Chapter 2 quiz questions

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The Federal Fair Credit Reporting Act

Regulate consumer reports

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

Which of the following is a person who receives a fee or commission to attempt to negotiate settlements between a life insurance policyholder or certificate holder and one or more viatical settlement providers?

Life settlement broker

under the fair credit reporting act, individuals rejected for insurance due to information contained in a consumer report

Must be informed of the source of the report

Which of the following is NOT correct regarding false statements by a person engaged in the business of insurance?

Only written statements can be considered fraud.

A license applicant's trustworthiness and competence will be determined by all of the following EXCEPT

Personal testimonies from pervious co-workers and managers.

circulating deceptive sales material to the public is what type of Unfair Trade Practice?

False advertising

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

Which of the following is any person who has authority to bind, or manages all or part of the assumed reinsurance business of a reinsurer and acts as an agent for the reinsurer?

Reinsurance manager

An agent makes a sales pitch that contains blatant lies about the insurer and its competitions. Who will ultimately be held legally responsible for this?

The insurer

an insurer refuses to renew a policy written by an intermediary whose contract has been terminated. This is allowed if-

The notice contains an offer to renew the policy by written request

Which of the following statements is INCORRECT

replacing insurance policies for the purpose of making commissions is legal.

all of the following are considered unfair trade practices in the business of insurance EXCEPT

sharing commissions

If a person violates an order specifically issued to him or her, that person may be required to pay a fine up to

$1,000

The Commissioner may require a surplus lines agent or broker to supply a bond of up to

$100,000

If a person does not comply with an order issued within 2 weeks after the commissioner has given notice, for each day that the violation continues, the Commissioner may issue a fine of up to

$5000

What is the maximum annual billing for an insurer

1% of net premiums earned

Insurance regulations in this state require prompt initiation and completion of claims investigations, and delivery of necessary claims forms and assistance to the insured and claimants. What constitutes prompt action?

10 consecutive days

The insurer decided to cancel an insurance policy prior to its expiration due to nonpayment of premium. When can cancellation take place?

10 days after the notice was delivered to the policyholder

The commissioner may issue a temporary license for an intermediary for a period of up to

12 months

an intermediary has just placed insurance on himself. He can receive compensation for this transaction only if he has placed insurance on other individuals with the same insurer with the last

12 months

if reasonably possible, a notice of proof of loss claim must be provided to the insurer within what period of time after the time required by the policy?

12 months

an insurer terminates an agent's appointment. Within how many days of termination must the intermediary be notified>

15

What is the minimum age to apply for an insurance license in Wisconsin

18

How many hours of prelicensing education approve by the Commissioner must each applicant complete

20

within how many days of the of the original hearing and final issuance of an order (regarding an order issued by the Commissioner) may an aggrieved person request a re-hearing?

20

After the original hearing and a final order is issued, an aggrieved person may request a re-hearing within

20 days

an intermediary holding a Wisconsin insurance license in any major line of insurance must complete how many credit hours of continuing education every 2 years?

24

Any person who violates an insurance statute or rule of Wisconsin can be imprisoned for up to how many years?

3 1/2

Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?

3 days

The Commissioner issues an order without having conducted a hearing. Within how many days of receiving the order can the person aggrieved by the order request a trial

30

if the commissioner issues an order without having conducted a hearing, the person aggrieved by the order may demand a hearing within how many days after the order was mailed?

30

when the appointment of an individual agent is terminated, the insurer must notify the office of the commissioner with the appropriate forms within now many days after the termination date?

30

A claim is considered overdue if NOT paid within how many days after the insurer receives written notice?

30 days

An agent who has had formal disciplinary action taken against them by a state regulatory agency must notify the commissioner of this within

30 days

How long are oral contracts valid in Wisconsin?

30 days

In this state, Insurers must pay a claim within how many days of receiving proof of loss?

30 days

Life settlements sold in Wisconsin must allow for the rescission of the contract within

30 days

What is the maximum number of insurance risks an agent can place with a single insurer in one calendar year if the agent is not listed with that insurer?

5

if a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?

5 days

The commissioner is required to examine every domestic insurer and every licensed rate service organization every

5 years

When the Commissioner revokes an intermediary's license for any reason other than nonpayment of fees, the intermediary may NOT apply for a new license for how many years?

5 years

An insurer decides to renew a life policy but at a higher premium rate, starting on the renewal date. How many days in advance must the insured be notified?

60

every producer must maintain a place of business in this state

Accessible to the public

Which of the following would NOT be a violation of state insurance regulations?

Agent C uses her license to write only business other can controlled.

The rule relating to insurance policy readability applies to which of the following?

All insurance policies issued in this state

How is the Commissioner of insurance placed in office

An appointment by the Governor

How is the Commissioner of insurance placed in office?

An appointment by the governor

Which of the following statements is true of insurance licensing in the state of Wisconsin

Applicants must pass a state licensing exam

Which of the following terms describes a situation in which an agent and policyholder act together to defraud in the insurer?

