Chapter 15 Michigan State Laws

If a LTC policy is replaced,

the replacing insurer may not require any elimination or probationary time periods that were satisfied under the previous policy.

How many days after terminating the appointment of an agent must an insurer notify the Commissioner of the termination? A. 10 B. 20 C. 30 D. 15

C. 30

A Medicare supplement policy must provide that benefits and premiums under the policy may be suspended at the request of the policyholder for up to

24 months. The policyholder must request suspension within 90 days after the date the individual becomes entitled to assistance.

How many days after appointing an agent must an insurer notify the Commissioner of the appointment? A. 10 B. 5 C. 15 D. 20

C. 15

Required Disclosure Provisions Insurers must provide:

-A description of policy provisions relating to renewability, cancellation, or continuation of coverage, including any reservation of rights to change premium -The premiums for the policy or certificate separately from the premiums for any optional or supplemental riders Applicants for Medicare supplement insurance must be provided with a Guide to Health Insurance for People with Medicare.

How many credit hours of CE must be devoted to ethics during each renewal period? A. 3 B. 1 C. 5 D. 10

A. 3

8. Payment of Premiums

All policies must allow premiums to be paid in advance.

The fine for a knowingly violating a cease and desist order is what amount per infraction? A. $25,000 B. $20,000 C. $50,000 D. $5,000

B. $20,000

Definition of Small Employer

In Michigan, a small employer is one who employs at least 2-50 eligible employees on at least half of its working days.

Unpaid Premiums

Optional Provisions, A policy may provide that any unpaid premiums will be deducted before a claim payment is made to an insured.

Small Employer Insurers

Small employer carriers must offer all health benefit plans available in this state on a guaranteed issuance basis. A small employer carrier may not offer a health benefit plan that contains a waiting period applicable to new or late enrollees.

Right to Examine (Free Look)

The free look period in Michigan is at least 10 days.

Denial of Enrollment - An insurer may not deny enrollment to an insured's child on any of the following grounds:

The child was born out of wedlock The child is not claimed as a dependent on the insured's federal income tax return The child does not reside with the insured or in the insurer's service area

LTC Right to Return

The free look period for an LTC policy is 30 days.

Physical Examinations and Autopsy

The insurer has the right to conduct physical examinations as required pursuant to a claim, and to make an autopsy where not forbidden by law.

Time Limit on Certain Defenses

The period for contestability is 2 years.

Legal Actions

The period for legal actions is no less than 3 years.

3. Reinstatement

A lapsed life insurance policy may be reinstated within 3 years of lapse, upon evidence of insurability and payment of arrears of all premium due, including interest.

Reinstatement

A policy may be reinstated within 60 days of a policy lapse. If the insurer requires a new application and issues a binding receipt, the policy must be reinstated within 45 days, unless the new application is denied. A reinstated policy will immediately cover accidental injury and will begin to cover sickness 10 days after the reinstatement date.

Eligibility of Employees

An eligible employee is one who works on a full-time basis with a normal workweek of 30 or more hours. Eligible employee includes an employee who works on a full-time basis. An employer may extend eligibility to workers with a normal workweek of 17.5-30 hours if these eligibility criteria are applied among all of the employer's employees and without regard to health status-related factors.

In Michigan, the Free Look period for life policies is set at how many days? A. 20 B. 30 C. 10 D. 15

C. 10

In order to be sold as a long-term care insurance policy, an insurance product must: A. Provide at least 24 months of coverage B. Provide an inflation protection at a rate 5% compounded annually C. Have an pre-existing exclusion period of no more than 6 months D. Be sold with a 10-day free look period

C. Have an pre-existing exclusion period of no more than 6 months All LTC policies provide at least 12 months of coverage, and have a 30-day free look period. An automatic inflation rider at 5% compounded annually is only one of three acceptable standards.

An insurer replacing a life policy must notify the existing insurer of the proposed replacement within how many business days of receiving an application? A. 7 B. 5 C. 10 D. 3

D. 3

How many days after terminating the appointment of an agent must an insurer notify the Commissioner of the termination? A. 10 B. 20 C. 15 D. 30

D. 30

A small employer is one that employs no more than how many employees? A. 20 B. 30 C. 10 D. 50

D. 50

How long after reinstatement will a health policy reinstate coverage for sickness? A. After 30 days B. Immediately C. After 20 days D. After 10 days

D. After 10 days

If an individual seeks to enroll a dependent during the first 30 days of the dependent special enrollment period, the coverage of the dependent must be effective as follows:

For marriage, not later than the first day of the first month beginning after the date the completed request for enrollment is received For a dependent's birth, as of the date of birth For a dependent's adoption or placement for adoption, the date of the adoption or placement for adoption

Delivery of the policy information for the applicant

If the policy information for the applicant is not furnished at the time of application, it must be delivered within 15 working days after the application is taken, but at least 5 days before delivery of the policy. If the policy is delivered sooner than 5 days after the policy information for the applicant, the free-look period is extended to 15 days.

Long-Term Care Insurance Renewability

Individual LTC policies must contain a renewability provision on the first page of the policy disclosing the duration of renewability and the duration of the term of coverage.

Non-Custodial Parents If a child has health coverage through an insurer of a non-custodial parent, that insurer must:

Provide the custodial parent with information necessary for the child to obtain benefits Permit the custodial parent or, with the custodial parent's approval, the provider to submit a claim for covered services without the non-custodial parent's approval Make payment on claims directly to the custodial parent or medical provider

If group disability coverage is replaced by another group disability policy or certificate with a preexisting condition limitation, insuring 10 or more employees or members, the preexisting condition limitation for a condition covered by the replaced coverage may not be less than the following:

The coverage of the replacement policy or certificate without application of the preexisting condition limitation The benefits of the replaced group disability coverage until the individual's preexisting condition limitation expires under the replacement policy

Child Enrollment

The insurer must permit a parent to enroll a dependent child who is otherwise eligible for coverage without regard to any enrollment season restrictions.

Identity of Insurer

The name of the insurer must be clearly identified in all advertisements and, if any specific individual policy is advertised, it must be identified either by form number or other appropriate description. No advertisement may imply that a policy or insurer's financial condition has been approved by a governmental program or agency unless it is true.

Identification of Insurer and Policy

The name of the insurer must be clearly identified in all advertisements and, if any specific individual policy is advertised, it must be identified either by form number or other appropriate description. No advertisement may use any combination of words or symbols that would mislead prospective insureds into believing that the solicitation is in some manner connected with a governmental program or agency.

Each producer who initiates an application must submit to the insurer:

-A statement signed by the applicant affirming whether or not policy replacement is involved -A statement signed by the producer affirming whether or not policy replacement is involved

The Commissioner may waive the exam or prelicensing requirements for an applicant who:

-Applies for a limited license -Has been a licensed insurance producer within the preceding 12 months -Has obtained the CPCU, CLU, CIC or other professional designations -Has an associate's, bachelor's, or master's degree with a concentration in insurance from an approved institution

Medicare Supplements

-Medicare supplement policies must be guaranteed renewable. -Termination of a Medicare supplement policy or certificate must be without prejudice to any continuous loss which commenced while the policy was in force. -A preexisting condition may not be excluded for more than 6 months after the effective date of coverage. -No Medicare supplement policy may contain benefits that duplicate benefits provided by Medicare. -An issuer may not cancel or refuse to renew a Medicare supplement policy for any other reason than the nonpayment of premiums or for a material misrepresentation.

hospital, medical, or surgical policy may not require an insured or an asymptomatic applicant for insurance to do either of the following:

-Undergo genetic testing before being issued a policy -Disclose whether genetic testing has been conducted, or any test results or other genetic information

Which of the following is not a prerequisite to apply for a producer's license in Michigan? A. Having a high school diploma B. Passage of the licensing exam C. Being at least 18 years old D. Completion of the prelicensing course

A. Having a high school diploma

Medicare Supplement Policies: A. May have a maximum pre-existing condition exclusion of 6 months B. Must be noncancellable C. May not have an outpatient prescription drug benefit D. Must duplicate benefits provided by Medicare

A. May have a maximum pre-existing condition exclusion of 6 months

Which of the following is not considered an Unfair Trade Practice? A. Representation B. Churning C. Rebating D. Twisting

A. Representation

4. Incontestability

An individual life insurance policy is incontestable after it has been in force during the lifetime of the insured for 2 years from its date of issue except for nonpayment of premiums.

