Life Chapter 11

Appointment

authorization from an insurance company gives the insurance agent the authority to act in its behalf as an agent

Continuing Educations

resident agents must complete 24 hours of continuing education every 2 years to keep their license active - 3 of those hours must be in ethics

Incontestability

policy has been in force for two years, the insurance company cannot contest the validity of the policy for any reason other than failure to pay the premiums

A life insurance policy becomes incontestable after it has been in force for:

2 years

Any person who knows or suspects that an insurance transaction or life settlement may be fraudulent has a duty to report it to the Commissioner within:

30 days

What is Arkansas' REQUIRED grace period for a life insurance contract?

31 days

In order to save on premiums, a life insurance policy can be backdated up to:

6 months

Which of the following statements is TRUE about an insurer's right to screen applicants for HIV?

an insurer can require a blood test for HIV

Twisting

inducing or attempting to induce any insured person through misrepresentation to lapse, forfeit, or surrender insurance

A producer who sells insurance in Arkansas but resides in another state is called a(n)

nonresident producer

The Commissioner MUST give a MINIMUM of how many days' notice of a disciplinary hearing?

10 days

All insurer must be members of what organization, as a condition of their authority to transact insurance in Arkansas?

Arkansas Life and Disability Insurance Guaranty Association

The Commissioner is empowered to

enforce state laws relating to insurance

Agent

producer; an individual who in any manner sells, solicits, or negotiates insurance on behalf of insurance companies for compensation is an insurance agent

Arkansas law requires that an insurer must notify the Commissioner of a producer appointment termination

within 30 days of termination

A producer who sells an individual life insurance policy in Arkansas MUST deliver to the policyowner a(n)

A Policy Summary and Buyer's Guide

Group Rates

Approved premium rates for group health insurance shall be guaranteed by the insurer for an initial period of no less than 12 months.

Commissions

No person shall pay or accept commissions to/from an unlicensed individual for the purpose of selling or negotiating insurance business.

Examination of Records

The Commissioner can examine anyone in the business of insurance in the state at anytime. The Department will review insurance companies for financial stability at least once every 5 years. An investigation may be prompted on an individual producer if 3 complaints are received on them within a 30 day period.

Fraternal Benefit Society

corporation, society, or order that have a representative form of government and are organized through a lodge system - exist for the benefit of its members and their beneficiaries

Providing incorrect, misleading, incomplete, or materially untrue information in the license application is

misrepresentation

A licensee who is required to take continuing education must complete ___ hours of continuing education coursework?

24 hours

Reinstatement

health policy is reinstated after it had lapsed for nonpayment, there is a waiting period of 10 days before a claim covering sickness will be covered - injuries sustained from an accident will be covered immediately

Claim Forms

Insurance company will send forms for filing proof of loss to a claimant within 15 days after company receives notice of a claim

Notice and Hearing

The Commissioner may call and hold hearings for any purpose deemed necessary. At least 10 days written notice will be given to all persons affected by the hearing.

An example of replacement is

canceling a term life policy to buy a whole life policy

Which of the following is NOT considered to be an act of fraud?

collecting a charge for insurance that is less than the charge applicable to that insurance

Assumed Names

An insurance producer doing business under any name other than the producer's legal name shall notify the Commissioner before using the assumed name.

Failing to promptly provide a reasonable explanation for the denial of a claim is considered to be a(n)

unfair claim settlement practice

Fingerprinting

The Commissioner requires this within 30 days of applying for a resident insurance license.

Notice of Claim

Written notice of claim for injury or sickness must be given to the insurer within 20 days after the date of occurrence.