Collusion

Which of the following includes information regarding a person's credit character reputation, and habits?

Consumer report

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

Dividends from a mutual insurer

how often are domestic insurers examined by the Commissioner?

Every 5 years

which of the following is true regarding the notice of the insured's right to file a complaint?

Every insurer must provide such notice to its policyholders when the policy is issued

When the Commissioner examines an insurer, who pays the examination costs?

Examinees

All of the following violations may result in an agent's imprisonment EXCEPT

Failing to report to the department a criminal prosecution taken against the agent in another jurisdiction

An applicant is denied insurance because of information found on a consumer report. Which of the following requires that the insurance company supply the applicant with the name and address of the consumer reporting company?

Fair credit Reporting Act

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

Which of the following is an intermediary who acts on behalf of the insurer

Insurance agent

Which of the following is true regarding state regulations for record maintenance?

Insurer's records may be maintained electronically

A person who assists another in soliciting, negotiating, or placing insurance or annuities on behalf of an insurer or a person seeking insurance or annuities is called a(n)

Intermediary

The Gramm-Leach-Bliley Act was passed to

Protect private customer information filed with a financial institution.

which of the following may NOT be included in an insurance company's advertisement?

That its policies are covered by a state Insurance security fund

The commissioner conducts an examination of a domestic insurer and believes that the costs of examination places an unreasonable financial burden on the insurer. Which of the following will happen?

The Commissioner's office may pay all or part of the costs

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 Department

The commissioner has the power to perform all of the following EXCEPT

Write insurance laws to protect the public

in Wisconsin, producers are permitted to share or split commissions, providing that

both are properly licensed for the line of insurance

an insurance producer just sold an insurance policy to his sister. What kind of business is this?

controlled

All of the following are CORRECT regarding temporary licenses EXCEPT

examinations are never required for the issuance of a temporary license

all of the following actions can be described as twisting EXCEPT

explaining to client the advantages of permanent insurance over term and suggesting changing policies

an agent who includes a statement or omits a statement which, when taken in context of the whole presentation, may tend to mislead or deceive the persons addressed has committed

misrepresentation

under what circumstance may an insurer cancel or refuse to renew an insurance policy based upon the past criminal record of the insured

only upon conviction of an offence directly related to the risk insured

An intermediary must maintain records for how long?

3 years

An intermediary must notify the Commissioner of a change of residence address within how many days of the change

30

According to the rule of readability of insurance policies in this state, what is a required minimum score on the Flesch reading ease test for Medicare supplement policies

50

If the commissioner issues an order and the person who is the object of the order demands a hearing within 30 days, within how many days must the hearing be held?

60 days

Any licensed person whose activities affect interstate commerce and who knowingly makes false material statements related to the business of insurance may be imprisoned for up to

10 years

applicants must complete a crime information bureau form within how many days before taking their state exam?

180 days

In addition to any other forfeiture imposed, any person who violate an effective order may be required to pay

Twice the amount of any profit gained from the violation

Which of the following is a statement made in an insurance application by the insured that is the absolute truth?

Warranty

If an insurer develops a new policy form, which authority must approve it?

Commissioner

Which of the following authorities decides whether a person's license should be revoked?

Commissioner

All funds collected by an intermediary for prompt payment to insureds, insurers, or producers as entitled are received in what is known as

Fiduciary capacity

An insurance company assures its new policyholders that their premium costs will not increase for a period of at least five years. However, due to increasing financial strain, they plan to raise premium costs for all insureds by 10% over the next two years. What term best describes this act?

Fraud

Any inducement offered to the insured in the sale of an insurance policy that is not specified in the policy is an unlawful practice known as

rebating

A policy may be issued for a term longer than one year or for an indefinite term as long as there is a clause in the policy providing for cancellation by giving how much notice prior to the anniversary date?

60 days

an insurance policy is considered a "new policy" if it has been in effect for what maximum time period?

60 days

an intermediary failed to complete the CE requirements by the due date 14 months ago. What must they do to reinstate their license?2

Complete the prelicensing education course and pass the state exam

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 true regarding rebates EXCEPT

Rebates are allowed if it is in the best interest of the client

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

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

which of the following entities is appointed to oversee the business of insurance and to ensure that the insurance laws of Wisconsin are enforced?

The commissioner of insurance

Federal law makes it illegal for any individual convicted of a crime involving dishonesty or breach of trust to work in the business of insurance affecting interstate commerce

Without receiving written consent from an insurance regulatory authority

If an insurance company wishes to order a consumer report on an applicant to assist in the underwriting process, and if a notice of insurance information practices has been provided, the report may contain all of the following information EXCEPT the applicant's

ancestry

If an agent advises a policyholder to replace an insurance policy but only does so for the purpose of making commissions, the agent has committed an act of

churning


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