Assumed Names

An insurance producer doing business under any name other than the producer's legal name is required to notify the Commissioner prior to using the assumed name.

License Duration

An insurance producer license will remain in effect (unless revoked or suspended) as long as education requirements are met.

Allowable Charges Regulation of Variable Products

At the time a variable contract is delivered, an insurer must disclose all charges that may be made against the separate account.

With regard to life insurance policies, the maximum liability of the Michigan Life and Health Guaranty Association liability is limited to the lesser of the impaired insurer's contractual obligation, or: A. $300,000 in annuity benefits B. $300,000 in death benefits per insured C. $300,000 per policy D. $300,000 in net cash surrender values

B. $300,000 in death benefits per insured

How many days after appointing an agent must an insurer notify the Commissioner of the appointment? A. 5 B. 15 C. 10 D. 20

B. 15

How many credit hours of continuing education must a producer complete to maintain his/her license during each renewal period? A. 12 B. 24 C. 36 D. 48

B. 24

The Michigan Life and Health Insurance Guaranty Association will pay the obligations of an insolvent insurer up to what amount for a single claim for LTC benefits? A. $ 500,000 B. $1 million C. $300,000 D. $1.5 million

C. $300,000

How many credit hours of continuing education must a producer complete to maintain his/her license during each renewal period? A. 24 B. 36 C. 12 D. 48

A. 24

An insurer replacing a life policy must notify the existing insurer of the proposed replacement within how many business days of receiving an application? A. 3 B. 5 C. 7 D. 10

A. 3

In Michigan, what is the minimum grace period for life insurance policies? A. 20 days B. 10 days C. 30 days D. 60 days

C. 30 days

Deceptive Phrases

No advertisement can contain or use words or phrases such as all, full, complete, comprehensive, unlimited, up to, as high as, or similar words and phrases, in a manner which exaggerates any benefits beyond the terms of the policy. No advertisement may contain descriptions of a policy limitation worded to imply that it is a benefit, such as, describing a waiting period as a "benefit builder," or stating "even preexisting conditions are covered after 2 years." No advertisement may use words or phrases that tend to mislead the public into believing that the policy will enable them to profit from being hospitalized.

6. Misstatement of Age/Gender

on the policy, any benefits will be adjusted according to what the premiums paid would have allowed at the correct age or gender.

2. Grace Period

individual life insurance policies may not be less than 30 days.

Fixed premium universal life insurance policy

means a universal life insurance policy other than a flexible premium universal life insurance policy.

Flexible premium universal life insurance policy

means a universal life insurance policy that permits the policyowner to vary the amount or timing of one or more premium payments or the amount of insurance.

Universal Life

means any individual or group life insurance policy under which interest credits are paid.

LTC Shopper's Guide (Buyer's Guide)

must be provided to the applicant prior to the application's presentation or enrollment form's presentation, in the case of a producer solicitation.

Group Life Conversion to Individual Policy

must contain a provision that, if the insurance for an insured terminates due to termination of employment, the insured will be entitled, without evidence of insurability, to an individual policy upon application within 31 days of the termination date.

If existing group disability coverage is replaced by a group disability insurance policy or certificate with a preexisting condition limitation insuring less than 10 employees or members

the replaced coverage must extend benefits for the preexisting condition by providing benefits for until the term of the preexisting condition limitation has expired or 6 months have elapsed, whichever occurs first.

Long-Term Care Insurance Preexisting Conditions

An LTC policy may not exclude losses incurred more than 6 months from the effective date of coverage for a preexisting condition.

The notice must be in writing and contain the following information:

-A statement that information may be collected from persons other than the individual who is to be insured -A list of the types of information that may be collected and the origin and investigative method used The types of disclosure -A description of the insured's rights and how the rights may be exercised -A statement that the information obtained may be retained by the insurer and disclosed to other persons If a licensee does not disclose, and does not wish to reserve the right to disclose, nonpublic personal financial information, the licensee is not required to provide initial notice and the licensee may simply state the fact.

A lapsed life insurance policy may be reinstated for up to how many years following premium default? A. 4 B. 3 C. 2 D. 1

B. 3

Suspension, Revocation, Refusal to Issue or Renew Insurers

When it appears to the Commissioner that any person has committed a violation of insurance law which makes the continued operation of an insurer contrary to the interests of policyholders or the public, the Commissioner, after giving notice and an opportunity to be heard, may suspend, revoke or refuse to renew the insurer's license or authority to do business in Michigan.

Disclosure of Modification

An advertisement must disclose any exceptions, reductions and limitations affecting the basic provisions of the policy. Statistical information relating to any insurer or policy must accurately reflect all relevant facts.

Each universal life insurance policy must contain:

-Guarantees of minimum interest credits and maximum mortality and expense charges -A general description of the calculation of cash surrender values. -A description of limitations on the policyowner's right to change the basic coverage -A statement that coverage may not continue to the maturity date even if scheduled premiums are paid in a timely manner. -A requirement that written notice will be sent to the policy owner at least 30 days prior to termination of coverage -For flexible premium universal life insurance policies, a grace period of at least 30 days Notice that an illustrative report will be sent to the policyowner upon request

LTC Exclusions

-Pre-existing conditions -Mental or nervous disorders (except for Alzheimer's disease) -Alcoholism or drug addiction -Suicide -Service in the armed forces or auxiliary units -War or act of war, whether declared or undeclared -Participation in a felony, riot or insurrection

fixed indivisible premium life insurance policy that funds LTC benefits entirely by accelerating the death benefit must comply with all of the following provisions:

-Premiums required to be paid are fixed and guaranteed for the life of the policy The guaranteed cash surrender value is stated in the policy -The death benefit and long-term care benefits are guaranteed for the life of the policy The risk charges for mortality and morbidity benefits are guaranteed not to exceed the maximum charges set forth in the policy -The interest credited internally is guaranteed not to be less than the minimum interest rate set forth in the policy -The benefits cannot be terminated by the insurer except for nonpayment of premium The policy meets the applicable nonforfeiture requirements -At the time of issue, the policy is accompanied by an illustration that clearly discloses the year-by-year progression of cash values and face amount -The policyowner is provided with an annual report showing the current cash value, death benefit, and LTC benefits

Which of the following statement applies to Medicare Select policies? A. Prospective Medicare Select buyer must receive an outline of coverage prior to applying for coverage B. Medicare Select enrollees do not have access to other plans at the time of enrollment C. Medicare Select policies require all care to be in-network D. Medicare Select is another name for Plan A offering core benefits

A. Prospective Medicare Select buyer must receive an outline of coverage prior to applying for coverage

The insurer must provide the policyholder with an annual report of the policy status itemizing:

-The beginning and end of the current report period -The policy value at the end of the previous and current report periods -The total of all amounts credited or debited to the policy value during these current report period -The death benefit at the end of the current report period on each life covered by the policy -The net cash surrender value of the policy -The amount of outstanding loans, if any -Notice that the policy's net cash surrender value will not maintain insurance in force until the end of the next reporting period, if applicable

At the time the agent takes an Universal Life application for a policy, the agent must furnish a statement of policy information to the applicant. Any statement of policy cost factors or benefits must contain all of the following:

-The corresponding guaranteed policy cost factors or benefits -A statement explaining the non-guaranteed nature of any interest rates, charges, or other fees applied to the policy, including the insurer's rights to alter any of these factors -Any limitation on the crediting of interest Any illustration of the policy value must be accompanied by the corresponding net cash surrender value. Any statement regarding the crediting of a specific current interest rate must also contain the frequency and timing by which that rate is determined. If any statement refers to the policy being interest-indexed, the index must be described. Any illustrated benefits based upon non-guaranteed interest, mortality, or expense factors must be accompanied by a statement indicating that these benefits are not guaranteed. If the guaranteed cost factors or If the guaranteed cost factors or initial policy cost factor assumptions would result in policy values becoming exhausted before the policy's maturity date, that fact must be disclosed.

