SC LIFE, ACCIDENT, HEALTH QUESTIONS AND ANSWERS
Reciprocal Agreement - Answers -Two states allowing for non resident license
What two brokers dont need a license - Answers -Surplus and Excess
Fine for selling ins without license? - Answers -$10,000
Who examines foreign and alien insurers? - Answers -Regulatory authority
What is the biennial appointment fee? - Answers -$40
What is the application fee? - Answers -$25
What is Section 1034? - Answers -Authorizes the attorney general to provide civil and
criminal punishment to those breaking Section 1033 (dishonesty, etc.)
What does Gramm Leach Biley Act do? - Answers -Protects consumer info through
privacy regulation
How much you give notice of privacy and health info? - Answers -In person annually
What is the fine for blank forms? - Answers -$200
What are prohibited inducements? - Answers -Promise of returns (opposite of rebate
which is incentive up front)
What do estate death benefits help pay? - Answers -Taxes on assets as well as any
potential debts
What is the difference between a Viatical Settlement and a Life Settlement? - Answers -
Viatical has a higher premium due to lower life expectancy. For Viatical, the insured
must be terminally or chronically ill. Terminal ill means life expectancy shorter than 24
months.
What is insurable interest? - Answers -When someone or a company has interest in
your life or property
How long is the contestability Period? - Answers -2 years
What is a buy sell agreement? - Answers -It is where the owners interest is bought by
partners (doesn't fund)
What is a cross purchase buy sell? - Answers -Where partners of shareholders are
each others beneficiaries so the death benefit can be used to pay their interest in the
company
,What is an entity buy sell? - Answers -When business is a party in the agreement and
pays for partners policies (4 partners, 4 policies)
Key person buy sell? - Answers -When the company wants to insure one person to
make up for potential lost income and knowledge resulting from their death
What is a deferred comp plan? - Answers -This is when someone sets aside money into
the plan to save for typically retirement
What is an executive bonus plan? - Answers -When employer pays part or all premium
for an executive
What are the characteristics of a permanent life policy? - Answers --To age 100
-Large premiums, if unused they are paid back in dividends
-Not taxable income
What are the characteristics of a term life policy? - Answers --Limited time
-There is a death benefit but no accumulating value (No CV)
-smaller premiums
What is a participating policy? - Answers --Usually from Mutual companies
-Larger premiums but if unused will be paid back in dividends
-Not taxable income
What is a nonparticipating policy? - Answers --Usually stock companies
-Company profit may be paid out but it is not in form of dividends and IS taxable income
What are the characteristics of a Fixed life policy? - Answers --Fixed Death Benefit
-Premiums invested in general account
What are the characteristics of a Variable Life policy? - Answers --Guaranteed minimum
death benefit which is usually the face amount of the policy
-Premiums invested in separate accounts
What are the premium factors? Explain. - Answers -Mortality- risk of death posed by the
applicant. It is a charge.
Interest- the amount the insurer can expect to earn on invested premiums. It is a credit
(reduces premium)
Expenses- represent the insurers costs of doing business. It is a charge.
What is the Life, Accident, and Health Guarantee Association? - Answers -If an insurer
doesn't have the money to pay out, they ensure the insured isn't SOL
What is an illustration? - Answers -Document created to show how a life insurance
policy would perform under a set of certain circumstances
, What is a Buyers Guide? - Answers -Something that is given to the insured before
accepting the applicants initial premium. It was made by NAIC to help buyers determine
what kind of insurance they need, how much, and which policy
What is a policy summary? - Answers -States coverages, costs, benefits, limitations,
exclusions, and terms of the life insurance policy
When can the buyers guide and the policy summary be delivered IF the policy buyer
has a free look period of 10 days? - Answers -Delivered with policy on or before it
What is the Traditional Net Cost Method? - Answers -It identifies the cost of funding the
pure insurance portion of the life policy over a specific period (Usually 10 or 20 years)
What is the Interest Adjusted Net Cost Method? - Answers -Factors in the interest rate
credited to the policy. Because it accounts for the time value of money, this method is
more widely used.
When can a policy owner replace a Life policy? - Answers -Life policies require a free
look period of 10 days. If it is being replaced by another policy, 20 days. If the policy is
sold from a direct response insurer (online) without using a producer it is 31 days.
What does a producer have to provide a buyer if they are replacing a policy and what
does it contain? - Answers -Notice Regarding Replacement. Contains list of all life
policies the new policy will be replacing and will identify the insured, insurer, annuitant
(if applicable), and the new policy or contract.
What does HIPAA of 1996 do? - Answers -Imposes strict requirements on those who
collect, transfer, and exchange health and medical information about consumers.
