12 - California Laws and Ethics Pertinent to Insurance Questions with Verified Solutions

12 - California Laws and Ethics Pertinent to Insurance Questions with Verified Solutions Anyone employed in California to assist an insurance agent in transacting insurance is called an insurance solicitor a life agent who has misappropriated fiduciary funds to his own use. What is Pete guilty of? Theft According to the California Insurance Code, what is "insurance"? A contract A person who asserts a right of recovery under an insurance policy is called claimant According to the California Insurance Code, what term is used to describe a fact so important it could affect the policy premium? Materiality Why is a life insurance policy's delivery date important? The free-look period begins on the policy delivery date What does the term "indemnity" mean as it pertains to insurance? To make whole Which of the following does the California Insurance Code NOT require an insurance policy to specify? Insurer's financial rating When handling premiums for an insured, an agent is acting in which capacity? Fiduciary What is required after a life agent sells an insurance policy to an applicant without being appointed by the insurer? Notice of appointment must be submitted to the Commissioner An agent's attempt to stop the replacement of an existing life insurance policy is known as conservation Under the California Insurance Code, a licensee's license number must be printed at what size on all price quotes, business cards, and printed material? The same size print as the licensee's phone number, fax number or address Life insurance surplus must be distributed to policyowners at what frequency? Annually All of these are reasons the Commissioner may disapprove a licensee's request to use a fictitious name EXCEPT The name is the licensee's actual name Which of the following does the California Department of Insurance (CDI) have NO jurisdiction over? Medicare Which word implies permissiveness according to the California Insurance Code? May Any changes in background information that occur after a producer application has been submitted or a license has been issued MUST be reported to the Insurance Commissioner within 30 Days The California Insurance Code defines "policy" as a(n) written contract According to the California Insurance Code, which of the following is NOT an example of an insurable event? An insured suffers a financial loss in the state lottery According to the California Insurance Code, what is the maximum penalty per violation for anyone who unwillfully commits an unfair method of competition? $5,000 The free-look period for life insurance policyowners age 60 or older is 30 Days! What prevents a life insurance policy from being rescinded by the insurer after being in force for two years? Incontestability clause The California Life and Health Insurance Guarantee Association covers all of these types of policies, EXCEPT Self-funded plans Which of the following is NOT protected under the California Life and Health Guarantee Association? Insurers Paul has an existing annuity and is sold a new one, in which the new policy holds no greater financial benefit to him than the existing contract. This is considered a(n) unnecessary replacement Before an insurer is allowed to test an individual for HIV, what must be completed? Consent form Which of the following is NOT considered to be an act of insurance solicitation? Publishing a magazine where one of the advertisers is an insurer Jim is applying to become an insurance agent and has a past misdemeanor conviction that was later expunged due to California Penal Code 1203.4. Which of the following statements is correct? Pursuant to California Penal Code Section 1203.4, you are required to report a conviction that was later expunged. The California Insurance Code allows an individual how many days to cancel a life policy for a full-refund? Every policy of individual life insurance shall have a notice stating that after receipt of the policy by the owner, the policy may be returned by the owner for cancellation by delivering it or mailing it to the insurer or to the agent through whom it was purchased. This period shall not be less than 10 days nor more than 30 days. In California, an insurer organized under the state laws of Oregon is called a(n) foreign insurer The California Insurance Code has authorized standards for names used by life insurance agents. Which of the following, if any, are automatically acceptable for Lance Manyon, a holder of the CLU designation? If the word "Insurance" is included in the name, the California Department of Insurance then checks to make sure one of the six definitive words ("Agency," "Services," "Marketing," "Sales", "Center" or "Solutions") is also included in the name. In this instance, Lance Manyon Insurance Services would be acceptable. What does the term "illustration" mean when used in the phrase "life insurance policy illustration", according to the California Insurance Code? Presentation of policy features that includes non-guaranteed elements How long must life agents keep their transaction records? 5 years Insurance agents and brokers must make their insurance records available to the Commissioner at all times A representation may be altered or withdrawn only before the insurance is in effect What is an "insurance broker" according to California Insurance Code? A person compensated for transacting insurance on behalf of another person with an insurer What is an insurance solicitor authorized to do? Help an agent or broker sell insurance According to the California Insurance Code, who is responsible for submitting a life agent's appointment? Insurer Which of the following does NOT have to be included on life insurance policy illustrations? "Statement that all values and benefits are guaranteed". Not all benefits and values are guaranteed in life insurance policies. Some have non-guaranteed values which must be described in the illustration. According to the California code governing claim settlement practices, which of the following is NOT considered to be an act of unfair discrimination? Denial of a claim based on reckless behavior What is the insurance term the State of California uses for an insurer that is eligible to transact business in this state? Admitted Which type of jurisdiction requires an insurer to have its rates accepted by the Insurance Department prior to using them? Prior approval The California Insurance Code requires that an insurer must have enough assets to cover its liabilities and for reinsurance of all outstanding risks. To remain solvent, it must also possess additional assets equal to what amount? Its paid-in capital What type of license is required for an individual who charges a fee to review an insured's existing life insurance policy? Life and disability analyst Who does a life settlement broker represent? Individual wanting to sell their life policy to a third party Which of the following is NOT a primary objective of insurance regulation? Interpret policy provisions An individual who transacts life, disability, or life and accident and health insurance on behalf of an insurer is called a(n): life agent When intentional concealment is involved, what course of action is the injured party entitled to? Rescission of the contract An agent has advertised that the insurer to which the agent is appointed with is a member of the Insurance Guarantee Association. This agent has committed a(n) unfair method of competition Failure to report background changes within 30 days as required under section 1729.2 of the California insurance code could subject a license or applicant to could subject a licensee or applicant to formal disciplinary action, including a fine, suspension, denial, restriction, or revocation of the license. Paul has an existing annuity and is sold a new one, in which the new policy holds no greater financial benefit to him than the existing contract. This is considered a(n) unnecessary replacement According to section 1729.2 of the California Insurance Code, which of these does NOT qualify as "background information"? Misdemeanor charges filed, not resulting in a conviction Which of the following is NOT considered to be an unfair claims settlement practice? Advising a claimant to hire an attorney What is required after a life agent sells an insurance policy to an applicant without being appointed by the insurer? Notice of appointment must be submitted to the Commissioner Which of the following acts is NOT a Federal offense committed by an insurance agent? Misrepresentation on an insurance application