Life Insurance: General Law (22 Questions)
Monies in a premium account can be invested in any of the following securities:
-us gov securities -certificates of deposit (cds) -repurchase agreements -commercial paper -municipal bonds -money market funds
License Fees
All license fees collected are placed into the Insurance Producer Administration Fund and used for the payment of expenses of the Insurance Department for the enforcement of insurance laws... Fees.... Regular Producer - 180 payable every two years Temp Producer - 50 issuance fee only Business Entity - 150 payable every two years Limited Lines Producer - 25 payable annually Car Rental Limited License - 50 residents
Additional Required Fees:
Annual registration fee of 1000 for education provider registration certification fee of 50 for each initial provider program annual fee of 20 per course for each provider program renewed
Persons required to be licensed:
Insurance producers limited lines producers
Change of Address
Licensees must inform the Director by any means acceptable to the Director of a change of address within 30 days after the change.
Premium and Trust Account
These are savings or checking accounts established in an Illinois bank to protect client's premiums. A premium account must be established and maintained if a licensee -holds any premiums for more than 15 days before remitting to an insurer -retains any party of the premium collected to pay commissions
Number of hours of prelicensing requirements (per each line of insurance):
life accident and health fire casualty personal lines ---------------------------All the above require 20 hours prelicensing and 7.5 hours of classroom hours ---------------- Life Accident and Health = 40 hours of prelicensing and 15 hours of classroom hours *Motor Vehicle Insurance requires 12.5 hours and 5 class hours
Insurance Producers
no selling unless license in that line of authority no anything, no advice, fee based planning, help, nada without being: licensed insurance producer, limited lines producer, temporary insurance producer
Types of Disbursements allowed to be taken out of the premium fund trust account:
premium remittances to the insurance co. (can be net premium, which is the total premium minus commissions owed) commissions payable to insurance producers premiums to be returned to applicants within 15 days if the policy is denied or the insured cancels the policy within the free look time period producer can keep any interest earned in the account as long as the insurer has given premission
Applicant rights when application is denied
request a hearing within 30 days of learning of the action hearing must be held within not fewer than 20 days nor more than 30 days after the mailing of the notice of hearing
Temporary Insurance Producers (two types)entityt
1. the new producer 2. 180 temporary license
Business Entities
A business entity acting as an insurance producer must obtain an insurance producer license using the uniform business entity application. before approval by the director the following must be complied with. application must be made and fees paid business entity must designate a licensed producer responsible for compliance with the insurance laws and rules furnish any additional documentation required by the Director payment of 150 dollar fee every two years
Fiduciary Responsibilities
All monies collected shall be held in a fiduciary capacity and shall not be misappropriated. The following represents details on these fiduciary rules agents can pick up premiums due on outstanding policies not more than 90 days after their due date an insurer that issues a policy shall be assumed it received the policy premium if paid to an agent. The insurer remains responsible to the insured for any return of premium. if an insurer owes a producer commissions which were not paid in 90 days of becoming due, the agent can charge the insurer a late charge not to exceed 1.5% per month misappropriation by an agent of $150 or less is a CLASS A MISDEMEANOR for a first offense and A CLASS 4 FELONY for subsequent misappropriations. More than $150 is a CLASS 3 FELONY.
alien company
a co incorporated under the laws of a country outside of the us or its territories or possessions
The insurance director
can do almost anything as long as it isn't arbitrary or unreasonable in light of the circumstances. The following are some of the powers of the insurance director and his office: -make reasonable rules and regulations -conduct investigations -conduct examinations, investigations and hearings -issue cease and desist orders to stop illegal activities - noncompliance penalty of a maximum of 1000 -when a cease and desist order is given the Director must give that person a notice of hearing to take place in not less than 20 nor more than 30 days -appeals are available for adverse hearing decisions -suspend or revoke persons not in compliance -issue licenses
Other Premium Rules
the absence of a premium-account does not relieve the agent of holding premiums in a fiduciary capacity non-premium monies such as service fees, policy fees, late charges, etc. can also be placed into a premium account. all monies deposited into a premium account are considered to be fiduciary funds until withdrawn. premium account shall not be used as a general operating account or claim payment account account must balance between deposits less any lawful withdrawals accurate records must be kept
foreign co
a co in any state other than the one in which it is incorporated or chartered, but within the us or its posessions
(obtaining a license) Qualifications and Pre-licensing
Individuals applying for a resident insurance producer license must make application and declare under penalty of refusal, suspension, or revocation of the license that the statements made in the application are true, correct and complete.