How does one get immunity from fraud? - Answers -Reporting it (Restitution is still on
table)
Difference between twisting and misrepresentation? - Answers -Twisting is for purpose
of replacing policy
Where is the Insurance Fraud Division? - Answers -Attorney general office
What is a contract of adhesion? - Answers -Take it or leave it
What is an aleatory contract? - Answers -Unequal amounts between parties
What is a unilateral contract? - Answers -Only one party makes enforceable promise
What is the Law of Agency? - Answers -Producer acts on behalf of the principal
Reciprocal Agreement - Answers -Two states allowing for non resident license
What two brokers dont need a license - Answers -Surplus and Excess
Fine for selling ins without license? - Answers -$10,000
Who examines foreign and alien insurers? - Answers -Regulatory authority
What is the biennial appointment fee? - Answers -$40
What is the application fee? - Answers -$25
What is Section 1034? - Answers -Authorizes the attorney general to provide civil and
criminal punishment to those breaking Section 1033 (dishonesty, etc.)
What does Gramm Leach Biley Act do? - Answers -Protects consumer info through
privacy regulation
How much you give notice of privacy and health info? - Answers -In person annually
What is the fine for blank forms? - Answers -$200
What are prohibited inducements? - Answers -Promise of returns (opposite of rebate
which is incentive up front)
What do estate death benefits help pay? - Answers -Taxes on assets as well as any
potential debts
What is the difference between a Viatical Settlement and a Life Settlement? - Answers -
Viatical has a higher premium due to lower life expectancy. For Viatical, the insured
must be terminally or chronically ill. Terminal ill means life expectancy shorter than 24
months.
What is insurable interest? - Answers -When someone or a company has interest in
your life or property
How long is the contestability Period? - Answers -2 years
What is a buy sell agreement? - Answers -It is where the owners interest is bought by
partners (doesn't fund)
What is a cross purchase buy sell? - Answers -Where partners of shareholders are
each others beneficiaries so the death benefit can be used to pay their interest in the
company
,What is an entity buy sell? - Answers -When business is a party in the agreement and
pays for partners policies (4 partners, 4 policies)
Key person buy sell? - Answers -When the company wants to insure one person to
make up for potential lost income and knowledge resulting from their death
What is a deferred comp plan? - Answers -This is when someone sets aside money into
the plan to save for typically retirement
What is an executive bonus plan? - Answers -When employer pays part or all premium
for an executive
What are the characteristics of a permanent life policy? - Answers --To age 100
-Large premiums, if unused they are paid back in dividends
-Not taxable income
What are the characteristics of a term life policy? - Answers --Limited time
-There is a death benefit but no accumulating value (No CV)
-smaller premiums
What is a participating policy? - Answers --Usually from Mutual companies
-Larger premiums but if unused will be paid back in dividends
-Not taxable income
What is a nonparticipating policy? - Answers --Usually stock companies
-Company profit may be paid out but it is not in form of dividends and IS taxable income
What are the characteristics of a Fixed life policy? - Answers --Fixed Death Benefit
-Premiums invested in general account
What are the characteristics of a Variable Life policy? - Answers --Guaranteed minimum
death benefit which is usually the face amount of the policy
-Premiums invested in separate accounts
What are the premium factors? Explain. - Answers -Mortality- risk of death posed by the
applicant. It is a charge.
Interest- the amount the insurer can expect to earn on invested premiums. It is a credit
(reduces premium)
Expenses- represent the insurers costs of doing business. It is a charge.
What is the Life, Accident, and Health Guarantee Association? - Answers -If an insurer
doesn't have the money to pay out, they ensure the insured isn't SOL
What is an illustration? - Answers -Document created to show how a life insurance
policy would perform under a set of certain circumstances
, What is a Buyers Guide? - Answers -Something that is given to the insured before
accepting the applicants initial premium. It was made by NAIC to help buyers determine
what kind of insurance they need, how much, and which policy
What is a policy summary? - Answers -States coverages, costs, benefits, limitations,
exclusions, and terms of the life insurance policy
When can the buyers guide and the policy summary be delivered IF the policy buyer
has a free look period of 10 days? - Answers -Delivered with policy on or before it
What is the Traditional Net Cost Method? - Answers -It identifies the cost of funding the
pure insurance portion of the life policy over a specific period (Usually 10 or 20 years)
What is the Interest Adjusted Net Cost Method? - Answers -Factors in the interest rate
credited to the policy. Because it accounts for the time value of money, this method is
more widely used.
When can a policy owner replace a Life policy? - Answers -Life policies require a free
look period of 10 days. If it is being replaced by another policy, 20 days. If the policy is
sold from a direct response insurer (online) without using a producer it is 31 days.
What does a producer have to provide a buyer if they are replacing a policy and what
does it contain? - Answers -Notice Regarding Replacement. Contains list of all life
policies the new policy will be replacing and will identify the insured, insurer, annuitant
(if applicable), and the new policy or contract.
What does HIPAA of 1996 do? - Answers -Imposes strict requirements on those who
collect, transfer, and exchange health and medical information about consumers.
How does one get immunity from fraud? - Answers -Reporting it (Restitution is still on
table)
Difference between twisting and misrepresentation? - Answers -Twisting is for purpose
of replacing policy
Where is the Insurance Fraud Division? - Answers -Attorney general office
What is a contract of adhesion? - Answers -Take it or leave it
What is an aleatory contract? - Answers -Unequal amounts between parties
What is a unilateral contract? - Answers -Only one party makes enforceable promise
What is the Law of Agency? - Answers -Producer acts on behalf of the principal
