State and Law Supplements - Practice Exam

An insurer that terminates a producer's appointment must inform the Commissioner within how many days?

30

A company that has not been authorized to operate in Colorado is known as

a nonadmitted insurer

A fiduciary responsibility is defined as

a relationship of special trust and confidence when a person is entrusted with another's funds

Circulation of a maliciously critical statement about an insurer's financial condition to damage the insurer's reputation or business is called

defamation

An insurance producer who solicits insurance on behalf of an insurer represents the

insurer

To be valid, a group life insurance policy

may not be issued to a group formed solely for the purpose of obtaining insurance

All of the following are duties of the Commissioner EXCEPT : A. keeping records of the insurers that he has examined B. adopting rules and regulations C. writing insurance laws D. submitting an annual report to the general assembly

writing insurance laws

A group life insurance policyholder must be given a grace period for premium payment of how many days?

31

What is the maximum amount the Commissioner can fine an insurer for each violation of a cease and desist order?

$10,000

How many hours of continuing education must be in courses associated with the lines of insurance for which the producer is licensed?

. 18

Which of the following statements regarding the Notice Regarding Replacement of Life Insurance is CORRECT? A. It is presented to the applicant only on request. B. It must be presented to the applicant after the policy is issued. C. A copy of the notice must be signed by the applicant and submitted with the application. D. A copy of the notice must be reviewed and signed by both the policy applicant and beneficiary

A copy of the notice must be signed by the applicant and submitted with the application

Which of the following potential insurance sales would be subject to replacement regulations? A. A new policy issued by the same insurer as part of a conversion privilege B. A new policy that causes an existing life insurance policy to be surrendered C. A credit life insurance policy that causes an existing credit life insurance policy to be forfeited D. A new group life policy that is replacing an existing group life policy

A new policy that causes an existing life insurance policy to be surrendered

Which of the following is NOT a problem when existing life insurance is replaced with new coverage? A. The risk that a financial loss will occur when values in the existing policy end and new values are built in new coverage. B. Comprehensive coverage may increase under the new policy. C. The new policy may be based on the insured's attained age, with higher premiums than existing coverage. D. The policyowner may pay additional costs for the new policy to issue.

Comprehensive coverage may increase under the new policy

All of the following are examples of unfair claim settlement practices EXCEPT A. paying a claim without conducting an investigation B. denying a claim promptly but without explaining the coverage or laws on which the denial is based C. paying a claim promptly but without explaining the coverage or laws on which the payment is based D. denying a claim without making an investigation

paying a claim without conducting an investigation

If a producer offers to refund part of a prospect's premium in exchange for the purchase of a life insurance policy, the producer is committing the illegal act of

rebating

To be licensed to sell life, accident, and health insurance in Colorado, an applicant must complete

100 hours of prelicensing education

When appropriate, the Commissioner reports a violation of insurance law to

the district attorney

A fraternal benefit society representative need not be licensed as a producer if he sells life insurance with a face amount equal to or less than

$50,000

The usual free look period for a life insurance policy that is not delivered as a replacement policy is how many days?

15

A group life policy is incontestable (except for nonpayment of premium) once it has been in effect for

2 years

A producer has how many days to file a written appeal to the Commissioner after he has been terminated by his appointing insurer?

30

How must insurance producers account for each insurance policy and the premiums they receive on it?

As a separate account of the insured

Which of the following policyholders may request that the Commissioner examine an insurer because they fear the insurer is unsound or insolvent? A. At least 100 policyholders who have called the Commissioner's office with requests for an examination B. One policyholder with at least $1 million insurance in force C. At least 5 policyholders who have at least $100,000 insurance in force and who have specified their concerns in writing D. A significant percentage, to be determined by the Commissioner, who have serious complaints about the insurers' market and claims practices

At least 5 policyholders who have at least $100,000 insurance in force and who have specified their concerns in writing

The Commissioner gives approval to an insurer to do business in Colorado in a certificate of

authority

In Colorado, all of the following are considered unfair trade practices EXCEPT A. misrepresentation B. rebating C. replacement D. coercion

replacement

All of the following insurance practices are illegal in Colorado EXCEPT A. soliciting or procuring insurance without a license B. paying a fee for services as an insurance producer to anyone who is not properly licensed C. inquiring about an applicant's sexual orientation in connection with an application D. replacing one life insurance policy with another

replacing one life insurance policy with another

When an insurer terminates a producer's appointment, the insurer must notify

the Commissioner and producer

The Commissioner may A. conduct investigations relating to insurance matters only through the state Attorney General B. conduct investigations on his own but cannot subpoena witnesses C. investigate only individuals and companies that apply for licenses D. conduct investigations and subpoena witnesses whenever he deems it necessary

conduct investigations and subpoena witnesses whenever he deems it necessary

In general, people who represent fraternal benefit societies to solicit insurance are

considered insurance producers and must meet all licensing requirements

A producer who was to write a majority of his insurance business on the employees and officers of a restaurant owned by his wife is transacting

controlled business

All of the following are violations of Colorado insurance law EXCEPT A. charging individuals of the same class different premium rates B. offering tickets to a football game as an incentive to purchase a policy C. informing a new policyholder that his new policy, if lapsed for nonpayment of premium, could be reinstated upon reapplication D. having an arrangement to sell stock to a person contingent upon the purchase of an annuity

informing a new policyholder that his new policy, if lapsed for nonpayment of premium, could be reinstated upon reapplication

Suppose a producer helps a client set up an estate plan, which is not part of the producer's usual service. The producer can charge a fee for this service if all of the following circumstances are in place EXCEPT A. when it is clear from the beginning that no sale of an insurance product is related to the service B. when the client signs a disclosure statement which stipulates that he is not obligated to buy insurance from the producer in exchange for the service C. when the producer always planned to sell insurance to the client D. when the financial service is beyond the producer's normal duties

when the producer always planned to sell insurance to the client