Primerica Chapter 5 review

Every insurer in the state of Colorado is required to prepare, implement and maintain an insurance anti-fraud plan. In addition, a summary of the company's anti-fraud efforts must be submitted to the Commissioner on

Annually

If an insurer holds a Certificate of Authority, it is known as what type of insurer?

Authorized or admitted

If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered what type of insurer?

Authorized or admitted

What type of licensee represents the insured?

Broker

If the Commissioner/Superintendent finds a licensee engaging in an unfair method of competition or an unfair practice, what order will be issued?

Cease and desist order

What document is required for an insurance company to transact insurance?

Certificate of Authority

An insurer may not transact insurance in this state without which of the following?

Certificate of authority

A banker is ready to close on a customer's loan. The bank is prepared to offer the loan but only if the customer purchases an insurance policy from the bank in the amount of the loan. This is an example of

Coercion

What is an example of a misuse of a fiduciary fund?

Collecting interest on customer balances held in a producer's trust account

The mixing of premiums belonging to the insurer or the insured with the producer's personal funds not related to the business is called

Cominngling

If the Commissioner believes a person is engaged in unfair business practices, what should the Commissioner do?

Conduct a hearing for that person to show cause

For what reason can a temporary license be issued?

Continuation of business in case the Licensed producer dies or becomes disabled.

What are producers required to do in order to renew their license?

Continue education hours and pay renewal fee.

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?

Discrimination

Insurers are classified according to their domicile. What are the three types of insurers?

Domestic, foreign, and alien

Colorado law requires resident producers to complete 24 hours of state approved continuing education courses every

Every two years.

Producers who wish to sell variable life insurance in this state must be registered with what entity?

FINRA

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?

Misrepresentation

What illegal act does a producer commit when the producer represents a policy in a more favorable light than the policy really is?

Misrepresentation.

In which of the following situations is it legal to limit coverage based on marital status?

Never legal to limit coverage based on marital status

Can insurers advertise the existence of the guaranty association during solicitation and sale of insurance policies?

No, it is illegal to advertise existence of the guaranty association during sale of insurance policies.

How often must insurance companies doing business in Colorado file financial statements with the Commissioner?

Once a year

Who may share in the commission from the sale of a life insurance policy?

Only producers properly License for the type of insurance transaction.

Who is an insurance agent?

Person authorized to sell, solicitation and negotiate insurance contracts.

Who can usually be granted a temporary license?

Producer's spouse or designee in case the licensed producer dies or becomes disabled

Which of the following is a specific service for which an insurance producer is NOT allowed to charge a fee to the applicant or policyholder?

Qualified retirement plan design for which the producer receives a commission from the insurer

An agent offers a client free tickets to a sporting event in exchange for the purchase of an insurance policy. What is the agent guilty of?

Rebating

What is an example of coercion from a lender.

Requiring the debtor to acquire a policy from a specific producer

Who owns stock companies?

Stockholders

Who must be notified of a producer's change of address?

The Department of Insurance (Commissioner/Director/Superintendent)

In order to facilitate responses to inquiries from the Division of Insurance, companies must maintain all records for at least

The current calendar year, plus the 2 prior calendar years.

The requirement that producers must account for all insurance funds collected, and not commingle those funds with their own is known as

Fiduciary responsibility.

Noncompliance with the regulation regarding fees charged by producers may result in which of the following penalties?

Fines and license suspension/revocation

Which of the following is a producer's fiduciary duty?

Handling Premiums

Which of the following is a producer's fiduciary duty?

Handling premiums

When the Commissioner believes that a person has engaged in an unfair method of competition or an unfair trade practice, before issuing a cease and desist order, the Commissioner must

Hold a hearing

What is NOT a penalty for violating provisions of the Insurance Code?

Imprisonment

A rebate is only allowed if ?

In best interest of client

In general, who can be excluded from producer licensing and examination requirements?

Insurance company officers, directors and other employees who do not transact insurance and do not receive commissions for their services.

What is controlled business?

Insurance on producers own life/property, or the lives/property of the producers family or business associates.

In the agent/insurer relationship, who is considered the principal?

Insurer

Who is responsible for the costs associated with the examination of insurers?

Insurer being examined.

All licensed producers are required to inform the Commissioner in writing of any change of address within how many days of the change?

Within 30 days

A producer is subject to criminal prosecution in another jurisdiction. Within what time frame must the producer report this fact to the Commissioner?

Within 30 days after the initial pre-trial hearing

An insurer who willfully violates a single provision of an unfair trade practice regulation may be fined

$30,000

A person was found guilty of an unfair trade practice of defamation. What is the maximum monetary penalty the person may have to pay?

$500

A certificate proving that an applicant for a license has completed the required prelicensing education is valid for how long?

1 year

What is the minimum age for producer licensing in this state?

18

Of the required 50 hours of prelicensing education, what is the minimum number of hours an applicant must complete on the subject of ethics?

3 hours

After a client signs a disclosure statement regarding additional fees charged by a producer, the producer must keep a copy of the statement for at least

3 years from date of completion services

An individual seeking a license to sell insurance must complete a prelicensing program that includes how many hours pertaining specifically to state laws related to the line of authority?

4 hours

Who is responsible for the contents of insurance advertisements?

The insurance company

Producers will be deemed to be using their license primarily to write controlled business if, during any 12-month period

The total premiums on controlled business exceed the total premiums on all other business written.

To whom may a certificate of authority be issued?

To an insurer authorized to transact business in this state.

What is the purpose of insurance guaranty associations?

To protect policyowners, insureds and beneficiaries from financial losses caused by insolvent insurers

What is the purpose of a cease and desist order?

To stop/prevent insurer/producer from further violating laws of transacting insurance.

What type of representation persuades an insured to want to cancel, lapse or switch policies from one to another?

Twisting

When is controlled business legal?

When commissions from controlled business do not exceed aggregate commissions on all the other business (specific limits may vary from state to state).

When can the Commissioner or Director examine insurers?

Whenever deemed necessary but at least once every five years.

A producer is required to remit premiums from a trust account to the insurer within how many days of receipt?

45 days

What are the most common penalties for violations of insurance statutes?

A cease and desist order, a fine, and license suspension or revocation

The Commissioner may not revoke a producer license if?

Acting in a fiduciary capacity.

What type of licensee represents the insurance company?

Agent

Who is considered a nonresident agent?

Agent who resides and licensed in other state, but is authorized to transact insurance in this state.

Who must be a member of insurance guaranty associations?

All insurers authorized to write insurance within a state.

If a producer makes maliciously critical statements about another insurer, what is this illegal practice called?

defamation