CH 10 VA State Health and Insurance Exam
What is the minimum age for obtaining an agent license in this state? A) 18 B) 19 C) 21 D) 25
A) 18
How many hours of continuing education must be completed on the subject of ethics biennially A) 3 B) 5 C) 10 D) 12
A) 3 Of the total required CE hours, 3 credit hours must be in ethics, which may include insurance law and regulations applicable in Virginia
How long is an insurer required to maintain records in Virginia? A) 3 years B) 5 years C) 10 years D) Permanently
A) 3 years Records must be kept for at least 3 years.
A business entity conducting the business of insurance under an assumed name must notify the Bureau of Insurance within a specified number of days of their licensure. How many days? A) 30 B) 7 C) 60 D) 14
A) 30 Anyone (individual or a business entity) using an assumed or fictitious name must notify the Bureau of Insurance within 30 days of their licensure.
All of the following must be included in the report to the Commissioner after any felony conviction or administraive action is taken against a licensed insurance agent EXCEPT A) A copy of the agent's license B) Consent to the order C) General facts and circumstances surrounding the conviction/action D) Specific facts and circumstances surrounding the conviction/action
A) A copy of the agent's license
Which of the following would be required to be licensed as an insurance producer? A) A salaried employee who advertises and solicits insurance B) A person whose activities are limited to producing insurance advertisements C) A salaried full-time employee who furnishes information for group insurance D) An insurance company director who performs executive, administrative and managerial duties
A) A salaried employee who advertises and solicits insurance A person does not require an insurance produce license if he or she only advertises without intent to solicit insurance. However, once there is solicitation, a license is required.
Which of the following represents an insurer? A) Agent B) Insured C) Commissioner D) Non-resident
A) Agent
Who is legally required to keep records pertaining to insurance transactions? A) All licensees B) Insureds C) Agencies and insurer only D) The Commission
A) All licensees All licensees, including agents and brokers, are required to keep records of all their insurance transactions. These must be maintained for 3 years following a completed transaction.
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) As long as M and N are both licensed for the line of insurance written, they may share the commission. B) Person M was not licensed at the time the insurance was written; however, Person N is licensed. Both individuals may share the commission since both worked on the account. C) Person M is license as a health agent. Person N is licensed as a life agent. The policy written was for life insurance. Both individuals may share in commission for the life policy written. D) Only one person can receive commission; sharing is not allowed
A) As long as M and N are both licensed for the line of insurance written, they may share the commission. Both individuals must be licensed as an agent or broker in order to share commissions, and they must be licensed in the line of insurance for which the policy was written.
At what time may the Insurance Commissioner inspect records pertaining to insurance transactions? A) At any business time in 3 years immediately following the relevant transaction B) At least 3 years after the transaction C) At any business time in the 5 years immediately following the relevant transaction D) At least 5 years after the transaction
A) At any business time in 3 years immediately following the relevant transaction Records must be kept available and open to inspection by the Commission, at any business time during the 3 years immediately following the completed transaction.
What authority issues a Cease and Desist Order? A) Commission B) Law Enforcement Officials C) NAIC D) Federal Board of Insurance Fraud.
A) Commission Whenever it appears that any person is violating an insurance law of Virginia or any rule or regulation made by the Commission, the Commission may issue a cease and desist order.
Which of the following is licensed solely to advise insureds about their policies? A) Consultant B) Agent C) Broker D) Actuary
A) Consultant Insurance consultants offer advice and counseling regarding any contract of insurance issued in Virginia. Records of consultations must be kept for at least 3 years. A licensed agent or broker can serve as a consultant without a separate license.
Two individuals are in the same risk and age class; yet, they are charged different rates for their insurance policies due to an insignificant factor. What is this called? A) Discrimination B) Law of Large Numbers C) Misrepresentation D) Adverse selection
A) Discrimination
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 Consultants' licenses must be renewed annually, by submitting a renewal application and a nonrefundable renewal fee by June 1.
What is the term most specifically associated with the fact that an agent is in a position of financial trust, and must be held accountable for handling premiums or other funds? A) Fiduciary capacity B) Express authority C) Utmost good faith D) Legal duty
A) Fiduciary capacity An agent is in a position of financial trust and must be held accountable for receipt of premiums, return premiums, or other funds. This responsibility is referred to as the agent's fiduciary capacity.
