Michigan Credit Insurance Producer

licensing (insurance regulation)

a license or charter authorizes an insurer the right to conduct business as an admitted insurer and specifies the lines of insurance which the insurer is authorized to transact

Producer Licenses( types of licenses)

a licensed person who as the authority to transact insurance business sell solicit or negotiate insurance contracts

resident license( types of licenses)

issued to a resident who satisfies the states requirements

non resident license(types of licenses)

issued to producer who wishes to sell insurance outside of the state in which they reside

change of name and address (maintenance and duration)

producer must notify the insurance bureau of any changes of ___ within 30 days of the change

reporting of actions (maintenance and duration)

all agents are required to __ within 30 days of occurrence any judgements or disciplinary action by the insurance regulatory agency of any other state or territory of the united states

cease and desist order ( disciplinary actions)

requires that a person refrain from the unfair method of competition or deceptive act violation's punishable by a fine of 10k/violation

suspension revocation refusal to issue or renew (disciplinary actions)

require written notification from the commissioner a hearing must be held within 15 days of receipt of the notification

penalties and fines (disciplinary actions)

violations of the producer licensing laws include a fine of 300/unintentional violation the max fine for willful violations is 1500/violation the total max fine is limited to 10k

company regulation (state and federal regulation)

__ by the commissioner of insurance as it pertains to licensing solvency rates unfair claims settlements ect

certificate of authority(state and federal regulation)

the charter or license authorizing an insurer the right to conduct business as an admitted insurer and specifies the lines of insurance which the insurer is authorized to transact

rates(state and federal regulation)

the premium __ charged to the debtor cannot exceed the premium rates filed with the commissioner

forms and exceptions(state and federal regulation)

anyone involved in transacting insurance must be licensed except for employees of the home office who not require licensing provided they are salaried individuals who do not share in commissions

producer appointment(state and federal regulation)

a producer cannot act as an agent without an appointment from an admitted insurer. to appoint a producer as an agent the insurer will file a notice of ____ with the commissioner for the lines of insurance held by the producer

termination of appointment(state and federal regulation)

requires the insurer to notify the commissioner within 30 days following the effective date of the cancellation of appointment; within 15 days of the notification to the commissioner the agent must be notified on the cancellation of appointment by the insurer

acting without a license ( producer regulation)

a person may not sell solicit or negotiate insurance in the state of Michigan for any line of insurance unless licensed for that qualifications; exceptions include administrative employees working for an agent a home office employee ect

prohibited conduct( producer regulation)

in transacting credit life transactions insurers shall not refuse to insure refuse to continue to insure or limit the amount of insurance avail to an individual because the person is age of 70 ( does not apply to disability benefits)

commissions( producer regulation)

an agent may only share in __ with another agent licensed in the same lines of insurance

fiduciary capacity( producer regulation)

a person in a position of financial trust an agent has fiduciary responsibility to all persons involved in the transactions of insurance including the prospect client insurance company

Misrepresentation (unfair insurance trade practices)

the illegal act of lying about benefits advantages or provisions of why any insurance policy or to lie about the financial condition of any insurance company; punishable by a max fine of 1000 violation or imprisonment

twisting (unfair insurance trade practices)

the act of dropping existing coverage due to some illegal or unethical persuasion for the purpose of purchasing new insurance a misdemeanor punishable by license revocation up to 1 year a max fine of 1k/violation and imprisonment

defamation (unfair insurance trade practices)

the illegal act of making false malicious or derogatory statements regarding an insurer or any person engaged in the business of insurance

boycott coercion and intimidation(unfair insurance trade practices)

illegal acts which intend to result in unreasonable restraint of trade or a monopoly in business of insurance

unfair discrimination(unfair insurance trade practices)

__ between individuals of the same class or life expectancy regarding rates dividends or other benefits illegal to __ because of age color or creed in the issuance and rating of insurance punishable by max fine of 500/violation

rebating/illegal inducements(unfair insurance trade practices)

any ___ in the sale of insurance which is not specified in the insurance contract such as sharing in the producers commissions or providing a service a bribe not offering premium reductions to policy holders form accumulated surplus or premium adjustments for group insurance policies a misdemeanor punishable by a max fine of 100/violation or imprisonment

consumer privacy regulation(unfair insurance trade practices)

the state of mi requires the agent provide an applicant with privacy notice info at the time of application and in case of policy renewal reinstatement or change of benefits must include: categories of non public personal financial info collected and disclosed - categories of affiliates and non affiliated third parties to whom the agent discloses info - explanation of consumers right to opt out - any disclosures the agent makes under the fair credit reporting act - the agents policies and practices used to protect confidentiality and security of non public personal financial info

fair credit reporting act(unfair insurance trade practices)

a federal law which requires that an applicant for insurance be advised that a consumer report may be requested designed to protect the privacy of the applicant

risk( risk management key terms)