When advertising their health insurance products, insurance carriers: A. Must not use statistical information relating to any insurer or policy unless it accurately reflects all relevant facts B. Must disclose whether genetic testing is required of all applicants C. Must use the term 'LIMITED POLICY' if there are limitations on the coverage of pre-existing conditions D. Must not advertise in any venue which could be seen, or heard, beyond the states in which the insurer is licensed

A. Must not use statistical information relating to any insurer or policy unless it accurately reflects all relevant facts Limited Policies apply to limited perils not policy exclusions, and advertising can extend beyond the borders of one's authority if the limits are stated in the advertising. As for genetic tests, those are prohibited if someone is asymptomatic.

Renewability

A small employer carrier must renew coverage under a health benefit plan at the option of the small employer or sole proprietor.

An employee must apply for conversion from group life to individual life within how many days after the group coverage terminates? A. 31 B. 21 C. 12 D. 16

A. 31

All of the following licenses require a licensing fee of $10 per year, except: A. A surplus lines producer B. An insurance counselor C. A solicitor D. A non-resident agent

A. A surplus lines producer

When Robert suffered a disabling injury, he received disability income benefits under the terms of his employer-sponsored disability insurance policy. He was still receiving benefits when his employer switched carriers. The process of determining how benefits applied immediately after this change was governed by which of the following provisions? A. Extension of benefits B. Policy conversion C. Policy conversion COBRA D. Coordination of benefits

A. Extension of benefits

When will children born to policy holders be covered for injury or sickness to include that caused by congenital defects and birth abnormalities? A. From the moment of birth B. Upon discharge from the hospital C. 31 days after birth if an application is submitted along with the required premium D. Starting on the third day of life

A. From the moment of birth

All of the following statements regarding life insurance policy provisions are correct, except: A. If a misstatement of age occurs, the insurer adjusts the premiums to reflect the true age of the insured B. The minimum grace period for a life insurance policy is 30 days C. Living benefit premiums must be fixed and guaranteed for the life of the policy D. The incontestability provision becomes active after the first 2 years

A. If a misstatement of age occurs, the insurer adjusts the premiums to reflect the true age of the insured The benefits would be adjusted, not the premium.

If the Commissioner determines that a person has engaged in an unfair method of competition, or an unfair or deceptive act or practice, the Commissioner will take which of the following actions? A. Issue a cease and desist order B. Impose a penalty of $2,500 per violation C. Impose a fine of $10,000 per code violation D. Issue an administrative penalty of $250 per violation

A. Issue a cease and desist order

Variable life insurance policies must comply with the following minimum requirements? A. The Commissioner must approve each policy before it can be issued for delivery in Michigan B. Insurers may never guarantee a minimum death benefit for any variable policy C. Variable policies must mature like other whole life policies at age 100 D. Variable policies must have a 31-day free-look period

A. The Commissioner must approve each policy before it can be issued for delivery in Michigan

Group Membership

Advertisements may not imply that prospective purchasers become a group of members who enjoy special rates or privileges ordinarily associated with group insurance.

Form and Content

Advertisements must be truthful and not misleading in fact or by implication. The form and content of an advertisement of a policy must be sufficiently complete and clear so as to avoid deception.

Special Offers

An advertisement may not falsely imply that only a specific number of policies will be sold, or that a time is fixed for the discontinuance of the sale of the particular policy because of special advantages available in the policy.

Disparaging Comparisons

An advertisement may not make unfair or incomplete comparisons of policies or benefits of other insurers, and may not disparage competitors, their policies, services or business methods. No advertisement may make any misleading statement relating to the financial condition of a life insurance company.

Appropriateness of Recommended Purchase Medicare

An agent must make reasonable efforts to determine the appropriateness of a recommended purchase or replacement of a Medicare supplement policy. An insurer may not issue a Medicare supplement policy to an individual enrolled in Medicare Part C unless the effective date of the coverage is after the termination date of the individual's Part C coverage.

Renewability Clause

An individual expense-incurred hospital, medical, or surgical individual policy must be renewable at the option of the insured and a group expense-incurred hospital, medical, or surgical individual policy must be renewable at the option of the plan sponsor. Guaranteed renewal is not required in cases of fraud, intentional misrepresentation of material fact, lack of payment, if the insurer no longer offers that particular type of coverage in the market, or if the individual or group moves outside the service area. These renewability requirements do not apply to a short-term or one-time limited duration policy or certificate of no longer than 6 months.

Dependent Child Age Limit

Attainment of age 19 for a dependent will not terminate the coverage under an individual or group disability policy if the child is both incapable of self-sustaining employment by reason of mental retardation or physical handicap and chiefly dependent upon the policyholder for support and maintenance. However, the policy holder must provide the insurer with documentation of such incapacity or dependence within 31 days of the child's attainment of the limiting age.

Each agent must notify the Department of Insurance within how many days of a change in residence or business address? A. 90 B. 30 C. 60 D. 180

B. 30

The insured covered under a group disability policy must apply for the conversion policy within how many days after the termination of the group coverage? A. 60 B. 30 C. 180 D. 90

B. 30

Which of the following provides advice about insurance policy terms and/or benefits for a fee? A. An insurance adjuster B. An insurance counselor C. An insurance broker D. An insurance agent

B. An insurance counselor

A producer may not act as an agent unless he/she is _________ as an agent by the insurer. A. Disapproved B. Appointed C. Authorized D. Licensed

B. Appointed

Which of the following statements about blanket disability insurance coverage is correct? A. An application is required from each person covered B. Credit disability insurance is considered a blanket policy C. Blanket insurance benefits are paid to the plan sponsor D. The term blanket insurance does not apply to employer-sponsored group insurance

B. Credit disability insurance is considered a blanket policy

What is the conversion privilege required on all group life insurance policies sold in the state of Michigan? A. There is no required benefit, though one may be offered B. Terminated employees have 31 days to convert to an individual policy C. Terminated employees have 10 days to convert to an individual policy D. Terminated employees have 30 days to convert to an individual policy

B. Terminated employees have 31 days to convert to an individual policy

Which of the following statements regarding the advertising, solicitation, and sale of life insurance in the state of Michigan is correct? A. The only life policies that may be characterized as sold through the investment department are variable life policies B. The name or title of a life insurance policy must contain the words 'life insurance' in it C. The term 'advertisement' refers to material that promotes the sale of policies, not the recruitment of agents D. A Buyer's Guide must always be given to the prospective purchaser of a life insurance policy prior to the payment of the initial premium

B. The name or title of a life insurance policy must contain the words 'life insurance' in it

All of the following would be consider violations of the state's Insurance Fraud Regulation, except: A. To knowingly present an insurance application that contains false information to an insurer B. To misrepresent the terms of an insurance policy in order to make a sale C. To divert funds that rightly belong to an insurer D. To solicit new or renewal insurance risks by or for any insolvent insurer

B. To misrepresent the terms of an insurance policy in order to make a sale Misrepresentation is an unfair trade practice, but it is distinct from Fraud.