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) Illegal under any circumstance B) Legal, provided that the information can be verified C) Illegal until endorsed by the Guaranty Association D) Legal, provided that the other insurers are paid royalties for the usage of their names
A) Illegal under any circumstance When a company criticizes the financial situation of another company, with the intention of injuring that company, it has committed an illegal trade practice called "defamation"
An agent has moved from Virginia to another state. When will his license authority be terminated? A) Immediately B) 30 days after the Commission receive the notification C) 30 days after the change of residence D) Within 10 business days
A) Immediately If an agent has moved the place of residence from this Commonwealth, the license authority terminated immediately, whether or not the Commission has been notified.
Which of the following best describe an unfair trade practice of defamation? A) Making derogatory oral statements about another insurer's financial condition B) Assuming the name and identity of another person C) Issuing false advertising material D) Refusing to deal with other insurers
A) Making derogatory oral statements about another insurer's financial condition Making oral or written statement directly or indirectly which are derogatory or maliciously critical of another insurer would be an example of an unfair trade practice of defamation recognized by the National Association of Insurance Commissioners, and adopted by every state.
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. The company is guilt of A) Misrepresentation B) Concealment C) Unfair claim practice D) Rebating
A) Misrepresentation Issuing or circulating any sales material that is false or misleading would be considered misrepresentation and is illegal.
Who is protected from financial loss by the Life, Accident and Sickness Insurance Guaranty Association? A) Policyholders B) The State C) Insurance companies D) Insurance producers
A) Policyholders All admitted insurers must be a member of the Life, Accident and Sickness Insurance Guaranty Association as a condition of their license. The association is in existence to protect policyowners and beneficiaries against losses cause by the insolvency of an insurance company.
What governing body issues rules and regulations for the administration of the Insurance Code? A) The State Corporation Commission B) The Virginia Department of Insurance C) The Life and Health Guarantee Association D) The Joint Legislative Audit and Review Commission
A) The State Corporation Commission The State Corporation Commission, referred to as "the Commission," issues the rules and regulations for the administration for the Insurance Code.
A licensed agent must file a report with the Insurance Commission regarding all of the following EXCEPT A) The agent files divorce proceedings B) The agent is fined by the IRS C) The agent is found guilty of assault D) The agent is convicted of driving in another state under the influence of alcohol.
A) The agent files divorce proceedings Every licensed agent convicted of a felony and/or any administrative action taken against him/her in another jurisdiction or by another governmental agency in this Commonwealth must report all the facts and circumstances to the Commission within 30 days. The report must include a copy of the order, consent to order or other relevant legal documents
Which of the following terms is used to describe a person, other than a viator, that enters into or effectuates a viatical settlement contract? A) Viatical settlement provider B) Viatical settlement purchaser C) Viatical settlement broker D) Viatical settlement effectuator
A) Viatical settlement provider
In which instances may 3 licensees share Commissions? A) When all 3 are licensed for the same line of insurance from which the commission comes B) When at least 2 are licensed for the appropriate line of insurance from which the commission comes C) Three licensees may never share a commission D) Sharing a commissions is at the discretion of the insurer
A) When all 3 are licensed for the same line of insurance from which the commission comes No insurer may pay any compensation, fee, or commission for services as agent or broker unless that person was licensed as an agent or broker at the time of the transaction. Licensees may share commission, as long as each license is licensed for the same line of insurance at the time of transaction.
What is the maximum penalty that could be imposed on agent for an unintentional violation of Virginia insurance law? A) $500 B) $1,000 C) $2,000 D) $5,000
B) $1,000 Any person who violates without knowledge or intent the insurance code of Virginia 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.
Notice of a hearing for cease and desist order must be given at least how many days in advance? A) 7 B) 10 C) 30 D) 90
B) 10 Notice of a hearing for a cease and desist order must be given at least 10 days in advance of the hearing and include the time and place of hearing
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? A) 0 B) 10 C) 30 D) 60
B) 10 The Commission will notify the applicant at least 10 calendar days' notice in writing, of the time and place of the hearing
A new set of continuing education hours must be completed every A) 1 year B) 2 years C) 3 years D) 5 years
B) 2 years
When an insurance producer is to charge an administrative fee to an insured, all of the following must be done EXCEPT A) A schedule of fees must be posted in the office B) A copy of any fee disclosure must be provided to the insured. C) The agent must disclose the fees in writing D) The insured must provide a signature on any fee disclosure.