evolves from uncertainty a condition in which a chance of loss exists the unpredictable chance occurrences of everyday life which result in financial or economic loss

exposure( risk management key terms)

the state of being subject to the possibility of loss

loss( risk management key terms)

the injury or damage sustained by the insured as a result of an accident or misfortune against which the insurer in consideration of the premium has undertaken to indemnify the insured

avoidance(methods of handling risk)

the act of avoiding or eluding risk

transfer(methods of handling risk)

shifting of risk to another party such as an insurer

adverse selection(methods of handling risk)

the tendancy of less than average risks to purchase or cont to be covered by insurance resulting increased claims and reduced profitability

law of large numbers(methods of handling risk)

a basic principle of insurance which states that the larger the number similar risks the more reliable the prediction of possible losses over a period of time

stock companies (types of insurers)

owned by stock holders policy holders do not participate in dividends

mutual companies(types of insurers)

owned by policy holders participate in dividends

risk retention groups(types of insurers)

an alternative risk transfer entity created by the federal liability risk retention act must form as liability insurance companies under the laws of at least one state

authorized insurers(types of insurers)

an insurer licensed or chartered to transact insurance in mi a company that is admitted to do business in the state

unauthorized insurers(types of insurers)

an insurer not licensed to transact insurance in mi one that is not admitted to do business in the state

financial status -independent rating services (types of insurers)

companies which assess the financial strength of a company based on level of reserves claims management and investments ex: standard and poor

marketing (distribution) systems (types of insurers)

systems used to market ins to the public including direct writer system direct response/direct mail system general agency system independent agency system and exclusive agency (captive) system

producer/insurer relationship (producers and general rules of agency)

the agent (producer) and insurance company (insurer) will enter into an agency contract which specifies what an agent can and cannot do the agent represents the company and must be careful to stay within the limitations of the contract

authority and powers of producers(producers and general rules of agency)

types of authority in an agency agreement between the producer and insurer

express (producers and general rules of agency)

specific written authority in the agency contract

implied(producers and general rules of agency)

powers or duties that may not be covered in the agency contract but are assumed or implied for the agent to do his job

apparent(producers and general rules of agency)

covers the relationship between the agent and the customer

responsibilities to the applicant/insured(producers and general rules of agency)

an agent services a client by their knowledge of policy coverage provisions limits and risk evaluation also serves the client in a fiduciary capacity meaning the client relies on the agent to forward premiums and secure coverage

offer and acceptance ( elements of legal contract)

a valid offer and acceptance constitute agreement between the parties to the contract one party must make an offer and the second party must accept the offer.

consideration ( elements of legal contract)

something of value exchanged between the parties to the contract money and info represent value

competent parties ( elements of legal contract)

legal contract requires the legal and mental competency of the parities legal age to enter into a valid contact is 18 or 21 in most states

legal purpose ( elements of legal contract)

to be valid a contact must have legal intent or legal purpose ins is automatically considered to have legal purpose it is not gambling or speculation

distinct characteristics of an insurance contract (elements of legal contract

personal contract (insurable interest) and conditional contract ( certain conditions must occur before a claim is paid)

reasonable expectations ( legal interpretations affecting contracts)

a policy should accomplish to the policy owner what is reasonably expected

indemnity ( legal interpretations affecting contracts)

the insured is restored to the same financial condition as before the loss

utmost good faith ( legal interpretations affecting contracts)

both the insurer and the insured cannot attempt to conceal or deceive the other party

represnentation ( legal interpretations affecting contracts)

a statement by the applicant that is "believed" to be true

warranty ( legal interpretations affecting contracts)

statement that is considered and "guaranteed" to be true

concealment ( legal interpretations affecting contracts)

failure of the applicant to disclose a known material fact in an application considered fraud

fraud ( legal interpretations affecting contracts)

in most contracts in the event of fraud the contract is considered null and void

waiver ( legal interpretations affecting contracts)

giving up of known or legally enforceable right

estoppel ( legal interpretations affecting contracts)

prevention from asserting a right that would be to the detriment of another party once a right is waived the individual is prevented from exercising that right

debtor/insured (nature of consumer credit ins, parties involved)

a purchaser or lessee of goods services property rights or privileges for which payment is arranged through a credit transaction

creditor/beneficiary (nature of consumer credit ins, parties involved)

a vendor or lessor of goods services property rights privileges for which payment is arranged through a credit transaction or any successor to the right title or interest of any such vendor or lessor

insurer (nature of consumer credit ins, parties involved)

the issuer of the policy who assumes the risk of the insured debt

bank and savings and loan associations (factors for debtors and creditors to consider markets)

offer the widest range of credit products due to the large variety of services offered

credit unions (factors for debtors and creditors to consider markets)

nonprofit organizations offering savings and loan services for members generally focus on installment lending agreements

finance companies (factors for debtors and creditors to consider markets)

for profit companies that generally offer credit ins on small items such as appliances