Which of the following is an optional provision for health insurance policies In Michigan? A. Reinstatement B. Unpaid premiums C. Entire contract D. Time Limit on defenses

B. Unpaid premiums

Which of the following is an optional provision for health insurance policies In Michigan? A. Time Limit on defenses B. Unpaid premiums C. Reinstatement D. Entire contract

B. Unpaid premiums

Any person who commits a fraudulent insurance act is guilty of a felony punishable by imprisonment for up to 4 years and/or a fine of: A. Up to $5,000 per violation B. Up to $50,000 per violation C. Up to $15,000 per violation D. Up to $10,000 per violation

B. Up to $50,000 per violation

An LTC policy may not limit or exclude home health care benefits in any of the following ways:

By requiring that the insured would need skilled care in a skilled nursing facility if home health care services were not provided By requiring that the insured first or simultaneously receive nursing or therapeutic services in a home or community setting before home health care services are covered By limiting eligible services to services provided by registered nurses or licensed practical nurses By requiring that a nurse or therapist provide services covered by the policy that can be provided by a home health aide or other licensed or certified home care worker acting within the scope of his or her licensure or certification By requiring that the insured have an acute condition before home health care services are covered By limiting benefits to services provided by Medicare-certified agencies or providers

The penalty for violating a Cease and Desist Order is: A. $500 per violation B. $25,000 per violation C. $20,000 per violation D. $2,500 per violation

C. $20,000 per violation

After how many years does an individual life policy become incontestable? A. 3 B. 1 C. 2 D. 5

C. 2

In Michigan, the Free Look period for LTC policies is set at ____ days? A. 15 B. 20 C. 30 D. 10

C. 30

An employee must apply for conversion from group life to individual life within how many days after the group coverage terminates? A. 16 B. 12 C. 31 D. 21

C. 31

Which one of the following regarding insurable interest is false? A. Any individual who has an insurable interest in the life of another human being may not insure that other human being's life unless the proposed insured consents to be insured in writing by signing the application for insurance B. No person may procure an insurance contract upon the life or body of another person unless the benefits are payable to the individual insured or that individual's beneficiary C. Any individual who has an insurable interest in the life of another human being may not insure that other human being's life unless they have been given permission by the Insurance Commissioner at least 30 prior to application for the proposed insurance coverage D. An individual of competent legal capacity may procure or effect an insurance contract upon that individual's own life or body for the benefit of any person

C. Any individual who has an insurable interest in the life of another human being may not insure that other human being's life unless they have been given permission by the Insurance Commissioner at least 30 prior to application for the proposed insurance coverage

Which of the following is not an exception to the requirement that small employer health plans be guaranteed renewable? A. Exit of carrier from the market B. Misrepresentation C. Changes in employee risk profile D. Nonpayment of premium

C. Changes in employee risk profile

A small employer: A. Is defined as having between 1 and 50 eligible employees B. May not offer a plan with an affiliation period for new or late enrollees C. Must have the option to renew group health plan coverage D. Must, at a minimum, define an eligible employee as one that works 17.5 hours a week or more

C. Must have the option to renew group health plan coverage

Which of the following is not a required objective of an insurer's information security program? A. Protect against any anticipated threats or hazards to the integrity of the information B. Protect against unauthorized access to the information that could result in substantial harm or inconvenience to any customer C. Provide for prosecution of those who violate privacy protections D. Ensure the security and confidentiality of customer information

C. Provide for prosecution of those who violate privacy protections

Craig borrows $25,000 for the purchase of an automobile, with the balance to be amortized over the course of 5 years. During the term of the loan, the death benefit will equal: A. $25,000 B. The value of the car C. The outstanding balance of the loan D. The sum of the remaining scheduled loan payments

C. The outstanding balance of the loan

Newborn Children

Children born to policy holders are covered from the moment of birth for injury or sickness to include that caused by congenital defects and birth abnormalities. Insurers must be notified of the birth within 31 days for coverage to continue beyond that date.

Claim Procedures

Claims must be paid immediately upon receiving the proof of the claim. However, insurers may pay installment amounts until the proof is provided.

Regulations governing replacement of life insurance policies would apply to which of the following policy types? A. Group life B. Life policies with deductible premiums C. Credit life administered by group-type methods D. Individual life

D. Individual life

In the state of Michigan, if a business entity wishes to become a licensed insurance agent, it must: A. Disclose the name of license officers of the corporation, but not non-licensed ones B. Assure that all of the partners or officers or directors of the entity are individually licensed as producers C. Meet the same requirements as an individual seeking a license D. Provide the name and address of a licensed agent who will be responsible for compliance with state laws, etc.

D. Provide the name and address of a licensed agent who will be responsible for compliance with state laws, etc.

An insurer who terminates an appointment, employment, or other relationship of a producer must notify: A. The producer, 5 days after the determination is made B. The producer within 30 days C. The Commissioner, 15 days after notifying the producer D. The Commissioner, 30 days after the appointment is terminated

D. The Commissioner, 30 days after the appointment is terminated

Every entity marketing long-term care insurance in this state must:

Ensure that policy comparisons are fair and accurate and that excessive insurance is not sold or issued Ensure that excessive insurance is not sold Include the following notice on the first page of the policy and outline of coverage: "Notice to buyer: This policy may not cover all of the costs associated with long-term care incurred by the buyer during the period of coverage. The buyer is advised to review carefully all policy limitations." Insurers must file all long-term care policies and advertising materials with the Commissioner for review and approval prior to issuing the policies or using the advertising materials.

Long-Term Care Insurance Suitability

Every LTC insurer must develop and use suitability standards to determine the appropriateness of purchasing or replacing LTC insurance. Producer and issuer considerations include ability to pay for proposed coverage, the applicant's LTC goals and needs, and the values, benefits, and cost of the existing insurance compared to the proposed coverage.

Conversion Privilege

Every group disability policy must provide that a dependent who has been continuously insured under the group policy for at least 3 months and whose insurance under the group policy has been terminated is entitled to be issued a conversion policy, without evidence of insurability. The insurer must give written notice to an insured of the conversion option and procedures within 14 days after the group plan's termination. The insured must apply for the conversion policy within 30 days after the termination of the group coverage. The converted policy may not impose any preexisting condition limitations other than those remaining unexpired under the policy from which conversion is exercised.

Guaranteed renewal is not required in cases of:

Fraud or intentional misrepresentation Nonpayment of premium Noncompliance with minimum participation requirements The small employer carrier ceasing to offer that particular type of coverage in the market The sole proprietor or small employer moving outside the coverage area

Long-Term Care Insurance Conversion

Group LTC insurance must provide insureds with a basis for continuation or conversion of coverage.

Certificate of Coverage

Group disability policies must include a provision that the insurer will furnish to the policyholder, for delivery to each employee or member of the insured group, an individual certificate setting forth in summary form a statement of the benefits.

If an LTC policy is offered, the insurer must also offer the applicant, at the time of purchase, the option to buy an inflation protection feature that:

Increases benefit levels annually at a rate no less than 5% Guarantees that the insured may periodically increase benefit levels without providing evidence of insurability or health status, so long as the option for the previous period has not been declined Covers a specified percentage of actual or reasonable charges and does not include a maximum specified indemnity amount or limit

Adopted Children

Insurance under any group life insurance policy issued under sections may be extended to insure the eligible dependents of each insured employee or member who so elects. A "child" includes a biological, legally adopted, and step or foster child of an employee or member who is dependent on the employee or member.

Specified Illness

No advertisement of a policy covering only one disease or a list of specified diseases may imply coverage beyond the terms of the policy.

7. Exclusions and Restrictions

No policy of life insurance other than industrial life insurance may be issued in Michigan with any of the following provisions: -Forfeiture of the policy for failure to repay any loan on the policy while the total indebtedness is less than the loan value -Time limit for legal action against the insurer of less than 6 years -An effective date more than 6 months before application was made -Settlement at maturity of less value than the amount insured by the policy plus dividend additions, if any, less any indebtedness to the insurer on the policy and less any premium that may by the terms of the policy be deducted

Other Insurance in This Insurer

Optional Provisions, A policy may provide that if an insured has more than 1 policy with the same company, he/she may elect the policy to be used. Excess premiums for the excess coverage will be returned.

