 7.5 of those total 20 hours required having been completed in a classroom setting. This requirement applies to all of the major lines of insurance - property, casualty, life, and accident/health. Reference: See State Supplement. This content is not in the License Exam Manual

All of the following are grounds for license suspension or revocation EXCEPT A)failing to pay state income tax B)knowingly accepting insurance business from an unlicensed individual C)conviction of a misdemeanor D)having a license suspended in another state

conviction of a misdemeanor Explanation Conviction of certain felonies is grounds for license suspension or revocation, but not misdemeanors.

Suppose a licensee in Illinois has been found guilty of rebating and has received the commission for the sale giving rise to the illegal rebate. This commission: A)has been earned and is retained by the licensee. B)may be recovered by the insurance company. C)is awarded to the purchaser of the insurance product by the Department of Insurance. D)must be turned over to the Department of Insurance.

may be recovered by the insurance company. Explanation A licensee who is found guilty of rebating a Class B misdemeanor may not receive commission for selling the policy associated with the rebate. The insurer may recover the commission if it has been paid to the producer.

When a Medicare supplement policyholder applies for and is entitled to Medicaid benefits, Medicare supplement policies: A) provide enhanced benefits. B) are automatically canceled. C) increase dramatically in premium cost. D) must provide for a suspension of benefits and premiums for up to 24 months.

must provide for a suspension of benefits and premiums for up to 24 months. Explanation All Medicare supplement policies must provide for a suspension of benefits and premiums (up to 24 months) in the event the policyholder applies for and is entitled to Medicaid benefits. To obtain such a suspension, the policyholder must notify the insurer within 90 days of becoming entitled to this assistance. The coverage is automatically reinstituted if the insured loses his entitlement, notifies the insurer within 90 days, and pays the premium effective as of that date.

A temporary license for an insurance producer applicant may be issued: A)as often as needed by the insurance company. B)once in a ten year period. C)once in a five year period. D)only once in lifetime.

only once in lifetime. Explanation An individual applicant may not hold more than one temporary insurance producer license during her lifetime.

When selling a health benefit plan to a small employer, insurers must make, as part of their solicitation and sales material, a reasonable disclosure of all the following, EXCEPT: A) provisions relating to policy renewability. B) provisions concerning the insurer's right to change premiums. C) information relating to the insurer's claim experience. D) provisions relating to preexisting conditions.

provisions concerning the insurer's right to change premiums. Explanation In a sale of a health benefit plan to a small employer, insurance carriers need only to disclose information about their right to change premiums and the factors other than claim experience that affect premiums, in addition to other required disclosures.

Controlled business is insurance sold to cover the lives, businesses, properties, or risks of all the following EXCEPT A) the spouse of the insurance producer B) the insurance producer C) a friend of the insurance producer D) an employer of the insurance producer

the insurance producer Explanation Controlled business means insurance procured by or through the person upon his own life, person, property, or risks or those of his spouse; or the life, person, property, or risks of his employer or own business.

All of the following statements regarding a life insurance policy summary are correct EXCEPT: A) they must include dividend projections through at least the 20th policy year. B) they must include the generic name of the policy being described. C) they must illustrate the annual premium for the policy and each optional rider for the first 5 policy years plus other target years. D) they may be combined in one document with the Buyer's Guide.

they must illustrate the annual premium for the policy and each optional rider for the first 5 policy years plus other target years. Explanation The policy summary must be printed as a separate document and not combined with any other document.