Chapter Exam Arkansas Laws and Rules
If a producer knowingly violates a cease and desist order issued by the Arkansas Commissioner for unfair trade practices, the producer may receive which of the following penalties for each violation?
$10,000 for each violation not to total more than $50,000
What is the maximum tax rate a named beneficiary will be charged on proceeds collected in the state of Arkansas?
0%
Before holding a hearing regarding a producer's unfair or deceptive practice, the Commissioner MUST give how many days notice?
10
If after satisfactory proof of loss, an insurer fails or refuses to pay death proceeds, the insurer must pay interest on the proceeds after how many days?
10
In Arkansas, how long is the "free look" period?
10 days
Under an individual life insurance policy, an insured may assign a MAXIMUM of what percentage of policy ownership?
100%
What is the minimum age for a person to enter in to an insurance agreement in the state of Arkansas?
18
A temporary license may be issued for a MAXIMUM period of how many days?
180
All licensees are required to complete how many continuing education hours every two years?
24
A producer must have how many hours of ethics per continuing education reporting period?
3
In Arkansas, a producer who moves to a new address must notify the Commissioner of the address change within how many days?
30 days
In Arkansas, the minimum number of days the insurance company must allow for a grace period on a life policy is
30 days
Under the Nonforfeiture Law, a cash surrender value payment may be deferred by the insurance company for NO LONGER than how many months?
6
A producer who sells an individual life insurance policy in Arkansas MUST deliver to the policyowner
A Policy Summary and Buyer's Guide
Which of the following is an example of defamation?
A brochure including an untrue statement regarding a competitor's ability to pay claims
A producer may share commissions with which of the following individuals?
A licensed producer
Which of the following individuals MUST be licensed as a producer?
A person who places insurance on behalf of anyone seeking insurance
A certificate of authority does which of the following?
Authorizes the insurance company to transact business in Arkansas
All of the following are Nonforfeiture Options EXCEPT
Automatic Premium Loan Option
To be eligible for a group life policy, a group MUST meet which of the following requirements?
Be formed for a purpose other than obtaining insurance
An applicant for a nonresident producer license MUST meet which of the following requirements?
Be licensed as a producer in the producer's state of domicile
Which of the following transactions would be considered a Life Insurance policy replacement?
Cash surrender an existing whole life policy and purchasing a new whole life policy
Which of the following violations is considered an unfair trade practice?
Coercion
What group term life feature permits an individual to depart from the group and continue to be covered without providing evidence of insurability?
Conversion
Which of the following actions by an insurance company is considered an unfair claims settlement practice?
Denying an insured's claim without indicating the basis of denial under the policy
An alien insurance company is defined as one formed in
Europe
How often must a producer complete continuing education to maintain their license in Arkansas
Every 2 years
All of the following provisions must be included in life insurance policies EXCEPT
Extended Term
Which of the following is an unfair claims practice?
Failing to effectuate prompt, fair, and equitable settlements of claims
In Arkansas, the Commissioner may place on probation, suspend, revoke, refuse to renew, or deny a license for all of the following reasons EXCEPT:
Filing bankruptcy
A foreign company operating in Arkansas is a company incorporated or organized under the laws of
Florida
All of the following are requirements to become an insurance producer in the state of Arkansas except:
Graduate High school
Which of the following is a standard provision of the conversion privileges in a Group Life policy?
Group Life coverage can be converted to an individual policy at regular rates on an attained-age basis
Which of the following BEST describes Credit Life insurance?
Insurance issued on a debtor to cover outstanding balances on installment loans
What MUST an insurance company use in its advertising?
Its true corporate name
The rules and regulations of the Life and Health Insurance Guaranty Association in Arkansas apply to
Life and Health Policies issued by companies authorized in Arkansas
Replacement is involved in all of the following situations EXCEPT when
Maintaining an existing policy and applying for a new one
Policyholders elect the governing bodies of which of the following types of insurance companies?
Mutual
Which of the following is NOT an unfair claim settlement practice?
Needing written documentation of claim details
When an existing life insurance policy is being reissued with a reduction in cash value, the producer must sign the
Notice Regarding Replacement of Life Insurance or Annuity
In Arkansas, an insurance company must do which of the following to terminate a producer's appointment?
Notify the Commissioner within 30 days
Which of the following actions by an insurance company or a producer is considered rebating?
Offering a prospect something of value that is not specified in a contract to induce the purchase of that contract
When must a written disclosure be given to the applicant or policy holder regarding administrative fees charged by the producer?
Prior to any services being rendered
Which of the following parties must provide an insured with proper disclosure concerning the replacement of an insurance company
Producer
Which of the following parties must provide an insured with proper disclosure concerning the replacement of an insurance company?
Producer
The purpose of the Guaranty Fund is to
Protect consumers from an insurance company's insolvency
Which of the following terms is defined as any transaction in which new life insurance or a new annuity is to be purchased and existing life insurance or annuity is to be terminated or discontinued?
Replacement
Which of the following would be considered misrepresentation by an insurance producer?