Misstatement of Age

Optional Provisions, A policy may provide that if the insured's age is misstated on the policy, benefits will be paid in accordance to what the premiums would have purchased at the correct age.

Illegal Occupation

Optional Provisions, A policy may state that insurers are not liable for losses incurred during the course of illegal activities.

Conformity with State Statutes

Optional Provisions, A policy may state that it will conform to the statutes of the state wherein the insured resides.

Some examples of the types of groups covered by blanket disability in Michigan include:

Passengers of a common carrier Employees of a single employer Students or teachers at a school or college Volunteer fire department, or other such volunteer group Debtors of a single creditor Members of a sports team Attendees of a camp

Each insurer that sells LTC insurance must ensure that each producer whose duties include transacting LTC insurance completes a program of instruction including:

State regulations and requirements, including, but not limited to, laws relating to adult financial exploitation Available LTC services and providers Changes or improvements in long-term care services or providers Alternatives to the purchase of private long-term care insurance Differences in eligibility for benefits and tax treatment between policies intended to be federally qualified and those not intended to be federally qualified The effect of inflation in eroding the value of benefits and the importance of inflation protection Consumer suitability standards and guidelines

Entire Contract; Changes

The policy and application must constitute the entire contract between the parties.

A small employer carrier must permit an employee or a dependent of the employee, who is eligible, but not enrolled, to enroll for coverage under the terms of the small employer health benefit plan during a special enrollment period if all of the following apply:

The employee or dependent was covered under a group health plan or had coverage under a health benefit plan at the time coverage was previously offered to the employee or dependent. The employee stated in writing at the time coverage was previously offered that coverage under a group health plan or other health benefit plan was the reason for declining enrollment, but only if the small employer or carrier, if applicable, required such a statement at the time coverage was previously offered and provided notice to the employee of the requirement and the consequences of the requirement at that time. The employee's or dependent's coverage described in the first bullet above was either under a COBRA continuation provision and that coverage has been exhausted or was not under a COBRA continuation provision and that other coverage has been terminated as a result of loss of eligibility for coverage, including because of a legal separation, divorce, death, termination of employment, or reduction in the number of hours of employment, or employer contributions toward that other coverage have been terminated. In either case, under the terms of the health benefit plan, the employee must request enrollment not later than 30 days after the date of exhaustion of coverage or termination of coverage or employer contribution. If an employee requests enrollment pursuant to this subdivision, the enrollment is effective not later than the first day of the first calendar month beginning after the date the completed request for enrollment is received.

Grace Period

The grace period is 10 days for monthly premiums, and 31 days for all other modes of payment.

Rules for Coordination of Benefits

The primary plan pays its benefits as if the secondary plan or plans did not exist. A secondary plan takes the benefits of another plan into account before benefits are paid. The benefits of the plan which covers the person as an employee or member is determined before those of the plan which covers the person as a dependent. The benefits of a plan which covers a person as an employee are determined before those of a plan which covers that person as a laid-off or retired employee.

Summary Suspension

Without prior hearing, the Commissioner may order summary suspension of a license if he or she finds that protection of the public requires emergency action. If requested, the Commissioner may conduct a hearing on the suspension not later than 20 days after the suspension.

business entity

a corporation, association, partnership, limited liability company, limited liability partnership, or other legal entity, subject to licensure when acting as a producer.

Blanket Insurance

a form of limited health insurance covering groups of persons whose membership fluctuates. Members of the group are automatically covered, and are not individually underwritten. -must contain all the provisions required under individual disability policies, plus a provision that new persons eligible for coverage will be added to the group. -An individual application is not required from a person covered under a blanket disability policy. -All benefits are payable to the person insured, their beneficiary or their legal guardian where applicable. If directed by the insured, benefits may be paid directly to a third-party organization such as a creditor.

5. Right to Examine (Free Look)

period in Michigan is 10 days.

Michigan Life and Health Insurance Guaranty Association's liability is equal to the insurer's contractual obligation had it not become insolvent, up to the following limits for one life (regardless of the number of policies written):

-$300,000 in life insurance death benefits and $100,000 in net cash surrender and withdrawal values -$100,000 for health insurance -$100,000 in annuity benefits -$300,000 for disability income or long-term care benefits -$500,000 in basic hospital, medical and surgical insurance benefits

Producer Appointment Notice of Appointment

-An insurer must file this within 15 days after the contract is executed or the first application for insurance is submitted. Upon receipt of this, the Commissioner will determine within 30 days whether the producer is eligible. If the producer is not, the Commissioner will notify the insurer within 5 days after the determination is made. -An insurer must pay an appointment fee and remit an annual renewal fee for each appointed producer. -Notification of the appointment or termination of the appointment of a managing general agent must be submitted to the Commissioner within 30 days after entering into a contract or termination.

It is an unfair trade practice to offer any of the following as an inducement to purchase or renew an insurance policy:

-Employment -Shares of stock or other securities issued or at any time to be issued -An advisory board contract promising special profits -Any prizes, goods, wares, merchandise or tangible property valued at more than $10

An agent or solicitor is a fiduciary for all money received or held by the agent in his/her capacity as a producer, and must abide by the following practices:

-No agent/solicitor may accept payment of a premium for a Medicare supplemental policy or certificate in the form of a check or money order made payable to the agent instead of the insurer. -Upon receiving payment of a premium for a Medicare supplemental policy or certificate, an agent/solicitor must immediately provide a written receipt to the insured. -An agent/solicitor must use reasonable accounting methods to record funds received in his/her fiduciary capacity including the receipt and distribution of all premiums due each insurer. -An agent/solicitor must record return premiums received by or credited to him/her which are due an insured. The records must be open to examination by the Commissioner. -An agent/solicitor may not reward or remunerate any person for procuring or inducing business, furnishing leads or prospects, or acting in any other manner as an agent. -A person may not sell or attempt to sell insurance by means of intimidation or threats. -A person may not induce the purchase of insurance through a particular agent or from a particular insurer by means of a promise to sell goods, to lend money, to provide services, or by a threat to refuse to sell goods, to refuse to lend money, or to refuse to provide services. -An agent/solicitor may not be a party to a contract under which the agent assumes any responsibility or obligation for payment, from his/her commission or any allocation of premium to him/her by the insurer, of any losses on insurance policies sold by the agent unless the claim adjusting is done by insurance company adjusters or licensed independent adjusters.

A surplus lines broker or surplus lines insurer is considered to be in compliance with the notice and opt out requirements for nonpublic personal financial information if all of the following are met:

-The broker or insurer does not disclose nonpublic personal information of a consumer to nonaffiliated third parties for any purpose, including joint servicing or marketing. -The broker or insurer delivers the following notice to the consumer at the time a customer relationship is established: PRIVACY NOTICE "Neither the U.S. brokers that handled this insurance nor the insurers that have underwritten this insurance will disclose nonpublic personal information concerning the buyer to non-affiliates of the brokers or insurers except as permitted by law."

Variable life insurance policies must comply with the following minimum requirements:

-The insurer bears mortality and expense risks -For scheduled premium policies, the insurer must provide a minimum death benefit that equals or exceeds the initial face amount of the policy as long as the insured pays the premiums -Any changes in the variable death benefit must be determined at least annually -The cash value must be determined at least monthly A variable life policy must specify: -That the amount or duration of the death benefit may be variable or fixed under specified conditions -That cash values may increase or decrease according to the experience of the separate account, subject to any specified minimum guarantees -Any minimum death benefit that is required The method for determining the amount of insurance payable at death -That the policyholder may return the policy within 10 days after delivery of the policy and receive a refund equal to the difference between the premiums paid and the amounts allocated to any separate accounts under the policy -The grace period -Reinstatement provision, if applicable -Designation of the separate account

Applicant must complete a prelicensing course no more than ______ months before submitting the application for examination.

