Chapter 5

Denial of License

The applicant will be fully notified within 30 days

2 seperate accounts

The life insurance and annuities account: and the health insurance account...Who does it protect and who funds it>ALL authorized insurer's

Commision

payment to the agent by the insurance company for placing insurance, usually a percentage of the policy premium

Domicile

refers to the location where an insurer is incorporated, not necessarily where the insurer conducts business

Resident/non resident

resident is a person who lives in state, non is out of state

Restitution

restorationton the the original condition or repayment

Individual Remedies

An action under this section must be brought within 2 years from the date the alleged violation is or should have been discovered

What would be considered legal of discrimination

Benefits on the basis of difference life expectancies

Viatical

Terminally ill

Failure to notify the commissioner of changes to a license address within 10 business days may result in an administrative fee of?

$50

Unfair Trade Practices

- Misrepresentation- a LIE - False advertising- UNTRUE ADVERTISING - Twisting- MISREPRESINTAION of company - Rebating-BRIBE - Inducements - Boycott, coercion, and intimidation- INTENSION TO RESTRICT FAIR TRADE or CREATE a MONOPLY - Defamation- CRITICAL STATEMENTS ABOUT A PERSON - Unfair discrimination

Insurance producers must report their change of business or residence address within

10 days

The required privacy disclosure notice must be provided by insurer to current policyholders at least once in any period of?

12 months

A temporary license is normally valid for

180 days

Continuing education requirement must be

24 hours every 2 years

Access to Recorded Personal Information

30 business days after the date the request is received AND Disclose to the individual the identity of those persons to whom the insurance institution, agent, or insurance- support organization has disclosed such personal information within 2 years prior to request.

Grace Period

31 days for the payment of any premium due

Commissioner of office

4 years term elected BY THE PEOPLE, the Governor will appoint a replacement if needed

Each insurer must keep an itemized register or log of all written complaints for at least

5 years

Statute

A formal written law enacted by legislature; insurance statutes can be found in thr insuranee code

What is mandatory in a provision in a life insurance contract?

A mandatory provision includes a grace period of 31 days, , incontestability after 2 years, except for nonpayment of premium and misstatement of age and sex. A minimum of 5% on cash value is NOT a mandatory provision

What is a Rebate

A rebate is an illegal act which involves returning something of value to the client as an inducement to buy, such as the commission. Rebates are only allowed if specifically stated in the policy. Insurance dividends are NOT considered rebates as the IRS considers it as a return of overpaid premium.

Who is considered a non resident agent

An agent who resides in another state but is licensed to write insurance in that state

Authorized insurer

An insurance company that has qualified and received a Certificate of Authority from the Department of Insurance to transact insurance in the state.

Subpoena

An order for someone to appear as a witness or submit testimony or evidence

Fraternal Benefit Societies

An organization formed to provide insurance benefits for members of an affiliated lodge, religious organization, or fraternal organization with a representative form of government.

If an insurance company makes a statement that its policies are guaranteed by the existence of the insurance guaranty association, that would be considered

An unfair trade practice

Acting with out a license

Class 1 misdemeanor

An agent who deliberately makes a malicious statement about another insurance company is c guilty of an illegal trade practice called

Defamation

Marketing and research Surveys

Do not use your own creative ways to present company

General rules mandated by the law:

Each insurer must maintain a complete file containing one copy of each authorized document and form used in life insurance solicitation for 3 years following the date of its last authorized use. An agent must inform the prospective purchaser that he/she is acting as a life insurance agent and provide the full name of the insurance company he/she is representing

An insurance company that is formed under the laws of another state is known as which type of insurer

Foreign

Any person with intent to injure, defraud, or deceive an insurer, presents a written or oral statement as part of, or in opposition to, a claim for payment that contains FALSE or misleading information is

GUILTY of a CLASS HFELONY

What provision in a life insurance policy extends coverage beyond= he premium due date

Grace period- 30-31 days

cease and desist order

If after a hearing, the Commissioner determines that a person has violated an insurance statue or regulation

Surplus lines

Insurance not available from authorized insurers placed with nonadmitted insurers who specialize in offering insurance to the high risk market

General License Requirements

Life- coverage on human lives Accident and health or sickness-coverage on sickness, bodily injury and accidental death and may include benefits for disability. FINRA- registration, no examination required Medicare Supplement and Long Term Care- Property- Casualty-coverage of legal liability, including death, injury or disability, or damage to real and personal property Personal lines- property and casualty insurance coverage sold to individuals and families for primary noncommercial purposes Limited line; or Any other kind of insurance permitted under state laws or administrative rules.

