Life Insurance Training: Insurance Regulation

Restitution

restoration to the original condition or repayment

Disclosure

revealed information to help someone make an intelligent and educated decision

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

Coercion

Forceful act or threat aimed to influence a person to act against his or her will

Which of the following authorities determines whether an insurer's appointment of an agent is valid? A. Commission B. Guaranty Association C. Federal Association of Insurers D. NAIC

A. Commission

When a producer is reviewing a potential customer's coverage written by another company, the producer made several remarks that were maliciously critical of that other insurer. The producer could be found guilty of A. Discrimination B. Nothing, unless the remarks were in writing C. Defamation D. Misrepresentation

C. Defamation

What is the term most specifically associated with the fact that an agent is in a position of financial rust, and must be held accountable for handling premiums or other funds? A. Utmost good faith B. Legal duty C. Fiduciary capacity D. Express authority

C. Fiduciary capacity

On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. What is the company guilty of? A. Unfair claim practice B. Rebating C. Misrepresentation D. Concealment

C. Misrepresentation

An agent willfully violated a requirement in the Insurance Code and his penalty was which of the following? A. $7,500 B. $1,500 C. $2,000 D. $5,000

D. $5,000

an agent is convicted of a felony in another jurisdiction. who must report this felony, and within what time period? A. Immediately B. 5 days C. 10 days D. 30 days

D. 30 days

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. Gender C. Address D. Sexual Orientation

D. Sexual Orientation

Commission

Payment to the agent by the insurance company for placing insurance, usually a percentage of the policy premium

Cease and desist

To stop or discontinue

Inducement

an offer that attempts to influence the other party

Subpoena

an order for someone to appear as a witness or submit testimony or evidence

State Corporation Commission (the SCC, or the Commission)

executes all laws relating to insurance and insurers in the Commonwealth.

Surplus lines

insurance not available from authorized insurers; placed with nonadmitted insurers who specialize in offering insurance to the high-risk market

Home office

insurer's headquarters, principal place of business

Insolvent

unable to meet financial obligations

How often must continuing education requirements be met? A. Every year B. Every 2 years C. Every 3 years D. Every year for the first 5 years, then every 3 years

B. Every 2 years

How often must insurance consultants renew their license? A. Every year B. Every 2 years C. Every 5 years D. Never: licenses are perpetual unless revoked

A. Every year

What are the disclosure requirements if an insurance producer wished to charge a fee? A. Obtaining a signature on a schedule of fees, issuing premium fee receipts to the client, providing copies of deposit statements to clients. B. Posting a schedule of fees in the producer's office, disclosing the fees to the client in writing, and obtaining a signature on the disclosure from the client. C. At least verbally disclosing the fees to the client, issuing a fee receipt to the client. D. Issuing conditional premium fee receipt, giving written notice of the premium, obtaining a signature of the insurer.

B. Posting a schedule of fees in the producer's office, disclosing the fees to the client in writing, and obtaining a signature on the disclosure from the client.

Exempt

Not subject to an obligation

Which of the following is NOT a duty of the Commission of Insurance? A. Examining each domestic insurer at least once a year B. Appointing the Commissioner of Insurance C. Enforcing the Insurance Code D. Suspending or revoking licenses of Insurance Code violators

A. Examining each domestic insurer at least once a year

How often will the Commissioner examine an insurer's books and record? A. Only upon a request from the insurer or complaint from a customer B. A least once every 5 years C. Every 3 years D. Annually

B. A least once every 5 years

Authorized insurer

insurer who has received a Certificate of Authority from the department of insurance to transact insurance in this state

An insurer publishes intimidating brochures that portray the insurer's competition as financially and professionally unstable. Which of the following best describes this act? A. Legal, provided that other insurers are paid royalties for the usage of their names B. Illegal under any circumstances C. Legal, provided that the information can be verified D. Illegal until endorsed by the Guaranty Association

B. Illegal under any circumstances

An agent is licensed for life and property insurance. How many hours of CE id the agent required to earn every 2 years? A. 10 B. 16 C. 24 D. 40

C. 24

An agent has been convicted of a felony in another jurisdiction. Who must report the offense to the Commission? A. The police B. The agent C. The prosecuting attorney of the jurisdiction D. The Commissioner of the other jurisdiction

