Chapter 12 - Alabama Insurance Law Common to All Lines

An insurance entity or licensee cannot pay a commission or fee to a person if the person's license is classified as one of the following EXCEPT

Temporary

What is the earliest legal age that a person can be license as an insurance producer?

18

A producer holds both a Life and Health and a Property and Casualty licenses. How many hours of continuing education will the producer be required to complete every 2 years?

24

For a producer to meet the state continuing education requirements, how many CE hours must be completed on the topic of ethics?

3

How long must producers keep records of insurance transactions under their license?

3 years

Licensees must make a report of any action taken against them in another jurisdiction or by another governmental agency in Alabama within how many days of the final disposition of the matter?

30

How long does a temporary producer's license last

6 months

All of the following would be considered rebating EXCEPT

An agent misrepresents policy benefits to convince a policyowner to replace policies

All of the following applicants for an insurance producer are exempt from prelicensing education requirements EXCEPT

An applicant for a dealer's license

A resident of another state wishing to transact insurance in Alabama may obtain a nonresident producer license, without examination, upon meeting one of the following EXCEPT

Been an executive officer of an insurance company

When the Commissioner suspects that a person is violating an insurance law or other regulation, what can be issued that would order a person to stop committing the act of violation?

Cease and Desist Order

Forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as

Coercion

Which of the following authorities issues insurance producer licenses?

Commissioner

Which of the following is a requirement that must be satisfied before an applicant can receive an insurance producer license in Alabama?

Complete pre-licensing classroom instruction, unless otherwise exempt by the Commissioner

Which of the following would be considered an illegal inducement to purchase insurance?

Confirming future dividends in a life insurance proposal

All of the following are lines of insurance that may be transacted under a life and accident/health producer license EXCEPT

Consequential loss insurance

When a producer was reviewing a potential customer's insurance coverage that is written by another company, the producer made several remarks that were maliciously critical of that other insurer. The producer could be found guilty of

Defamation

All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT

Dividends from a mutual insurer

When an insurance agency published an advertising brochure, it emphasized the company's financial stability and sound business practices. In reality, its financial health is terrible, and the company will soon have to file for bankruptcy. Which of the following terms best describes the advertisement?

False financial statement

Producers are responsible to collect and disperse premiums, and return premiums or other funds. Which insurance term is association with this?

Fiduciary capacity

State law specifically prohibits using illegal inducements in the marketing of insurance. All of the following would be considered illegal inducements EXCEPT

Inviting prospective clients to the grand opening of the company's new office

A producer has becomes disabled. In order to keep his business going, what may his designee do?

Obtain a temporary license

In addition to obtaining an insurance producer license, a business entity, in order to transact insurance, must have at least

One individual licensed insurance producer

In Alabama, an insurance company certificate of authority is issued for what period of time?

Perpetual

The term "fiduciary capacity" deals with a producer's

Position of financial trust

Which of the following would not be a violation of State insurance regulations?

Producer C uses her license to write uncontrolled business only

Paul is a producer in Louisiana and wants to become a producer in Alabama. The Commissioner will waive certain examination requirements, provided that Louisiana would waive these same requirements if an Alabama producer sought licensure in Louisiana. What term is used to describe this phenomenon?

Reciprocity

When a domestic insurance company, examined by the Commissioner, disagrees with the findings of the examination, what recourse is available?

Request a hearing within 20 days of receiving the report

In applying for an original certificate of authority, an insurer must submit an application with the appropriate fees and the following information, EXCEPT

The amount of insurance it intends to write

If a producer changes his residential address who must he/she notify?

The change will need to be reported to the Commissioner.

If a licensee wants to transact insurance under a different name than that listed on his or her producer's license, which of the following must occur?

the change must be reported to the Commissioner

In the event that an insurer terminates the appointment of a producer, the insurer must notify the Commissioner within

30 days

a producer license in Alabama must notify the Insurance Department of any change of address in his or her residence or business address within how many days?

30

A person convicted of willfully violating an insurance law of Alabama is subject to

A fine of up to $1,000, imprisonment, and a sentence to hard labor for a period of one year.

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

All of the following may cause the Commissioner to suspend or revoke the license of an insurance producer, EXCEPT

Failure of a producer to meet company imposed sales quota for two consecutive periods

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

Telling a client that his first premium will be waived if he purchases the insurance policy today