12

Nonresident Producer

A nonresident insurance producer who satisfies the continuing education requirements in the producer's home state also satisfies the Michigan continuing education requirements if the nonresident producer's home state recognizes the satisfaction of its continuing education requirements imposed on producers from this state on the same basis.

The Michigan Life and Health Insurance Guaranty Association will pay the obligations of an insolvent insurer up to what amount for a single claim for hospital and surgical benefits? A. $500,000 B. $1 million C. $2 million D. $5 million

A. $500,000

Form and Content

Advertisements must not be misleading. The form and content of an advertisement of a policy must be sufficiently complete and clear so as to avoid deception. An advertisement may not use the terms "investment," "investment plan," "expansion plan," "profit," "profits," "profit sharing," "interest plan," "savings," "savings plan," or other similar terms to mislead a prospective insured to believe that he/she will receive some benefit not available to other persons of the same class and equal expectation of life.

Advertising Beyond Limits of Licensing Jurisdiction

An advertisement that is intended to be seen or heard beyond the limits of the jurisdiction in which the insurer is licensed must not imply licensing beyond such limits.

Commission for Disability Policies

An agent may not receive a commission for a disability policy issued to an individual eligible for Medicare, unless the amount of the commission paid in the first year of the policy is not more than the amount that the agent receives for the policy in each of the 2 subsequent renewal periods.

False Report of Death or Sickness

Any agent, physician, insured or other person who presents to an insurer a false certificate of death, sickness or disability is guilty of a misdemeanor and is liable for a fine of up to $1,000, or to imprisonment in the county jail of up to 3 months.

Insurable Interest

Any individual of competent legal capacity may procure an insurance policy upon his/her own life or body for the benefit of any person. No person may procure an insurance contract upon the life or body of another person unless the benefits are payable to the insured or the insured's beneficiary. Anyone with an insurable interest in the life of a person at least 18 years old may not insure that person's life without his/her written consent

The fine for a knowingly violating a cease and desist order is what amount per infraction? A. $5,000 B. $20,000 C. $25,000 D. $50,000

B. $20,000

Written Agreement Between Counselor and Client

Before rendering services, an insurance counselor must prepare a written agreement, signed by both the counselor and the client, outlining the nature of the work to be performed by the counselor and the fee. The agreement must clearly state that the counselor's fee may not be waived under any circumstances and disclose that the counselor will receive a commission from the insurer on any insurance placed by the counselor acting as insurance agent. The counselor must retain a copy of each agreement for 2 years after completion.

How many credit hours of CE must be devoted to ethics during each renewal period? A. 1 B. 10 C. 3 D. 5

C. 3

How long must a life insurer maintain files containing the advertisements it has used? A. 2 B. 10 C. 4 D. 5

C. 4

Regulations governing replacement of life insurance policies would apply to which of the following policy types? A. Group life B. Credit life administered by group-type methods C. Individual life D. Life policies with deductible premiums

C. Individual life

Which of the following is not a required objective of an insurer's information security program? A. Protect against unauthorized access to the information that could result in substantial harm or inconvenience to any customer B. Protect against any anticipated threats or hazards to the integrity of the information C. Ensure the security and confidentiality of customer information D. Provide for prosecution of those who violate privacy protections

D. Provide for prosecution of those who violate privacy protections

Charging different rates or providing different benefits to insureds of the same actuarial class or hazard category is which of the following? A. Sliding B. False statements C. Defamation D. Unfair discrimination

D. Unfair discrimination

Long-Term Care Education Requirements

Each producer whose duties include transacting long-term care insurance must complete a program of instruction before selling, soliciting, or negotiating long-term care insurance.

Unfair Sex/Race Discrimination

Insurers may not restrict the amount of benefits payable on the basis of age, sex, race, creed, national origin or marital status, except to the extent the amount of benefits, term, conditions, or type of coverage vary as a result of the application of rate differentials.

Commissions

No insurer or producer may pay a commission, service fee, or other valuable consideration to a person for selling, soliciting, or negotiating insurance if that person is required to be licensed and is not so licensed. Nor may anyone accept a commission, service fee, or other valuable consideration for selling, soliciting or negotiating insurance if that person is required to be licensed and is not so licensed. Renewal or other deferred commissions may be paid to a person who is no longer actively licensed if the person was licensed when the transaction of insurance occurred. An insurance agent may pay a com

Twisting

No insurer, officer, director, agent or solicitor, may make any misrepresentation of policies for the purpose of inducing an insured to lapse his/her existing insurance therein, and to take out a another policy in its place. Violators are subject to license revocation, and may not seek a new license for one year following the violation.

Misrepresentation in Insurance Applications

No licensee may furnish a fee, commission, money, or other benefit in exchange for false or fraudulent representations on an application for insurance.

Continuing Education Requirements

To maintain a producer's license, each licensee must complete a minimum of 24 credit hours, 3 hours of which must be in ethics, of approved insurance continuing education (CE) courses every 2 years.

insurance counselor

a person who provides advice, counsel, or opinion with respect to benefits promised, coverage afforded, or terms of a policy of insurance or annuity. A person cannot hold him/herself out as an insurance counselor unless he/she is licensed as an insurance counselor.

insurance producer

person required to be licensed under Michigan law to sell, solicit, or negotiate insurance.

Michigan Life and Health Insurance Guaranty Association

provides protection to policyowners and beneficiaries in the event of insurer impairment or insolvency. All insurers authorized to transact life and health insurance in Michigan are required to be members of the Association. The association is funded by assessments from each insurer member If a member insurer becomes impaired or insolvent, an assessment will be made against the other members to provide money for the claims of the insolvent insurer. The Association assumes all the rights duties, and obligations of the insolvent insurer.

Boycott, Coercion, Intimidation

It is an unfair practice in the business of insurance to enter into action resulting in an unreasonable restraint of trade, or monopoly in, the business of insurance.

Licensees and applicants for licensure must pay the following fees to the Commissioner:

-Application fee for license as resident agent, nonresident agent, surplus lines agent, solicitor, counselor, or adjuster (not transferable or refundable) $10 -License examination fee for license as resident agent, surplus lines agent, solicitor, counselor, or adjuster (not transferable or refundable) $10 -Solicitor's license $10 Annually -Insurance counselor license $10 Annually -Adjuster's license $5 Annually -Surplus lines agent license $100 Annually

A licensee's information security program must be designed to do all of the following:

-Ensure the security and confidentiality of customer information -Protect against any anticipated threats or hazards to the integrity of the information -Protect against unauthorized access to the information that could result in substantial harm or inconvenience to any customer

A producer's license is not required of employees, officers, and directors who do not transact insurance, do not receive commissions, and who engage in the following capacities:

-Executive, administrative, managerial, or clerical tasks indirectly related to the transaction of insurance. -Underwriting, loss control, inspection, or the processing, adjusting, investigating, or settling of a claim on a contract of insurance -Providing technical advice and assistance to licensed insurance producers -Securing and furnishing information for the administration of group insurance -Performing administrative services related to mass marketed property and casualty insurance -Administration of a program of employee benefits for the employer's or association's own employees who are not compensated by the company issuing the contracts -The inspection, rating, or classification of risks, or the supervision of the training of insurance producers -Advertising -Counsel to an employer concerning its insurance interests

The following types of policies are exempt from replacement regulations:

-Replacements by the same insurer that issued the existing policy -Credit life insurance administered by group-type methods -Group life insurance policies -Policies is issued in connection with a pension, profit sharing, individual retirement account or other benefit plan qualifying for an income tax deduction of premiums -Nonconvertible term policies which cannot be renewed and which would expire within 5 years

It is an unlawful, fraudulent practice to knowingly make a material misrepresentations or concealments in an application for the issuance or renewal of an insurance policy, or in a claim for benefits under an insurance policy. It is also a fraudulent practice to:

-Solicit or accept insurance risks by or for an insolvent insurer -Conceal the records of an insurer, reinsurer or other licensee -Divert the monies of an insurer, reinsurer, or other licensee =is guilty of a felony punishable by imprisonment for up to 4 years, a fine of up to $50,000, or both, and must pay restitution. =A person who enters into an agreement, combination, or conspiracy to commit fraud is guilty of a felony, punishable by imprisonment of up to 10 years, or by a fine of up to $50,000, or both.

