Delaware Life and Health Insurance Laws and Rules

Process

An applicant for a resident producer license in Delaware must:
Be at least 18 years of age
Not have committed any act that is grounds for denial, suspension, or revocation
Have passed the state exam for the lines of authority in which licensure is sought (scores are valid for a period of 12 months from the date of examination)
Submit the application with fees
Penalties

Probation/ Suspension / Revocation

he Commissioner must give written notice to the producer before holding a hearing that may lead to the suspension or revocation of the producer’s license. The Commissioner may place on probation, suspend, revoke, refuse to renew, or deny a license to any person who has:

Provided incorrect, misleading, incomplete, or untrue information in the license application
Limited Producer

A limited lines producer is a person authorized by the Insurance Commissioner to sell, solicit, or negotiate limited lines insurance.

Continuing Education

Resident producers must complete 24 hours of continuing education every 2 years to keep their license active. 3 of those hours must be in ethics. Nonresident producers are not required to complete Delaware continuing education requirements as long as their home state requirements are met.

Broker

A broker is a licensed producer who, for compensation, represents a potential insured in finding a suitable insurance policy for his/her client.

Defamation

It is an illegal practice to make any public statement or advertisement that contains false information or unsubstantiated criticisms about an insurance company intended to harm or malign.

Commissions

No person shall pay or accept commissions to/from an unlicensed individual for the purpose of selling or negotiating insurance business.

Misrepresentation

It is an illegal practice to misrepresent any fact about an insurance policy, such as policy terms, benefits, value, cost, effective date, or existence of a contract of insurance. A misrepresentation includes:

Misrepresenting the dividends of a policy or stating they are guaranteed
Inducing an existing policy to lapse with the intention of purchasing a new one (twisting)
Calling an insurance policy a share of stock
Unfair Discrimination

It is an illegal practice to unfairly discriminate against a person in any way on an insurance-related matter. An example would be charging a different rate for someone in the same actuarial class.

Twisting

Twisting involves using misrepresentation in order to induce a policyowner to lapse, forfeit, or surrender a life insurance policy for the purpose of taking out another policy with another company.

Rebating

It is illegal to offer a prospective client something of value that is not specified in a contract to induce the purchase of an insurance policy.

Hearings

The Commissioner may hold hearings for any purpose within the scope of Delaware laws.

Grace Period

The required grace period for individual life insurance policies in Delaware is 30 days. The grace period is a time during which a policy remains in force after the premium is due, but not paid. If the insured dies during the grace period, the death proceeds will still be paid, minus the premium due.

Entire Contract

A provision that the policy and the application shall constitute the entire contract between the parties. All statements made by the policyholder are considered representations.

Incontestability Period

A provision that the policy terms shall be incontestable after it has been in force for a period of 2 years from its date of issue (exception would be the nonpayment of premiums).