Life Insurance - Ch. 7
What is the maximum civil penalty for violating Insurance Information and Privacy Protection laws? - $500 - $1,000 - $10,000 - $50,000
$10,000 in addition to a cease and desist order, the Director may issue a civil penalty between $500 and $10,000 for each violation
What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act? - $100 per violation - revocation of license - $2500 - $1000
$2500
Which of the following shows the types of insurance an insurer is permitted to transact? - Director's Commendation - Line Application - Insurance License - Certificate of Authority
Certificate of Authority
An insurance policy or countersignature endorsement must be signed by any of the following EXCEPT - bail bond agent - managing general agent - licensed insurance producer - director of insurance
director of insurance
The following are all causes for the Insurance director so suspend or impose conditions up on the continuance of a producer's license EXCEPT - conviction of a felony involving moral turpitude - evidence that the producer is a poor personal credit risk - misappropriation or illegal withholding of the policyholder's money - obtaining a license through fraud
evidence that the producer is a poor personal credit risk
FBI
federal bureau of investigation - a government agency that serves as a criminal investigative unit and an internal intelligence agency
Which of the following best describes a misrepresentation? - discriminating among individuals of the same insuring class - issuing sales material with exaggerated statements about policy benefits - making a deceptive or untrue statement about a person engaged in the insurance business - making a maliciously critical statement that is intended to injure another person
issuing sales material with exaggerated statements about policy benefits
Procure
obtain
Commission
payment to the agent by the insurance company for placing insurance, usually a percentage or the policy premium
Cease and desist
to stop or discontinue
Insolvent
unable to meet financial obligations
The Director may require a producer to submit fingerprints in all of the following situations EXCEPT - upon license renewal - in the process of a merger - upon insurer insolvency - upon license suspension
upon insurer insolvency
A producer's insurance license was due for renewal but she failed to pay the required license renewal fee. Seven months later, the producer decided to pay her renewal fee. How much can she expect to pay in addition to the renewal fee? - $0 - $100 - $200 - $350
$100 - within a year after expiration, qualified producers may still renew the license if they pay a renewal fee and a late fee of $100
If a producer changes his or her residential address, the Director must be notified of the change within how many days? - 30 - 60 - 90 - the Director only needs to be notified if the address of the producer's business, not residence, changes
30
How many days after an initial pretrial hearing date, does an insurance producer have to report any criminal prosecution to the Director? - 10 - 15 - 45 - 30
30 - the report must include a copy of the initial complaint filed, the order resulting from the hearing and all other relevant legal documents
Which of the following statements does NOT accurately describe an insurance broker? - brokers must have a written agreement with an insured when they receive any fees or compensation for services - a broker does not represent individual clients - a broker is not a direct representative of an insurer - a broker cannot bind coverage
a broker does not represent individual clients - unlike a producer, a broker represents his/her clients (policyholders) and is not a direct representative of any insurance company - brokers must have a written agreement with an insured when they receive fees or compensation for services - brokers cannot bind coverage
Injunction
a court issued order to stop committing an act or violation
Any person who knowingly attempts to obtain money, goods, or any other thing of value with the intent to cheat and defraud is guilty of - a misdemeanor - nothing - a felony - twisting
a felony
Statute
a formal written law enacted by legislature; insurance statues can be found in the state Insurance Code
Home state
a state in which an insurer is organized and has its main place of business
Which of the following would NOT be accepted as a document showing that an applicant for a license is in the United States legally? - a tribal certificate of Indian blood - a valid credit card with a major United States credit company - a United States certificate of citizenship - a United States passport
a valid credit card with a major United States credit company
Inducement
an offer that attempts to influence the other party
In Arizona, the Director of Insurance is - appointed by the insurance and industry committee of the state legislature - elected by the state legislature's banking and insurance committee - elected by Arizona voters - appointed by the Governor
appointed by the Governor - to serve a 6 year term
In Arizona, the Director of Insurance serves - at the pleasure of the governor - as long as elected by the general public - a term of 4 years - a term of 8 years
at the pleasure of the governor
Property and casualty producers can usually do something for their clients that life and health producers cannot provide. What is this service? - all producers have the same powers - bind coverage - solicit applications - add riders
bind coverage
In life insurance, producers are permitted to share or split commissions, providing that - the insurance department knows of the arrangement - there is a written agreement between the producers - both are properly licensed for the line of insurance - the insured knows and agrees to the arrangement
both are properly licensed for the line of insurance
Which of the following would NOT be considered an exception to the National Do Not Call List? - calls based from outside of the United States - calls for which the consumer has given prior written permission - calls which are not commercial or do not include unsolicited advertisements - calls by or on behalf of tax-exempt nonprofit organizations
calls based from outside of the United States
A banker is ready to close on a customer's loan. The bank is prepared to offer the loan but only if the customer purchases an insurance policy from the bank in the amount of the loan. This is an example of - coercion - loading - defamation - twisting
coercion
Which of the following terms describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance? - slandering - defamation - undercutting - twisting
defamation
Transacting insurance could include all of the following EXCEPT - receiving an application for insurance - effectuating a contract - designing insurance advertisements - negotiating insurance
designing insurance advertisements
Who requires that a prospective producer take and pass a written examination on the kinds of insurance business specified in the application? - insurance company - state legislature - no exam is needed - director
director
Coercion
forceful act of threat aimed to influence a person to act against his or her will
Which of the following is an example of a "gene product"? - stem cell treatments - bovine growth hormones - gene fragments - tests of an individuals DNA
gene fragments
Which of the following is designed to protect security and confidentiality of nonpublic information and the security of the information system? - information security program - investigative consumer report - fair credit reporting act - cybersecurity event
information security program - administrative, technical, and physical safeguards that a licensee uses to access, collect, distribute, process, protect, store, use, transmit, dispose of, or otherwise handle nonpublic information