A producer's license CANNOT be revoked without

a hearing given to the producer

An insurance producer is BEST defined as

a person who has a contract with an insurance company to represent it

Suicide

an insurer may exclude liability for paying a death claim in a life insurance policy if the insured commits suicide within 2 years of policy issue - premiums return if insured commits suicide within period

Insurer

any person, corporation, association, or society that writes insurance contracts

A producer may begin to solicit insurance ONLY when

appointment by an insurer

If an agent has a combined agent/broker license, and recommends a particular insurer to a customer in which he/she is not appointed, in what capacity is the agent acting?

as a broker

How long must the Commissioner maintain a complete record for every licensee in Arkansas for?

as long as he/she deems necessary

Any person who knowingly sells, solicits, or negotiates insurance products with a person or entity that is not licensed in Arkansas is guilty of:

class D felony

A producer who knowingly submits a false statement in support of a claim may be found guilty of

fraud

Authorized Insurer

has qualified and received a Certificate of Authority from the Insurance Department to sell insurance in this state

If dividends are illustrated, the advertisement MUST state that the dividends are:

not guaranteed

The Commissioner must examine the financial affairs of each admitted insurer operating in Arkansas at least once every

5 years

Statements in Application

All statements or descriptions in any application for a policy of insurance, or in the policy itself, are representations and not warranties. A representation, unless material or fraudulent, will NOT prevent a recovery on the policy.

Cease and Desist Order

Commissioner may call and hold hearings for any purpose deemed necessary - 10 days written notice

Business Records

Every insurance agent/broker MUST maintain all records, books, and documents for insurance transactions for a period of not less than 5 years.

The renewal period for a producer's license is a

Two year term

The Arkansas Insurance Department may take each of the following actions EXCEPT

incarceration

An insurance producer agrees to pay the first monthly premium for an insurance applicant. This is called a(n)

rebate

Policy Summary

contains specific information on the provisions, benefits, and coverage of the policy applied for

According to Arkansas law, commissions may be paid to

licensed and duly appointed producers

Conservation

agent's attempt to stop the replacement of an existing life insurance policy or annuity is known as conservation

Commingling

an agent who has combined premiums collected with personal funds has engaged in commingling, which is a prohibited act

Misrepresentation

an illegal practice to misrepresent any fact about an insurance policy, such as policy terms, benefits, value, cost, effective date, or existence of a contract of insurance

The beneficiary of any life insurance policy or annuity contract is protected from the __ of the insured.

creditors

Which of the following is NOT information found in a life insurance buyer's guide?

how to take legal action against an insurance company

False Advertising

illegal practice to falsely advertise insurance products or publish misleading info about its insurance coverage - false statements about the financial condition of insurer

Fiduciary

legal obligation of one party to act in the best interest of another - obligated party is someone entrusted with the care of money or property

The Arkansas Life and Disability Insurance Guaranty Association assures payment of benefits from insurance policies for insolvent insurers, and covers all of the following insured policies, EXCEPT

liability insurance

What MUST the company do prior to conducting an HIV related test?

obtain written consent from the proposed insured

Replacement

policy transaction in which a new policy contract is to be purchased - strictly regulated and requires full disclosure by both the agent and the replacing insurance co

Defamation

illegal practice to make any public statement or advertisement that contains false info or unsubstantiated criticisms about an insurance company intended to harm or malign

Controlled Business

policies written on people that the licensed producer has direct influence over: including family, employers, and/or any company to which the producer has stock control

An insurance producer must notify the Commissioner within how many days of conviction of a crime?

thirty

No one is allowed to act as a producer for any insurance company in Arkansas that:

is unauthorized to do business in AR

Which is the best way to describe Controlled Business?

policies written on people that a producer has influence over

Lapsed individual life insurance may be reinstated at any time within:

3 years

Unauthorized Insurer

insurance company that has been denied or not yet applied for a Certificate of Authority and may not sell insurance in this state

Grace Period

insurance policies must provide a grace period of 31 days after the due date - if the insured dies, insurance company may deduct any premium due from the death benefit

Broker

a person who is paid to buy and sell for someone else - representative

Making a statement that is false or maliciously critical of the financial condition of an insurer is known as

defamation

Making a statement that is false or maliciously critical of the financial condition of an insurer is known as:

defamation

Buyer's Guide

enables applicants to compare different life insurance policies and help them choose which policy is best for their needs

Commissioner of Insurance

enforces all laws of the state governing insurance companies and makes rules and regulations relating to the business of insurance - elected to office for 4 year terms

A foreign insurance company is defined as one that is:

formed under the laws of a state other than AR

Rebating

illegal to offer a prospective client something of value that is not specified in a contract to induce the purchase of an insurance policy - not include sharing commissions with other licenses and appointed agents