Penalties

A person, officer, member, or examining physician of any society authorized to do business who knowingly makes a false or fraudulent statement or representation in an application for membership, or for the purpose of obtaining any benefit is guilty of a misdemeanor and is subject to imprisonment for not less than 30 days or more than one year, or by a fine of not less than $100 or more than $500, or both. A person who willfully makes a false statement as to the death or disability of a certificate holder in a society for the purpose of procuring payment of a benefit is guilty of perjury.

Grace Period

A producer has a 90-day grace period from the expiration date of his/her license within which to meet his/her continuing education requirements or the license will be canceled. During the 90-day grace period, the insurance producer may not solicit or sell new policies of insurance, bind coverage, or otherwise act as an insurance producer except to service policies previously sold and receive commissions on policies previously sold.

Which of the following is not grounds for license revocation? A. Overinsuring a property risk B. Committing an Unfair Trade Practice C. Providing materially untrue information in the license application D. Violating a cease and desist order

A. Overinsuring a property risk

Producer B tells applicants that if they buy their insurance with her agency, she'll refund the first month's premium. This is an example of what Unfair Trade Practice? A. Rebating B. Misrepresentation C. Twisting D. Defamation

A. Rebating

Exemption for Nonresidents

An applicant for an insurance producer license in Michigan who was previously licensed for the same qualifications in another state is not required to complete any prelicensing education or examination. To qualify the applicant must be currently licensed in the originating state, or have applied for a Michigan license within 90 days of the cancellation of the applicant's previous license.

Termination of Appointment

An insurer terminates the appointment, employment, or contract with a producer must notify Commissioner within 30 days following the effective date of the termination. Within 15 days after notifying the Commissioner of termination of appointment, the insurer will mail a copy of the notification to the producer. If a producer's authority to represent an insurer is terminated, the responsibility of an insurance producer having property rights in the renewal will continue until the existing policies of insurance are canceled, replaced, or have expired.

All of the following would be eligible to have their prelicensing requirements waived by the Commissioner except an applicant who: A. Applies for a credit insurance producer's license B. Has been a licensed insurance producer within the preceding 36 months C. Has obtained the CPCU designation D. Has a bachelor's degree with a concentration in insurance from an approved institution

B. Has been a licensed insurance producer within the preceding 36 months

Notice of Denial

Before denying an application for a license, the Commissioner must notify the applicant or licensee of the denial in writing, including the reason for the denial. Not later than 30 days after this notice, the applicant or licensee may request a hearing before the Commissioner to determine the reasonableness of the Commissioner's action.

Within how many days must a producer notify the Commissioner of a change of address? A. 10 B. 40 C. 30 D. 20

C. 30

Information Security Program

Each licensee must implement a comprehensive written information security program that includes administrative, technical, and physical safeguards for the protection of customer information.

Regulation of Variable Products Form Filing

Insurers must file variable life policies with the Commissioner, who must approve each policy before it is issued for delivery.

Civil Immunity

Insurers, employees, producers, or other persons acting without malice, fraudulent intent, or bad faith, may not be subject to civil liability for libel, slander, or any other related action when information is given to law enforcement officials, the National Association of Insurance Commissioners (NAIC), the Department of Insurance, or a federal or state agency established to detect and prevent fraudulent insurance acts.

Duties

No one may transact insurance unless he/she is licensed for the line(s) of insurance being sold, solicited, or negotiated. The Commissioner may issue a cease and desist order if the Commissioner finds that a person is conducting transactions of insurance for which a certificate of authority or license is required without having obtained a certificate of authority or license.

1. Entire Contract

The policy and application must constitute the entire contract between the parties.

Release of Information

Upon written request by an authorized agency to an insurer, the insurer or an agent authorized by the insurer may release any information that is considered important relating to any suspected insurance fraud. If an insurer knows the identity of a person who it has reason to believe committed a fraudulent insurance act, the insurer may notify an authorized agency of such knowledge.

Defamation

includes making any false or maliciously critical statement regarding the financial condition of any person or business entity, with the intent to injure.

Misrepresentation; False Information and Advertising

issuing of any statement that falsely represents the benefits, advantages, conditions or terms of any insurance policy. Publishing or disseminating in any fashion, or through any media, any untrue, deceptive, or misleading statement about the business of insurance or, with respect to any person, in the conduct of the person's insurance business, or misrepresents the identity of the insurer. A person who knowingly makes any misrepresentation in the sale of insurance is guilty of a class 5 felony. If an insurer falsely represents that its financial standing is greater than its actual amount, every director or officer will be deemed guilty of a misdemeanor punishable by a fine of $100, imprisonment of up to 3 months, or both. No insurer doing business in Michigan, or its officers or agents, may issue any false or misleading advertisement concealing its true identity, subject to a fine of up to $500.

Disclosure of Policy or Account Numbers

licensee may not disclose, other than to a consumer reporting agency, a policy number, account number, or access code for a consumer's policy or account to any nonaffiliated third party for use in telemarketing, direct mail marketing, or email marketing.

An individual insurance producer may receive a license in 1 or more of the following lines of insurance:

-Life -Accident and health or sickness -Property -Casualty -Variable life and variable annuity products -Personal lines -Credit -Any other line of insurance permitted under state laws or rules

The replacing insurer's duties include:

-Making certain that all replacement actions are in compliance with state regulations -Notifying each insurer whose insurance is being replaced within 3 business days and, upon request, furnishing a copy of any proposals and comparison statements -Maintaining copies of proposals, receipts, and comparison statements for at least 3 years

Limited lines insurance is any of the following:

-Marine insurance -Credit insurance -Surety and fidelity insurance -Legal expense insurance -Livestock insurance -Malpractice insurance -Plate glass insurance A Limited lines producer is authorized by the Commissioner to sell, solicit, or negotiate limited lines insurance.

An advertisement includes:

-Printed and published material and descriptive literature used in newspapers, magazines, radio and -television scripts, billboards and similar displays -Descriptive literature and sales aids of all kinds -Prepared sales talks, presentations and material for use by agents and brokers -Material used for the recruitment, training and education of insurance sales personnel

The Commissioner may suspend, revoke or nonrenew any license issued to a licensee who:

-Provides incomplete or materially untrue information in the license application -Violates any insurance law, regulation, subpoena or order of the Commissioner, or of another state's insurance -Obtains a license through fraud or misrepresentation Improperly withholds any monies or properties received in the course of doing business -Misrepresents the provisions, terms and conditions of an insurance policy -Has been convicted of a misdemeanor or felony Commits any unfair trade practice -Has a license denied, suspended or revoked in another state -Forges another person's name in an application or document related to insurance -Cheats on an examination -Knowingly accepts business from a producer who is not licensed -Fails to comply with an administrative order for child support -Fails to pay single business tax

Variable Annuities License

All resident applicants for the variable annuities (VA) line of authority must register with FINRA, unless the Department of Insurance has exempted the agency from registering. Applicants for the VA license must pass variable annuities examination, but are not required to hold a basic life qualification as a precondition for licensure. Michigan does not require prelicensing education for the VA line of authority. However, continuing education requirements do apply

Disclosure Requirements

An advertisement must prominently describe the type of policy advertised. Advertisements may not use a name for a life insurance policy that does not include the words "life insurance" unless accompanied by other language clearly indicating it is life insurance. Any projection or illustration must clearly indicate that the dividends are not guaranteed. An advertisement may not state or imply that illustrated dividends or pure endowments will be sufficient to assure, without the further payment of premiums, the receipt of benefits, such as a paid-up policy, unless the advertisement clearly and precisely explains what benefits or coverage would be provided at such time and under what conditions this would occur. No advertisement may imply that the insured will acquire a stock ownership interest in the insurance company by virtue of the purchase of the policy. An advertisement may not imply that purchasing a policy entitles an insured to become a member of a limited group of persons who may receive special offers or favored treatment.

