Chapter 10: Missouri statutes, rules and regulations Common to All Lines

Which of the following licensees could be exempt from renewing their license biennially on the anniversary date of issuance?

A licensee called to active duty with the US Armed Forces Licensee is unable to comply with the renewal requirement due to military service are exempt from this requirement of the Insurance Code

Which of the following persons is required to hold a producer license

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

An insurer cannot transact business until it obtains a/an

Certificate of authority An insurance company MAY NOT transact business in Missouri unless it obtains a Certificate of Authority from the Director

Which of the following is an example of a producer being involved in an unfair trade practices of rebating?

Telling a client that his first premium will be waived if he purchases the insurance policy today Rebating is defined as offering any inducement in the sale of insurance products that is not specified in the policy, including money, reductions in commissions, promises, and personal services. Both offer and acceptance of rebate are ILLEGAL

A licensed life insurance producer in Missouri completed 20 hours of continuing education credits in order to renew her license. How many hours of continuing education credit will this producer need to complete in order to renew her license the NEXT term

12 hours All insurance producers must successfully complete 16 credit hours of continuing education every 2 years, prior to license renewal. Excess hours accumulated during the 2 year period may be carried forward ONLY to the next 2 year period.

A producer's license lasts for how many years before it needs to be renewed?

2 years

Individual who is a resident of another state may obtain a Missouri nonresident license without testing, provided that A. He is currently licensed in the state where he is domiciled B. He obtain that license by passing a test suitable to the Missouri Department C. The state where he lives affords the same privilege to residents of Missouri D. All of these requirements are met

All of these requirements are met Missouri law provides for licensing non-residents provided that the state of the applicant's residence affords the same privilege to residents of Missouri

The director may suspend, revoke, refuse to renew an insurance producer license for any one or more of the following causes, EXCEPT A. Failing to comply with any administrative or court order directing payment of state or federal income tax B. Failing to notify the director of a change of address C. Violating any insurance law or regulation D. Improperly withholding or converting Money received records of doing insurance business

Failing to notify the director of a change of address The penalty for failure to notify the director of a change of address within 30 days is a monetary penalty of $10 per month

An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of

False advertising; The illegal practice of advertising or circulating materials that are untrue, deceptive, or misleading

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

Rebating. When producers give or promise anything of value that is not specified in the policy

Paul is a producer in Kansas and wants to become a producer in Missouri. The Department will waive certain examination requirements, provided that Kansas would waive the same requirements if Missouri producers sought licensure in Kansas. What term is used to describe this phenomenon?

Reciprocity; this occurs when the state in which the person resides records the same privilege to residents of Missouri

Which of the following describes the duties of an insurance producer?

Soliciting, negotiating or delivering insurance policies An insurance producer is a person required to be licensed pursuant to the laws of this state to sell, solicit or negotiate insurance

To legally transact insurance in the state, and insurer must obtain which of the following?

A certificate of authority is required in order to transact insurance

All of the following would be considered rebating except A. An agent misrepresents policy benefits to convince a policy owner to replace policies B. An agent offers the use of his lake house to a client as an inducement to buy insurance policy from him C. An agent offers to share his commission with the policyholder D. An agent offers tickets to a basketball game as an inducement to buy insurance

An agent represents policy benefits to convince a policy owner to replace policies

In insurance, producers are permitted to share or split commissions if

Both are properly licensed for the line of insurance For a producer to receive commissions from the sale of insurance they must be properly licensed

A producer completed an insurance transaction in 2007. When can the producer dispose of the records for this transaction?

Can dispose in 2010; Insurance transaction records must be maintained for three years and must be available for inspection by the Director

The purpose of the Missouri life and health guaranty association is to

Help protect policy owners and beneficiaries against financial loss caused by the insolvency of an insurance company

A producer has submitted a new application to his insurer; however, 30 days later there was still no coverage for the applicant. What must the producer do?

Inform the applicant in writing Producers must ensure that each applicant for a new policy receives coverage as soon as reasonably possible. If the insurer does not provide coverage within 30 days of the application, the producer must inform the perspective insured of this fact in writing

How many days does a producer have to report to the Director any administrative action taken against the producer?

Must report in 30 days of any administrative action taken against the producer in another jurisdiction or by another governmental agency in the state

How is the Director selected for the office?

The Director is appointed by the governor with the consent of the Senate, and holds office currently with the governor until a successor is appointed or qualified

The Missouri life and health insurance guaranty Association was created to protect all of the following EXCEPT A. Insureds B. Insurers C. Policyowners D. Beneficiaries

Insurers

State law specifically prohibits using illegal inducement in the marketing of insurance. All of the following would be considered illegal inducements EXCEPT A. Inviting prospective clients to the grand opening of the company's new office B. Issuing or delivering insurance company stock in return for purchasing insurance C. Promising returns and profits from the purchase of insurance D. Offering benefit certificates or securities in return for purchasing insurance

Inviting perspective clients to the grand opening of the company's new office is NOT considered an illegal inducement Inducement is an illegal practice. It involves offering anything of value to a prospective client that is not specified in the policy as an incentive to buy insurance. This includes stocks, bonds, benefit certificates, dividends or profits

What is the minimum required age for an insurance producer in the state of MO

Minimum age requirement: 18 years old

Missouri law requires that the records of insurance transactions kept by producers must be orderly, what does that mean?

The records must be retrievable within 5 days upon request Insurance transactions must be orderly. In order to satisfy this requirement, producers must be able to retrieve those records from storage within 5 days of a request by the director

Which of the following actions is prohibited by the state regulations on producer commissions and compensation A. Compensation from surplus lines producers B. Profit sharing C. Retrospective commissions D. Sharing commissions

Retrospective commissions Retrospective commissions are prohibited. all other mentioned actions are permitted as long as they're within the scope of the producers' licenses

When twin brothers applied for life insurance from Company A, the company found that while neither of them smoked and both had a very similar lifestyle, one of the twins was in a much stronger financial position than the other. Because of this, the company charged him a higher rate for his insurance. This practice is considered

Discrimination Permitting individuals of the same class to be charged a different rate for the same insurance is the unfair trade practice of discrimination

During the sales presentation of producer intentionally makes a statement which may mislead the insurance applicant. This describes

misrepresentation Making false or misleading statements with the intent to defraud another is misrepresentation