Stating that dividends are guaranteed
Under the Arkansas insurance code, which of the following statements about the Suicide clause is CORRECT?
Suicide may not be a defense against payment after the second year
Under which circumstance can a group life insurance policy be converted to an individual policy?
Termination of employment
An insurance company licensed in Arkansas and domiciled in Pennsylvania is known as
a foreign company
An individual who is appointed by an insurance company to transact insurance is referred to as
a producer
The Commissioner of Insurance is responsible for
administering insurance laws
Which of the following is NOT an example of a producer's breach of fiduciary duty?
allowing premiums to be submitted electronically
All of the following provisions are required in a group life policy EXCEPT
an Accidental Death and Dismemberment provision
The Misstatement of Age provision requires that if the age of the insured is misstated, then any amount payable is
an amount that the premiums paid would have purchased at the current age or ages
One of the stated purposes of the Life and Health Insurance Guaranty Association is to
assist in the prevention of insurer insolvencies
An individual covered under a Group Life insurance policy is considered to be a(n)
certificate holder
Unfair discrimination is described as
charging different rates for persons in the same class
One definition of replacement is "the act of replacing an existing insurance policy with another". Replacement is
closely regulated and requires full disclosure
A creditor who requires a debtor to obtain insurance from a particular company or producer as a condition for a loan is guilty of
coercion
A producer who tells claimants that their rights may be impaired if they fail to complete a release form within a given period of time could be guilty of
coercion
Arkansas' 10-day free-look period for life insurance policies begins at the
date of delivery
The Commissioner may examine the records of an insurance company in order to
determine the solvency of the company
An insurance company may be judged guilty of false advertising if it
exaggerates its dividends in a newspaper advertisement
The life insurance and annuity replacement regulation defines replacement as
exchanging an existing policy for a new policy
An insurance company that publishes misleading information about insurance coverage may be found guilty of
false advertising
The Commissioner must examine each domestic insurance company AT LEAST every
five years
An organization that solicits insurance only among its members is known as a
fraternal benefit society
The Life and Health Insurance Guaranty Association is
funded by admitted insurance companies through assessments
Any administration service fees charged by an insurance producer require the written signature by a consumer
in all instances
The PRIMARY purpose of the life insurance replacement regulation is to protect the
interests of policyowners
In Arkansas, a domestic insurance company is defined as a company that
is incorporated and formed in Arkansas
An insurer may pay commissions directly to any person for services as a producer provided the producer
is licensed and appointed
A stock insurance company is BEST defined as an incorporated company that has its capital divided into shares and
is owned exclusively by its shareholders
Under the Unfair Trade Practice law, producers may be found guilty of defamation if they make a false statement that is intended to
malign another insurance company
A producer who tells a client that dividends are guaranteed may be guilty of
misrepresentation
An insurance producer who convinces a prospective insured to purchase a policy by exaggerating the benefits of the policy may be found guilty of
misrepresentation
Anyone who makes a fraudulent statement on an insurance application in order to obtain money benefits from an insurance company has committed an act of
misrepresentation
If a producer tells an applicant that an insurance policy is like a share of stock, the producer may be guilty of
misrepresentation
An insurance producer is guilty of twisting if the producer
misrepresents a policy to induce a policyowner to surrender an existing policy
A insurance producer does NOT have fiduciary responsibilities to
other producers
If, at the time of an insured's death, the insurance company discovers that the insured's age was misstated on the application for life insurance, the company will most likely
pay the policy proceeds in the amount the premiums would have purchased at the insured's actual age
The Replacement of Life Insurance and Annuities regulation is designed to protect the interest of the
policyowner
The purpose of the Rules Governing Life Insurance and Annuity Replacements is to
reduce the opportunity for misrepresentation and incomplete disclosure
According to Arkansas law, group life insurance conversion privileges must NOT
require evidence of insurability
Which of the following is an example of rebating?
returning a portion of a premium as inducement to purchase insurance
All of the following actions are considered rebating EXCEPT
sharing commissions with other licensed and appointed producers
A stock insurance company is owned by it's
stockholders
A temporary license is issued by the Commissioner to allow
the personal representative of a deceased producer to provide service to existing policyowners
Group Life policies in Arkansas are required to contain a conversion privilege that allows for conversion
to an individual policy for a stated period of time
T is an employee covered under a Group Life policy. If T's employment is terminated, the conversion privilege gives T the right to convert
to an individual policy upon employment termination
Inducing or attempting to induce any insured person through misrepresentation to lapse, forfeit, or surrender insurance is
twisting
Insurance producer licenses normally must be renewed every
two years
Under the Arkansas insurance code, an insurance company must pay death benefits for suicide if the policy has been in force for a MINIMUM of
two years
Boycott, coercion, and intimidation that result in the unreasonable restraint of trade are prohibited under the Arkansas insurance laws covering
unfair trade practices
Before holding a hearing that may lead to suspension or revocation of a producer's license, the Commissioner MUST give
written notice to the producer