False Statements

No one may willfully withhold information from, or give false or misleading information to, the Commissioner, any statistical agency, rating organization, data collection agency, or insurer, that might affect rates or premiums. A violation of this section is subject to a fine of up to $1,500. It is an unfair practice in the business of insurance to file a false financial statement with public officials, or record a false material fact in a book or record with the intent to deceive.

Producer An application for a resident producer license will not be approved unless the Commissioner finds that the applicant:

-Is at least 18 years of age -Has not committed any act that would result in license revocation or other sanction -Has completed a prelicensing course for the lines of insurance applied for -Has paid the applicable fees -Has successfully passed the examination for the lines of insurance applied for

Penalties

An agent who fails to comply with Michigan replacement regulations is presumed to have given cause for revocation or suspension of his/her license, or for imposition of a civil penalty for each such failure.

An exception to this provision will apply if a licensee discloses a policy or account number or other access number or access code:

Disclosure of Policy or Account Numbers -To the licensee's service provider solely in order to perform marketing for the licensee's own products or services, as long as the service provider is not authorized to directly initiate charges to the account -To a licensee who is a producer solely in order to perform marketing for the licensee's own products or services -To a participant in an affinity or similar program where the participants in the program are identified to the customer when the customer enters into the program.

File Maintenance

Each insurer must maintain a complete file containing a copy of every printed, published or prepared advertisement of its individual, blanket, franchise and group policies disseminated in Michigan. The file will be subject to inspection by the Insurance Department. All advertisements must be maintained for at least 4 years.

Business Entity A business entity applying for a resident insurer producer license will not be approved unless the Commissioner finds that the business entity has:

-Paid the applicable fees -Designated an individual licensed producer responsible for the business entity's compliance with Michigan's insurance laws, rules, and regulations -Not committed any act that would result in license revocation or other sanction

Counselor An application for an insurance counselor license will not be approved unless the Commissioner finds that the applicant:

-Possesses a good business reputation good moral character -Has not committed any act that would result in license revocation or other sanction -Has completed a prelicensing course for the lines of insurance applied for -Has paid the applicable fees -Has successfully passed the examination for the lines of insurance applied for

Which of the following is not a limited line of insurance in Michigan? A. Life B. Legal Expense C. Credit D. Marine

A. Life

Notice of Hearing

When a person has engaged in an unfair or deceptive act or practice, and the Commissioner determines that a hearing would be in the interest of the public, the Commissioner will give notice in writing to the person involved, including the general nature of the complaint and the proceedings contemplated. If an unfair or deceptive practice is not specified in the insurance code, the Commissioner may still serve upon the violator a statement of the charges and a notice of a hearing of at least 15 days.

Exceptions The Commissioner may waive the continuing education requirements for an insurance producer:

-Who is unable to comply with the continuing education requirements due to military service -For whom the Commissioner determines that enforcement of the requirements would cause a severe hardship -Who is licensed to write only travel or baggage insurance policies and whose employment is for a purpose other than the sale of those policies -Who is licensed to write only limited line credit insurance

A licensee is not required to provide the notice and opt out requirements for nonpublic personal financial information if the licensee is an employee, agent, or other representative of a principal and all of the following are met:

-The principal is another licensee -The principal otherwise complies with and provides the required notices -The licensee does not disclose any nonpublic personal information to any person other than the principal or its affiliates

Authority of Terminated Producer

When an insurance producer's authority to represent an insurer is terminated, the producer may continue to service existing policies of insurance until they are canceled, replaced, or have expired. An insurer may not cancel or refuse to renew a policy because of the termination of an insurance producer's contract. Following termination of the producer's appointment, he/she may continue to represent the insurer in servicing existing policies, but may not bind a new risk, renew a policy, nor increase the obligation of the insurer under the policy without the approval of the insurer.

Rebating and Illegal Inducement

the offer of any rebate of premiums due, any special favor in dividends or other benefits, or any valuable consideration or inducement not specified in the policy. A producer whose license is revoked for rebating, or an insurer whose certificate of authority is revoked for rebating, cannot reapply for a new license or certificate for 1 year following the violation.

The Gramm-Leach-Bliley Act requires state insurance regulatory authorities to establish appropriate standards relating to all of the following administrative, technical, and physical safeguards for the following reasons:

-To ensure the security and confidentiality of customer records and information -To protect against any anticipated threats or hazards to the security or integrity of such records -To protect against unauthorized access to or use of records or information that may result in substantial harm or inconvenience to a customer The release private or privileged health or medical information in Michigan generally requires the informed, written consent of the patient or his or her authorized representative.

Cease and Desist Order

-If the Commissioner determines that a person has engaged in an unfair method of competition, or an unfair or deceptive act or practice, the Commissioner will issue an order requiring the person to cease and desist from engaging in the method of competition, act or practice. After, the person may file a notice of appeal and may appeal any final order. If a person knowingly violates a cease and desist order, the Commissioner may order a civil fine of up to $20,000 for each violation, or a suspension or revocation of the person's license, or both. Fines may not exceed a total of $100,000.

In addition to a cease and desist order, the Commissioner may:

-Order payment of an administrative penalty of up to $1,000 per violation, not to exceed $10,000 for the same violation -Order payment of an administrative penalty of up to $5,000 per violation (not to exceed $50,000 for the same violation) if the person should have known that his/her actions could result in license suspension or revocation Violation of the statutes regulating rebating and misrepresentation is a misdemeanor, subject to a fine of up to $100 per rebating or inducement violation, or up to $2,000 for each misrepresentation violation. Both types of violation are also subject to a jail term at the discretion of the Commissioner. The amount of the insurance will be reduced in proportion to the value of any rebate.

When replacement is involved, the producer must:

-Present to the applicant with a Notice Regarding Replacement -Obtain a list of all existing life insurance and/or annuities to be replaced -Provide the applicant all sales materials used in presentation -Provide the replacing insurer with a Replacement Notice

An insurer or agent must provide a notice of information practices to all applicants or policyholders as follows:

-With a written application, disclosure notice must be given at the time of delivery of the policy or at the time when the collection of personal information is taken from a source other than the applicant -In the case of a renewal policy, at least annually -In the case of policy reinstatement or change in insurance benefits, a notice must be given no later than at the time a request is made for reinstatement or a change in benefits is received, except when personal information is collected only from the policyholder

Report of Actions

-Within 30 days of occurrence, a licensed agent must report any disciplinary action by the insurance regulatory agency of any other state or territory of the United States; each disciplinary action on an occupational license held by the licensee; each judgment or injunction entered against the licensee involving fraud, deceit, misrepresentation, or violation of any insurance law. Such information is confidential by law and is privileged. -Failure to report as required may, after notice and hearing, result in suspension or revocation of the violators license or certificate of authority, or subject the violator to civil fines.

Producer A tells his clients, falsely, that a rival insurer does not pay claims in a timely fashion. This is an example of what Unfair Trade Practice? A. Defamation B. Rebating C. Unfair Discrimination D. Misrepresentation

A. Defamation

Unfair Discrimination

It is an unfair practice in the business of insurance to enter into action resulting in an unreasonable restraint of trade, or monopoly in, the business of insurance.

Change of Name and Address

Licensees must inform the Commissioner by any means acceptable to the Commissioner of a change of legal name or address within 30 days of the change.