B) A copy of any fee disclosure must be provided to the insured. All fees and charges for insurance must be stated in the premium. Agents are permitted to charge certain administrative fees provided the agent posts a schedule of the fees in the office, discloses the fees to the client in writing and the client signs the disclosure
Before service is rendered, a written agreement must be prepared for outlining the nature of activity to be performed and fees to be paid. Both the consultant and which of the following must sign the agreement? A) Commissioner of Insurance B) Client C) Client's attorney D) A licensed agent
B) Client
Which of the following authorities ultimately decides whether an applicant is in good enough standing to receive a license? A) Governor B) Commission C) NAIC D) Federal Assocation of Insurers
B) Commission
Tim and Tom are twins. When they applied for life insurance from Company A, the insurance company found that while neither of them smoked and both had a very similar lifestyle, Tim was in a much stronger financial position that Tom. Because of this, the company charged Tim a higher rate for his insurance. This practice is called A) Post underwriting B) Discrimination C) Twisting D) Interdependent Sale.
B) Discrimination Permitting individuals of the same class to be charged a different rate for the same insurance is an unfair trade practice of discrimination
How often must continuing education requirement 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 Continuing education is required biennially (every 2 years) of resident and nonresident agents.
To what organization must all admitted insurers belong? A) The Virginia Insurance Department Association B) Life, Accident and Sickness Insurance Guaranty Association C) The Virginia Insurers Association D) The Commissioner's Association
B) Life, Accident and Sickness Insurance Guaranty Association All admitted insurers must be a member of the Life, Accident and Sickeness Insurance Guaranty Association as a condition of their license. the association is in existence to protect policyowners and beneficiaries against losses caused by the insolvency of an insurance company
Which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices? A) Stating that the competitors will arbitrarily increase their premiums each year B) Making comparisons between different policies C) Stating that the insurance policy is a share of stock D) Exaggerating the benefits provided in the policy.
B) Making comparisons between different policies Making accurate comparisons of policies is not illegal
Who is a person, other than a viator, that enters into a viatical settlement contract? A) Broker B) Provider C) Purchaser D) Effectuator
B) Provider "Viatical settlement provider" means a person, other than a viator; that enters into or effectuates (makes effective) a viatical settlement contract.
An agent offers his client free tickets to a sporting event in exchange for the purchase of an insurance policy. The agent is guilt of A) Controlled business. B) Rebating. C) Coercion D) Twisting
B) Rebating. When producers giver or promise anything of value that is not specified in the policy, they are guilty of rebating.
An applicant for an insurance license passed his prelicensing examination with the score of 90% 7 months ago. He applied for his license yesterday. Which of the following is true? A) The exam score is still valid; the applicant only has to pay license processing fees. B) The applicant must retake the examination and submit new application and processing fees. C) The prelicensing exam scores and fees are good for 1 year; the applicant just needs to wait for his license. D) The fees remain valid, but the test results will be forfeited.
B) The applicant must retake the examination and submit new application and processing fees. Applicants must apply for and obtain a license within 183 calendar days of passing the Virginia prelicensing exam or must retake the exam. All fees will be forfeited, and the exam results will become invalid.
An agent willfully violates an insurance law. What is the maximum fine for reach offence? A) $1,500 B) $2,000 C) $5,000 D) $7,500
C) $5,000 The Commissioner may fine a person committing a willful violation of any Virginia insurance code up to $5,000 for each offense.
Once the agent's appointment with the insurer has been terminated, how soon must the insurer mail a notice of termination to the agent? A) 5 business days B) 10 days C) 15 calendar days D) 30 days
C) 15 calendar days Within 15 calendar days after notifying the Commission of an agent's appointment termination, the insurer must mail a copy of the notification to the agent at his last known address.
Rebating is an unfair trade practice and is regulated by law. All of the following would be considered to be rebating EXCEPT A) An agent offers to share his commission with a policyholder B) An agent offers tickets to a baseball game as an inducement to buy insurance C) An agent uses misrepresentation to convince a person to cancel an existing policy and take a new policy from him D) An agent offers the use of his lake house to person as an inducement to buy
C) An agent uses misrepresentation to convince a person to cancel an existing policy and take a new policy from him Using misrepresentation to convince a person to cancel an existing policy and buy a new one is called "twisting"
All else being equal, which of the following will not be considered unfair discrimination by insurers? A) Cancelling individual coverage based on the insured's marital status B) Assigning different risk classifications to applicants based on ethnicity C) Discriminating in benefits and coveragees based on the insureds habits and lifestyle D) Charging applicants with similar health stories different premium rates based on their ethinicy
C) Discriminating in benefits and coveragees based on the insureds habits and lifestyle
Which of the following is NOT a duty of the Commission of Insurance? A) Enforcing the Insurance Code B) Suspending or revoking licenses of Insurance Code violators C) Examining each domestic insurer at least once a year D) Appointing the Commissioner of Insurance
C) Examining each domestic insurer at least once a year The Commission is required to examine every insurer license in Virginia at least once in every 5 years.