auto dealers and manufacturers (factors for debtors and creditors to consider markets)

offer credit insurance on boats , cars, mobile homes and recreational vehicles

closed end (types of credit covered)

borrowing a certain amount of money for a specific period of time

open end (types of credit covered)

a loan in which the amount of the credit extended can be increased at any time with no fixed period of time for the loan to be re paid

group coverage ( coverage characteristics)

the insurer issues a master policy to a group of individuals and issues a certificate of insurance to each person covered

individual coverage ( coverage characteristics)

the insurer issues one policy to cover one person

underwriting individuals ( coverage characteristics)

factors such as age sex occupation medical history ect are considerations

underwriting group ( coverage characteristics)

typically issued without medical underwriting and without proof of insurability on the part of the group participants generally "continuing"

evidence of insurability ( coverage characteristics)

provided by means of medical questions may be required for policy reinstatement

Single Premium (basis and payment of premiums)

charged a premium to insure full coverage at the inception of the loan for closed end transactions the premium is added to the principal of the loan and financed

monthly outstanding balance (basis and payment of premiums)

a premium is collected monthly for open end transactions rates are determined and the added to the min monthly payment due

right to examine -free look (group policy general provisions)

if the policy owner is not satisfied with the policy it may be returned to the insurer usually 10 days of delivery for a full refund of the premium paid can be greater than 10 days but cannot be less than 10 days

incontestability (group policy general provisions)

the insurer may not contest dispute or deny a claim based on info contained in the application after the policy has been in force for two years

grace period (group policy general provisions)

the ___ for ordinary life policies is one month

entire contract (group policy general provisions)

the application the policy and any amendments

effect on insured debt ( benefit payment)

the company is permitted to adjust policy benefits to reflect the benefit amount which should have been purchased by the premium paid if the correct age and sex of the insured were known if error discovered upon death the death benefit will be adjusted and paid to the beneficiary accordingly

payment of excess benefits ( benefit payment)

if the insurer overpays the debtor it is the responsibility of the debtor to pay the amount of the benefit in excess of the debt back to the insurer

amounts to be insured (Michigan regulation)

the initial amount of credit life insurance cannot exceed the total amount of indebtedness

term of insurance (Michigan regulation)

effective the date that the debtor becomes obligated tot he creditor may not exceed more than 15 days beyond the scheduled maturity date of the debt

premium refunds (Michigan regulation)

an insurer must file formulas when refunding excess and unearned premiums

premium rates (Michigan regulation)

for closed end transactions the premium is added to the principal of the loan and financed for open ended transactions rates are determined and added to the min monthly payment due

solicitation including insurance sales through lenders (Michigan regulation)

agents are governed under the rules and regulations of the unfair trade practices act which stipulates what can and cannot be said or used when soliciting insurance clients

evidence of coverage (Michigan regulation)

in a court of law only the written contract may be used as evidence it is assumed that all oral agreements are part of the written contract

termination of group policy

if the policy is terminated for any reason insurance coverage with respect to any debtor insured under such policy shall be continued for the entire period for which the single premium has been paid

claims processing (Michigan regulation)

the insured has 20 days to notify the insurer of claim (or whatever period of time is reasonable). once notified the insurer has 15 days to provide the insured with claim forms. the insured has 90 days from the date of loss to complete the claim forms and attach supporting info. once the claim is received the insurer must pay the claim promptly (typically 90 days). payment of claim will be made to the insured who is also loss payee

prohibited transactions (Michigan regulation)

insurers shall not refuse to insure refuse to continue to insure or limit the amount of insurance avail to an individual because the person is age 70

consumer credit protection act -truth in lending act (federal regulation)

federal law designed to protect consumers in the __ transactions by requiring clear disclosure of key terms of the lending arrangement and all cost (reg z) requires disclosures about terms cost to standardize and cost associated with borrowing

credit life insurance (consumer credit insurance)

insurance on the life of a debtor pursuant to or in connection with a specific loan or other credit transaction pays off all or some of your loan if you die during the term of coverage

eligibility of the individual insured (consumer credit insurance)

a person must usually be under a specified age generally 70; the individual borrower may be required to sign a good health statement an application with health questions may be required for larger amounts

gross coverage (consumer credit insurance)

total indebtedness owed under a closed end credit agreement; the total remaining principal insurance premiums and scheduled interest charges on a retail installment contract

netpay off coverage (consumer credit insurance)

amount of insurance covers the net indebtedness of the loan which is the total amount owed at any given point in time

decreasing term (types of insurance coverage)

providers a decreasing amount of death benefit plus level premium for a specified period of time the term of the policy

level term (types of insurance coverage)

provides a level death benefit which would generally be used to satisfy permanent type needs such as burial and final expenses

monthly outstanding balance (types of insurance coverage)

balance is multiplied by the premium rate per 1k of coverage which is then added to the monthly loan payment