Laws and Rules Pertinent to Insurance

The California Insurance Code defines "policy" as a(n)

-written contract
-a written contract in which one party promises to indemnity another against loss that arises from an unknown event.

Office of Insurance Regulation

The mission of the office of insurance Regulation is to ensure that insurance companies licensed to do business in a state are finally viable, operate within the laws and regulations of the insurance industry, and offer insurance policy products at fair a

Unauthorized Entities

The State Regulation of Insurance is in the public interest. One of the insurance regulators' larger concerns is with unauthorized entities transacting insurance in the state.

The State Regulation of Insurance is in the public interest. One of the insurance regulators' larger concerns is with unauthorized entities transacting insurance in the state. THE STATES REASON FOR CONCERNS:

-Potential for criminal activity within the insurance business
-Adverse economic impact on authorized insurers
-Potential for unpaid claims, due to dishonesty
-

Marketing Practices: Agent responsibilities

While life insurance agents should be generally familiar with all state insurance regulations, the following are of particular importance.
-Free Look
-Notice of Replacement
-Buyers Guide

Notice of Replacement

When a life insurance agent makes a life insurance proposal and knows or should know that the purchase of such a policy will replace an exiting life insurance policy, the replacement rule applies. Replacement means any transaction in which new life insura

Free Look

The free look provision allows an insured a specified number of days from the delivery date of the policy to look over a new policy and return it for a full refund if dissatisfied for any reason. This provision is mandated in most states.

Buyers Guide

A buyers guide provides basic information about an insurance policy. The document explains how a buyer should go about choosing the amount and type of insurance to buy, and how a buyer can save money by comparing the cost of similar polices. The insurer M

Agent Ethics

Licensed agents may not submit applications-to an insurance company without the following:
-The insurance companies name on the first page
-The agents license number
The information must be legible and a copy of the application must be provided to the app

Group Life Certificate

Instead of a policy, the participants under a group plan are issued certificates of insurance as evidence that they have coverage. Certificate must contain:
-Group policy number
-Description of the insurance protection
-Names of the insured, beneficiaries

COBRA/CONVERSION

COBRRA is a federal law that requires employers with 20 or more employees to include a continuation of benefits provision for former employees and their dependents. COBRA guarantees that the participant can continue the group coverage (at their own expens

The free-look period for life insurance policyowners age 60 or older is

30 Days!

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

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.

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

Life insurance surplus must be distributed to policyowners at what frequency?

Annually(in a participating policy)

What prevents a life insurance policy from being rescinded by the insurer after being in force for two years?

Incontestability clause.
-Insurers are prohibited from denying claims or rescinding a policy based on misstatements in a life accident, or disability policy application after the policy has been in force for two years.

Why is a life insurance policy's delivery date important?

The free-look period begins on the policy delivery date.
-The California Insurance Code gives an individual between 10-30 days to return a life policy for cancelation.

An agent's attempt to stop the replacement of an existing life insurance policy is known as

conservation

Who does a life settlement broker represent?

Individual wanting to sell their life policy to a third party

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

What is the insurance term the State of California uses for an insurer that is eligible to transact business in this state?

Admitted

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. Anyone who unwillfully engages in an unfair method of competition is liable to the state for a fine of up to $5,000 per violation. If the act is determined to be willful, the fine will not exceed $10,000 per act.

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
-Denial of a claim based on sexual orientation
-Denial of

Denial of a claim based on reckless behavior

a life agent who has misappropriated fiduciary funds to his own use. What is Pete guilty of?

Theft. Any person who diverts or misappropriates fiduciary funds to his or her own use is guilty of theft and punishable as provided by law.

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.

According to the California Insurance Code, what is "insurance"?

A contract

What is an insurance solicitor authorized to do?

Help an agent or broker sell insurance

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.

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

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

Which of the following does the California Insurance Code NOT require an insurance policy to specify?
-Policy Period
-Insurer's financial rating
-Premium
-What or who is being insured

Insurer's financial rating

Anyone employed in California to assist an insurance agent in transacting insurance is called an insurance

solicitor

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
-The name is too similar to a name already filed and in use by another licensee
-The use of the name may

-The name is the licensee's actual name

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
-Section 1729.2 of the California Insurance Code requires insurances producer application and licensees to notify the insurance commissioner in writing, within 30 days of changes in background information after an application has been submitted o

According to section 1729.2 of the California Insurance Code, which of these does NOT qualify as "background information"?
-A breach of fiduciary duty
-An administrative action regarding a professional or occupational license
-Misdemeanor charges filed, n

-Misdemeanor charges filed, not resulting in a conviction.

Which type of jurisdiction requires an insurer to have its rates accepted by the Insurance Department prior to using them?

Prior approval

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
-The insurer must submit a notice of appointment to the Commissioner within 14 days

Which of the following acts is NOT a Federal offense committed by an insurance agent?
-Embezzlement
-insurance Fraud
-Falsify records
-Misrepresentation on an insurance application

Misrepresentation on an insurance application

According to the California Insurance Code, who is responsible for submitting a life agent's appointment?

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 in

Which word implies permissiveness according to the California Insurance Code?

May

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. According to state law, the same size print as the above mentioned must be used for the licensee's number on all price quotes, business cards, and printed material.

A representation may be altered or withdrawn

only before the insurance is in effect

MRMIP stands for

-Major Risk Medical Insurance Program
-Is a program designed to provide health insurance for individuals who cannot obtain health insurance for individuals who cannot obtain health coverage on the open marker because of their medical conditions.

Which entity has jurisdiction over health care coverage providers?

Department of Insurance".
-Overseeing the insurance industry and protecting the states insurance consumers is the responsibility of the California Department of Insurance.

According to the PPACA, the medical enrollment tier that has 80% actuarial value is called

Gold

According to PPACA, what is a health benefits exchange?

PPACA creates new entities called american Health benefits Exchanges through which ... An entity to which individuals and small businesses can have access to affordable health coverage.

MRMIP is a

state program that offers health coverage to California residents who are not able to obtain coverage due to pre-existing conditionsstate program that assists single parents obtain affordable health coverage for their childrenFederal program that offers h

Both the Federal and state governments jointly finance which health insurance entitlement program?

Medi-Cal

What is the purpose of the Pre-Existing Condition Insurance Plan (PCIP)?

PCIP was created by the PPACA for people rejected by private health insurers due to pre-existing conditionsThe Pre-existing Condition Insurance Plan (PCIP) is a form of health insurance coverage offered to uninsured Americans who have been unable to obtai

According to PPACA, how long can an adult be covered as a dependent under their parents' insurance plan?

Under PPACA, an adult child be covered by their parents' insurance coverage as a dependent until age 26.

People with low income can be provided with medical assistance through which program?

-Medi-Cal
-Medi-Cal is California's Medicaid health care program, designed to provide medical assistance to people with low incomes.

ABC insurance company paid an insured $30,000 in lost wages, $35,000 for hospital costs, and $20,000 for physical therapy treatments. ABC later discovers this was a fraudulent claim. How much may the insured be fined?

$170,000.
-In a felony prosecution of insurance fraud for workers compensation benefits, the fine might increase up to $170,000 or an amount that is double the value of the defrauded amount, depending which penalty is greater.

An insurance policy issued in California may be called a comprehensive long term care insurance policy if benefits are provided for

The California Insurance Code states that policies or certificates may be called comprehensive long term care if they provide benefits for institutional (nursing facilites) and home care