All of the following actions can be described as twisting EXCEPT A) Embellishing the terms of the proposed policy in order to convince the insured to switch B) Making an incomplete comparison between the existing and proposed policies C) Explaining to client the advantage of permanent insurance over term and suggesting changing policies D) Misrepresenting the terms and conditions of the existing policy to make the new one more attractive.
C) Explaining to client the advantage of permanent insurance over term and suggesting changing policies Twisting is misrepresentation, or incomplete or fraudulent comparison of insurance policies that persuades an insured/owner, to his or her detriment, to cancel, lapse, or switch policies from on to another.
Bart applies for an insurance license, but the Commission decides not to issue the license because of Bart's past conduct. What is the earliest date that he can reapply? A) In 6 months B) In 1 year C) In 5 years D) Never. If a license has been denied or revoke, the person is not allowed to reapply, unless it is legally determine that the reason behind the denial or revocation was false or unjust.
C) In 5 years An agent whose license is denied or revoked must wait 5 years before reapplying.
Which of the following authorities determines whether an insurer's appointment of an agent is valid? A) Guaranty Association B) Federal Association of Insurers C) NAIC D) Commission
D) Commission If the Commission determines the appointment is invalid, it will notify the insurer within 5 business days of receipt of notice. If the appointment is valid, the Commission will issue an acknowledgement of appointment to the agent and insurer within 5 business days.
The State Corporate Commission (SCC) has the authority to do all of the following EXCEPT A) Issue cease and desist orders B) Issue licenses and certificated of authority. C) Impose fines or other penalties for violations of insurance laws. D) Have interest in insurance companies regulated by the Commission.
D) Have interest in insurance companies regulated by the Commission. The Commission may not have ownership of, interest in, or any transaction in any capacity with any financial institution or insurance company licensed or regulated by the SEC.
Agent P has a life license. How many hours of CE must be completed to complete Agent P's requirement? A) 8 B) 10 C) 12 D) 16
D) 16 Any agent who holds one type of license must complete 16 hours of continuing education. Any agent who holds more than one type must complete 24 hours of continuing education.
Which of the following authorities must present notice of appointment to an agent? A) Insurer B) Commission C) Federal Board of Insurers D) A & B
D) A & B The licensed agent must receive notice of appointment from the insurer, as well as from the Commission.
Which of the following persons is require to hold a producer license? A) A person who creates insurance advertisements B) A person who takes messages related to claims C) A person who administers employee benefits D) A person who negotiates insurance contracts
D) 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.
How often will the Commission examine an insurer's books and records? A) Every 3 years B) Annually C) Only upon a request from the insurer or a complaint from a customer D) At least once every 5 years
D) At least once every 5 years The Commission may examine books or records of each insurer as seen fit, but at least once every 5 years.
Which of the following statements is incorrect with regard to information collection Privacy Protection? A) Insurance agents must provided notice of their information practices to applicants and policyholders, no later than the time the policy is delivered. B) 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 C) A notice is not required in the case of policy renewal if a notice has been provided with the prior 24 months D) 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 no lapsed.
D) 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 no lapsed. Insurance agents must provide notice of their information practices to applicants and policyholders, no later than the time the policy is delivered.
What are the disclosure requirements if an insurance producer wishes to charge a fee? A) At least verbally disclosing the fees to the client, issuing a fee receipt to the client. B) Issuing a conditional premium fee receipt, giving written notice of the premium, obtaining a signature of the insurer. C) Obtaining a signature on a schedule of fees, issuing premium fee receipts to the client, providing copies of deposit statements to clients. D) 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.
D) 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. All fees and charges for insurance must be stated in the premium. Agents are permitted to charge certain administrative fees provided the agent posts a schedule of the fees in the office, discloses the fees to the client in writing and the client signs the disclosure.
In order to maintain funds in a fiduciary capacity, all of the following actions are required EXCEPT: A) Funds must be held in a separate account B) The agent must keep detailed records of the funds held. C) The agent must act in a reasonable; prudent and competent manner. D) The agent must photocopy all funds received prior to deposit.
D) The agent must photocopy all funds received prior to deposit. The agent must keep such funds in a separate account and keep accurate and detailed records of the funds. It is not necessary to photocopy funds received.