When is an insurer NOT required to state the coverage under which a claim payment is made? - insurers are always required to disclose the coverage under which a claim is paid - when the claim is paid to a beneficiary - when paying an inland marine claim - insurers are never required to state the coverage under which a payment is made
insurers are always required to disclose the coverage under which a claim is paid
Every office that transacts surplus lines insurance must have on staff a person who - is licensed as a surplus lines broker - serves as a liaison between the office and the Director - lobbies for favorable tax treatment by the state - updates all terms of insurance according to state law
is licensed as a surplus lines broker - in addition to being either a property or casualty insurance producer or a managing general agent for property or casualty insurance
Deficiency
lack or incompleteness
Which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices? - exaggerating the benefits provided in the policy - stating that the competitors will arbitrarily increase their premiums each year - making comparisons between different policies - stating that the insurance policy is a share of stock
making comparisons between different policies
Which of the following is a qualification for an adjuster's license? - must not have committed any act that is grounds for denial - must be at least 18 years old - must have a college degree - must be a resident of the county in which the adjuster is conducting business
must be at least 18 years old
Which of the following is a qualification for a producer's license? - must have a college degree - must be a resident of the country in which the producer is conducting business - must be free of any type of criminal conviction - must be at least 18 years old
must be at least 18 years old - before being licensed, a producer must be at least 18 years old, file an application with Director, pay appropriate license fee, submitted with the application and pass each examination which is required for the license being sought
Exempt
not subject to an obligation
When a new insurance company wishes to transact business in the state, it must do all of the following EXCEPT - obtain approval from the state insurance department or division - set certain capital and surplus requirements - obtain approval of each of its corporate officers and executives - apply for a license or certificate of authority
obtain approval of each of its corporate officers and executives
When a new insurance company wishes to transact business in the state, it must do all of the following EXCEPT - obtain approval from the state insurance department or division - set certain capital and surplus requirements - obtain approval of each of its corporate officers and executives - apply for a license or certificate or authority
obtain approval of each of its corporate officers and executives
The Gramm-Leach-Bliley Act was passed to - protect private customer information filed with a financial institution - define insurance as interstate commerce - allow consumers access to credit and private consumer reports - allow insurance companies access to medical information for underwriting purposes
protect private customer information filed with a financial institution
All of the following are true regarding rebates EXCEPT - rebates are allowed if it is in the best interest of the client - rebates are only allowed if specifically stated in the policy - rebating can be anything of monetary value given as an inducement to purchase insurance - dividends are not considered to be rebates
rebates are allowed if it is in the best interest of the client
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 - coercion - twisting - controlled business
rebating - when producers give or promise anything of value that is not specified in the policy, they are guilty of rebating
A producer in New Mexico wants to become a producer in Arizona. The Department will waive certain examination requirements, provided that New Mexico would waive these same requirements if an Arizona producer sought licensure in New Mexico. What term is used to describe this phenomenon? - fair exchange - equanimity - reciprocity - equality
reciprocity - when the state in which the person resides accords the same privilege to residents of Arizona
If after an examination and a hearing the Director determines that an insurer has failed to comply with the Insurance code statutes regarding extra fees or applying service charges, the Director will order the insurer to - refund the fee to the customer - be put on probation - cease its operations for a year - lower prices for future services to the customer
refund the fee to the customer - refund all or part of the fee/service charge & may impose civil penalties
The Federal Fair Credit Reporting Act - regulates consumer reports - protects customer privacy - regulates telemarketing - prevents money laundering
regulates consumer reports
If a producer waits more than 1 year to renew a license after it has expired, what is the producer required to do to be licensed again? - become appointed by an insurer - retake a licensing exam - pay a late fee of $100 - submit a license renewal application to the Director
retake a licensing exam
All of the following are considered business entities EXCEPT - limited liability partnerships - limited liability companies - corporations - sole proprietorships
sole proprietorships - "business entity" could apply to a corporation, association, or other legal entity permitted to conduct business - individuals and sole proprietorships are NOT considered business entities
Which of the following qualifications for selling insurance in the state of Arizona is NOT correct? - the applicant must have filed the application and passed the required examination - the applicant must be age 18 or older - the applicant must be a resident of the state of Arizona at the date of application for licensing and not hold a resident license in another state - the applicant must have two letters of recommendation attesting to trustworthiness, reliability, and good reputation
the applicant must have two letters of recommendation attesting to trustworthiness, reliability, and good reputation
Director
the head of the state Department of Insurance
Which of the following pays for the examination of an insurer's service fees to determine compliance with the State Insurance Code - the Director - the policyowners - the insurer - the Guaranty Association
the insurer - the insurer or insurance producer must pay the costs of the examination
If an insurance policy doe NOT have the proper countersignature - the insurer must issue a new policy - the insurer must receive the Director's approval on the policy - the policy will still be considered valid - the policy will have a 60 day waiting period before going into effect
the policy will still be considered valid
The producer or broker must keep at the place of business the usual and customary records pertaining to insurance transactions for at least - three years - five years - one year - two years
three years - state insurance laws require producers and brokers to maintain such records for AT LEAST 3 years
What is the purpose of a certificate of authority? - to show the lines of insurance an insurer is authorized to transact - to give the Director ultimate control over and insurer's actions - to show that an insurer is a member of the Guaranty Association - to allow the insurer specific liberties with regard to insurance code
to show the lines of insurance an insurer is authorized to transact
Although most domestic insurers must be examined at least once every 5 years, how often may the Director examine an insurer? - once every 2 years - once every 3 years - whenever necessary - once a year
whenever necessary