B. The agent

If an agent's appointment is terminated, suspended or revoked, the agent must cease selling or soliciting on behalf of the insurer within A. 30 calendar days B. 5 calendar days C. 10 calendar days D. 15 calendar days

C. 10 calendar days

Which of the following statements in incorrect with regard to information collection Privacy Protection? A. Insurance institutions and agents must provide notice of their information practices to applicants and policyholders, no later than 30 days after a policy is delivered, as long as the free-look period has not lapsed. B. Insurance agents must provide notice of their information practices to applicants and policyholders, no later than the time the policy is delivered. C. If information is collected from a source other than the applicant or public record, notice must be given at the time the information is collected. D. A notice is not required in the case of policy renewal if a notice has been provided with the prior 24 months.

A. Insurance institutions and agents must provide notice of their information practices to applicants and policyholders, no later than 30 days after a policy is delivered, as long as the free-look period has not lapsed.

In order to maintain funds in a fiduciary capacity, all of the following action are required EXCEPT: A. The agent must keep detailed records of the funds held. B. The agent must act in a reasonable, prudent and competent manner. C. The agent must photocopy all funds received prior to deposit. D. Funds must be held in a separate account.

C. The agent must photocopy all funds received prior to deposit.

Margaret applies for an insurance license, but the Commission decides not to issue the license because her tarnished reputation. She notifies the Commission that she wants to dispute this judgement in a hearing. The Commission must give her at least how many days' notice of the date of the hearing?

10

All of the following actions can be described as twisting EXCEPT: A. Explaining to client the advantages of permanent insurance over term and suggesting changing policies. B. Misrepresenting the terms and conditions of the exiting policy to make the new one more attractive. C. Embellishing the terms of the proposed policy in order to convince the insured to switch. D. Making an incomplete comparison between the existing and proposed policies.

A. Explaining to client the advantages of permanent insurance over term and suggesting changing policies.

What governing body issues rules and regulations for the administration of the Insurance Code? A. The Life and Health Guarantee Association B. The Joint Legislative Audit and Review Commission C. The State Corporation Commission D. The Virginia Department of Insurance

C. The State Corporation Commission

Statute

a formal written law enacted by legislature; insurance statutes can be found in the state Insurance Code

When an insurance producer is to charge an administrative fee to an insured, all of the following must be done EXCEPT: A. The agent must disclose the fees in writing. B. The insured must provide a signature on any fee disclose. C. A schedule of fees must be posted in the office. D. A copy of any fee disclosure must be provided to the insured.

D. A copy of any fee disclosure must be provided to the insured.

An agent who collects a premium payment from a client must hold such funds in which of the following types of accounts? A. As long as records are kept, any federally insured account B. An equity indexed account C. A business account D. A separate account from the agent's personal or business account

D. A separate account from the agent's personal or business account

Violation and Penalties Which comes first (A)Cease and Desist Order (B)Violation (C)Hearing (D)Other Penalties

1. Violation 2. Hearing 3. Cease and Desist Order 4. Other Penalties

A business entity conducting the business of insurance under an assumed name must notify the Bureau of Insurance with a specified number of days of their licensure. How many days? A. 60 B. 14 C. 30 D. 7

30 days

Person M and Person N worked on writing an insurance policy for a client. Which of the following statements regarding their possible share of commission is correct? A. Only one person can receive commission; sharing is not allowed. B. As long as M and N are both licensed for the line of insurance written, they must share the commission. C. Person M are not licensed at the time the insurance was written; however, Person N is licensed. Bot individually may share the commission since both worked on the account. D. Person M is licensed as a health agent. Person N is licensed as a life agent. The policy written was for life insurance. Both individuals may share in the commission for the life policy written.

B. As long as M and N are both licensed for the line of insurance written, they must share the commission.

All of the following may occur to a person who knowingly and willfully obtains information about an individual from an insurance institution, agent or insurance-support organization under false pretenses, EXCEPT A. The person may be punished by confinement in jail for 6 months B. The person may be fined $20,000 C. The person may be fined $5,000 or be confined in jail for no more than 12 months D. The person may be fined $10,000

B. The person may be fined $20,000