Bond Requirements
Insurance producers who place insurance either directly or indirectly with an insurer with which the producer does NOT have an agent contract must maintain in force while licensed a bond in favor of the people of the State of Illinois.
180 day temp license
issued for a period of 180 days. at the discretion of the director may be renewed without taking an exam. all fees must be paid. issued in the following situations: -insurance producer dies and someone has to fill in real fast -to the designee of a licensed insurance producer entering active service in the armed forces of the USA.
limited lines producer
issued for ppl who sell a limited type of insurance. -must be 18 years old -competent, trustworthy good character handles: -baggage insurance -travel insurance -industrial life insurance (small amts of life insurance) -legal expense insurance -limited health care plan -Enrollment of recipients of public aid or medicare in an HMO -car rental insurance Insurance company is responsible for payment of license fees limited lines producer may represent more than one insurance company the license is perpetual as long as fees are paid $25 annual fee for all the above licenses which is paid by the insurer car rental insurance = $50 fee every two years limited lines license may be terminated by the insurance company or licensee no exam or licensing class required name, address, ID# and date license issued must appear on the license
The following can sell or give advice about insurance:
-attorneys, CPAs, trust officers, actuaries and licensed public adjusters. (however, in order to qualify for this exemption, the advice given by these persons must be incidental to their regular business) -licensed insurance producers, limited insurance reps or temporary insurance producers *NOTE: VIOLATIONS OF THE ABOVE ARE TREATED AS CLASS 4 FELONIES
exemptions from any pre-licensing education or exam
-previously licensed in another state for the same lines of authority -available only if currently licensed in that state or the application is received within 90 days after the cancellation of the previous license and the license was in good standing verified by a good standing certificate issued by the former state -A person moving to Illinois must make application within 90 days after establishing legal resident
If bond is required, the following requirements must be met:
1. bond shall be continuous in form - no interruptions 2. amount of 2,500 or 5% of the premiums brokered in the previous calendar year, whichever is greater but not to exceed $50,000 total aggregate liability 3. Producer for a business entity can meet this requirement with a bond in the name of the business entity. 4. producer's license may be revoked if the producer acts without a bond
If an applicant is denied issue of license the applicant can:
1. request a hearing within 30 days of learning of the action 2. hearing must be held within not fewer than 20 days nor more than 30 days after the mailing of the notice of hearing. -may be subject to a penalty up to 5,000 for each cause but may total no more than 20,000 -persons are ineligible to apply for any license for 3 years after the revocation or denial of a license
Controlled Business
Controlled business is insurance written on the: 1. producer's own life, person, property or risks to his spouse 2. written on the life, person, property or risks of his employer or his own business --an insurance producer license may not be granted or extended to any person if the Director has reasonable cause to believe that the aggregate amount of premiums received on controlled business exceeds the aggregate amount of premium for all other insurance business: during either of the two calendar years immediately preceding the extension date of the license during the 12 month period immediately following the issuance or extension of the license
Director of Insurance may do any of the following in regard to the temporary licenses issued above:
-limit the authority of the license -require the license to have a suitable sponsor who assumes responsibility for his actions -may revoke a temp license
Before approval the Director must find that the individual
-passed a written exam consisting of two parts for each line of insurance (content and law). Both part 1 and part 2 must be passed within 90 days of each other. If not, the entire exam must be retaken. There is no limit to how many times the exam can be taken within one year payment of a non-refundable 25 dollar admin test request fee plus fees charged by the testing service to actually take the test be at least 18 years old make proper application
License Suspension, Revocation or Denial
An insurance producer's license can be suspended, revoked or denied by the Director of insurance for any of the following reasons (the following are in addition to those reasons stated in the pre-licensing and qualification section) -violating any insurance laws, rules or orders of the Director -obtaining or attempting to obtain a license through misrepresentation or fraud -improperly withholding, misappropriating or converting any monies or properties received in the course of doing insurance business -intentionally misrepresenting the terms of an actual or proposed insurance contract or application -having been convicted of a felony -committing any unfair trade practices -using fraudulent, coercive, or dishonest practices -demonstrating incompetence, untrustworthiness or financial irresponsibility in the conduct of business -denial, suspension, or revocation of license in any other state -forging names to an application -failing to comply with an order imposing a child support obligation -knowingly accepting insurance benefits from an individual who is not licensed -failing to pay off a state student loan
Producer License Contains:
Name Address Personal Identification Number Date of Issuance Lines of Authority Expiration Date
Department of Insurance Examinations
Subpoena power to compel attendance of any person or records- noncompliance can result in a 2000 fine perform examinations of any company or person or firm engaged in the insurance business right to review records of persons and companies at all reasonable hours where records are kept any person subject to an inquiry by the Director must be given a notice of hearing at least 10 days before the date assigned director may examine any applicant for or holder of an insurance producer license, limited line producer or temporary insurance producer license or any business entity if a report is made by examiners to the director, within 90 days the director must issue a written order based on that report or within 90 days after a hearing, if one is requested, issue a written order person getting examined has a right to request a hearing within 14 calendar days after receiving a duplicate copy of the examination report any violation of a written order from a regulatory examination is subject to a fine of not more than 10,000. any other violation can result in a fine of not more than 5000.