Hearings

Notice must be provided within 10 days prior to hearing and must state any specific charges

Alien

OUT OF COUNTRY

Foreign

OUT OF STATE

An arrangement that allows someone living with a life-threating condition to sell an existing life insurance policy and use the proceeds before death is called

Viatical settlement

Ethical Standards when in contact with the public, agents, limited representatives, brokers, adjusters, appraisers or other license representatives you are required to:

Promptly identify yourself, and your occupation, carry your license, conduct yourself in such a manor as to inspire confidence by fair and honorable dealings

An agent who offers a cash reward to prospect for buying a policy is guilty of

Rebating

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

Rebating-when a producers gives or promise anything of value that is not specified in the policy, they are guilty of REBATING

a transaction in which a new life insurance policy is to be purchased and an existing policy is to be lapsed, surrendered or converted to another type of insurance is called/

Replacements

Domestic

STATE, home office

Life Policy Provisions

Standard is 3 but could be 5

If the Commissioner issues a ceast and desist order, they must

Stop committing a particular violation

General power and Duties of a Commisioner

Supervise insurance business, Licensing, approve policies and forms, enforce insurance laws and impose penalties for violations, conduct examinations, investigations, hearings

A viatical settlement is arranged between a viatical company and a/an

Terminally ill insured

If an insurer becomes insolvent________would pay benefits to policyholders?

The Guaranty Association

Buisness entity

a corporation, association, partnership, limited liability company, limited liability partnership, or other entity

Business Entity

a corporation, association, partnership, limited liability company, limited liability partnership, or other legal entity

Temporary license

a maximum of 180 days

Agent

a person licensed to solicit applications or to negotiate a policy of, insurance. NOT DULY licensed

commissioner

a person sent to meet with others to plan and make official decisions

Broker

a person who, being licensed agent, procures insurance for a party other than himself through a duly authorized agent of an insurer that is licensed to do business in North Carolina

An agents license must be renewed

every 2 years

Broker's License Requirments

file a bond with at least 15,000 dollars or in lieu of a bond, cannot be terminated unless at least 30 days prior written notice is given, if a broker's license is terminated, the Commissioner must notify the surety within 10 days.

Automatically Suspended

if a person is convicted of a criminal violation of the General Statutes and has to be reinstated by the Commissioner

Content of Disclosure authorization forms

in the case of authorization signed for the purpose of collecting information in connection with an application for an insurance policy, a policy reinstatement or a request for change in policy benefits: 30 months from the date the authorization is signed if the application or request involves LIFE, HEALTH, or DISABILITY 1 year from the date the authorization is signed if the request involves property or casualty

Home office

insurer's headquarters, principal place of business

Replacing insurer

is the company that issues the new policy

Existing insurer

is the company whose policy is being replaced

Viator

the owner of the life insurance policy

claim reports

they specify the inception, handling, and disposition of each claim. Also retain for 5 years.

insolvent

unable to meet financial obligations

Disclosure

revealed information to help someone make an intelligent and educated decision

How long must a complaint record be maintained?

5 years

Cease and Desit

To stop or discontinue

How long should records be kept

5 years after termination of the transaction with an insured

Solicitation

Buyer's guide- basic information and a policy summary;- written statement describing the features and elements of the policy

Agent's Liability

Class 1 misdemeanor/ Class H felony unlawful solicitation, negotiation, or transaction of insurance with an unauthorized insurance company

A legally attempt by an existing insurer to dissuade a current policyowner from the replacement of existing life insurance is called?

Conservation- means any attempt by the existing insurer or its producers, or by a broker to dissuade a current policyowner from the replacement of existing life insurance or annuity.

NAIC

National Association of Insurance Commissioners

When a licensee is accused of any act, omission, or misconduct that could subject the licensee to a license suspension or revocation, with the approval of the commissioner, the license may be surrendered for a period of_________

Time to be set by the Commissioner

What is the main purpose of requiring licenses for persons who transact insurance

To protect the general public

Contract of insurance

an agreement by which the insurer is bound to pay money or its equivalent or to do some act of value to the insured upon, and as an indemnity or reimbursement for the destruction, loss, or injury of something in which the other party has an interest

Life and Health Insurance Guaranty Association

an association that protects policyowners against the insolvency of an insurance company

Inducement

an offer that attempts to influence the other party

Adjuster

any individual who, for salary, fee, or commission, investigates or reports to his principal relative to claims arising

Report to Commissioner

any licensed person, including employees or representatives of an insurance company, to notify the commissioner of any violations of the general Statues of the Insurance Code is a duty

Replacement

any transaction in which new life insurance or a new annuity is purchased, as a result, the existing life insurance or annuity has been or will be any of

Application for License

at least 18 years of age, has not committed any act that is ground for probation, suspension, nonrenewal, or revocation, has paid the fees, passed examinations

Education and training

complete 20 hours of prelicensing education for medicare supplement and long-term care insurance license must complete 10 hours of instruction

Business records

keep full records and transactions; relevant numbers, dates, terms, amount of insureds, premiums, and individuals responsible for issuing policies, certificates, or renewals.

Failure to maintain records

license suspension or revocation for no less than 1 month to no more then 6mofor the first offense and 1 year for the second. Refusal to provide records may result in a Class 1 misdemeanor

Willfully violates a cease and desist

may be subject to a fine from $1,000 - $5,000 for each violation

Exempt

not subject to an obligation