Producers License Not Required of the Following Officers, Directors or Employees of an Insurer
They do not receive commissions on policies written or sold job functions relate to underwriting, loss control, inspection, processing, adjusting, investigating, or settling claims. acting in a capacity of supervisor assisting insurance producers if activities limited to technical advice and does not include the sale, solicitation, or negotiation of insurance collects information for group life, group property and casualty, group annuities, group blanket accident and health enroll individuals or issuing certificates under group plans administers plans or assists in administering plans if no commissions are paid administering employee benefit plans those involved with inspection, rating, classification of risks or supervising or training insurance producers advertising without the intent to solicit insurance business salaried full-time employee who advises his employer to the insurance interests of the employer as long as he doesn't solicit insurance or receive commissions person who is not a resident of illinois who solicits or sells a contract of insurance for commercial property to an insured with risks located in more than one state provided that person is licensed in the state where the insured maintains its principal place of business.
domestic co
a company in the state under whose laws it was incorporated
Department of Insurance
authorized by state law to enforce the laws and to issue insurance regulations. the head of the department is given the title of Commissioner, Superintendent or Director and is responsible for administering the dept.
(Maintaining a license) Continuing ed
an insurance producer license shall remain in effect unless revoked or suspended and fees are paid and education requirements for resident individual producers are met by due date the following rules apply: before renewal must complete 24 hours of course study form approved provider. must include a class for a 3 hour ethics program (self-study cannot be approved for the required ethics program) format must be class, seminar or self-study combo methods will be considered self-study unless class or seminar equals or exceeds 2/3 of total hours certified. self-study programs require completing an exam on covered material license terminates upon failure to fulfill continuing ed must complete courses in advance of renewal date to allow the education provider time to report the credit to the dept if license lapses the producer may within 12 months after the due date be issued a license without the necessity of passing a written exam as long as fees are paid and continuous education requirements are complied with. if a producer can't comply due to military commitment the producer may request a waiver of the above procedures
The director can deny an insurance producer's license for any one or more of the following causes:
provide incorrect, misleading, incomplete or materially untrue info. obtaining or attempting to obtain a license through misrepresentation or fraud intentionally misrepresenting the terms of an application for insurance having been convicted of a felony demonstrate incompetence, untrustworthiness or financial irresponsibility in the conduct of business forgery failing to comply with an administrative or court order imposing child support obligation failure to pay state income taxes failing to make satisfactory repayment to the Illinois Student Assistance Commission for a delinquent student loan Applicant is ineligible to apply again until 3 years after the denial by the Director
The New Producer
the purpose is to allow a new employee of a business entity to solicit insurance while waiting to take the state insurance exam and complete all that is required to obtain a producers license. *this person must be sponsored by an insurance company! -the license is issued for a period of 90 days and a test is not required -this is a once in a LIFETIME issue to that person -in insurer must apply for the license and pay all fees -the applicant must be enrolled in a training course or program and be in the process of fulfilling the pre licensing requirements. -the insurance director may refuse to grant the insurance firm any more temporary insurance producers licenses if during a six month period more than 50% of that company's temporary license holders fail to obtain a producer's license the temp license ends after 90 days and cannot be renewed
Non resident licenses
these licenses are for persons living outside the State of Illinois but selling insurance in the state. -one can get a non-resident license if they already hold an insurance producer's license in their residential state which is in good standing -non resident license must be for the same lines of insurance currently licensed for in the residential state -must file an application with the director and pay fees or file a uniform app -director must verify licensing through the producer database maintained by the national association of insurance Commissioners -nonresident state must allow illinois residents the same opportunity. (not all states are reciprocal) -change of address must be furnished within 30 days
