The Insurance Marketplace

A licensee is NOT required to comply with continuing education requirements in the state of California of which conditions are met?

The licensee has been in good standing for 30 continuous years, and is at least 70 years old

What is the purpose of the California laws regulating production agencies?

To provide protection for the clients by requiring producers to maintain professional standards of conduct

What is the term for a sales campaign conducted through the mail?

Direct-response

When can earned surplus be returned to the policyholder?

Whenever it exists and is not needed for other expenses

An insurer may discriminate against a person through underwriting if that person has

A physical handicap that could result in an actuarially predictable loss

Applicants for insurance who are blind may be rated substandard for life insurance

Only on the basis of information unrelated to their blindness

An insurance company and its agents must notify all applicants and policyholders of information gathering processes utilized for written application transactions

Both are correct

Which if the following best describes an insurance company that has been formed under the laws of this state?

Domestic

In a life settlement contract, whom does the life settlement broker represent?

The owner

Which of the following can an insured submit to the insurer that would provide evidence of a claim and illustrate how severe the loss is?

Proof of claim

Which of the following entities may NOT be an insurer?

The Commissioner

In which distribution system must the potential client take the initiative and respond to an advertisement through a telephone or mail contract with the insurer?

Direct response system

Any person who transacts insurance without a license

May be guilty of a misdemeanor

The term "administrator" under California Insurance Codes refers to any person who

Collects any charge or premium from, or who adjust or settles claims on, life and health insurance policies or annuities

Which of the following actions would NOT be considered a form of "adverse underwriting decisions" for a policy involving individually underwritten coverage?

An insurer giving an insured a "preferred" rating due to health and lifestyle conditions

Which of the following is a TRUE statement concerning an insurer's Earned Surplus?

Earned Surplus are unassigned funds that are required to be reported on the insurer's annual statement

The Gramm-Leach-Billey Act was passed to

Protect private customer information filed with a financial institution

Within how many days after the application was submitted must an insurer file a notice of agent appointment with the Commissioner if the insurer issues a policy written by the agent who is not specifically appointed by that insurer?

14 days

What will happen if an agent submits an application to an insurance company to which he is not appointed?

If the insurer accepts the policy, it must appoint the agent

Which of the following is authorized to transact insurance on human lives?

Life-only agent

All of the following statements are true regarding policy dividends EXCEPT

They are guaranteed

A man has HIV and was hospitalized for several weeks. His insurance company has delayed paying his claim for 120 days, saying that he is not covered due to a pre-existing condition exclusion in his policy. The insurance company is guilty of which of the following?

Unfair claims settlement practice

Which of the following must an insurer obtain in order to transact insurance within a given state?

Certificate of authority

An agent is a legal person who acts on behalf of

The principal

According to the California Insurance Code, all licensees must prominently display their individual license number on all of the following EXCEPT

Motor club advertisements

An independent agent may have contracts with which of the following?

More than one insurer

If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered what type of insurer?

Authorized

The insured provides a proof of claim to the

Insurer

An insurer that holds a Certificate of Authority in the state in which it transacts business is considered a/an

Authorized insurer

What is a foreign insurer?

An insurer with a home office in another state

Your client want to buy a par policy to supplement his retirement savings program. Which of the following does your client need to understand about insurance policy dividends?

Dividends are considered a refund of unused premiums

Which of the following would NOT be considered a form of direct response marketing?

A sign in an insurer's office

If an insurance premium is paid by the policyowner to the agent, and the agent fails to remit that premium to the insurer, which of the following statements is true?

The policy will not lapse since payment to the agent is the same as payment to the insurer

Which of the following is the closest term to an authorized insurer?

Admitted

A participating insurance policy may do which of the following?

Pay dividends to the policyowner

An exclusive agent

Has a contract with one company

Which of the following would be considered refund of unearned premium?

Dividends

A licensed insurance agent overhears a conversation that leads him to believe a person is committing fraud. If the agent makes a written report to a law enforcement agency and the person is investigated, but it turns out that it was an erroneous accusation, what charge will the agent face?

No charges; the Insurance Code gives the agent legal immunity

Which of the following will NOT be considered unfair discrimination by insurers?

Discriminating in benefits and coverages based on the insured's habits and lifestyle

Which of the following departments is responsible for developing mortality and morbidity tables?

Actuarial

All of the following are true regarding rebates EXCEPT

Rebates are allowed if its in the best interest of the client

An insurance agent's responsibilities all of the following EXCEPT

Represent the client

An applicant for insurance is requesting more information from an agent about a claim that is currently being settled. Within what time period must the agent respond?

15 days

To legally transact insurance in this state, an insurer must obtain which of the following?

Certificate of Authority

Any person who engages in any unfair method of competition or deceptive act is liable to the state for a civil penalty and a fine of $5,000 for each act. In addition, if it is determined that the act is willful the fine will NOT exceed

$10,000

Which entity pursues liquidation of an insolvent insurer?

The state government

An insurance agent collected policy premiums from his clients and before remitting the funds to the insurer, borrowed some for personal use. This act would be legally considered

Theft

Which of the following persons represents several insurance companies but owns the records of the polices sold?

Independent agent

In California, a person applying for an insurance license is considered to have been convicted of a misdemeanor or felony if the person entered all of the following pleas EXCEPT

Innocent

The insurance solicitor is only found in which field of insurance?

Fire & Casualty

Company A enters into a reinsurance agreement with Company B, where Company B reinsures Company A's policies. Which of the following is true?

Company A is the primary insurer, and Company B is the reinsurer.

The Code defines the term "transact" as all of the following EXCEPT

Analyzing a contract of insurance

The department of Insurance contacts an agent about a claim that was settled two months ago. Within what time frame must the agent issue a complete response?

21 days

How many hours of continuing education in ethics must agents complete each licensing term?

3

If a policyholder contracts an insurance company about a claim and expects a response to the inquiry, within what span of time must the agent respond?

15 days

All of the following would be considered insolvent insurers EXCEPT

A company that reinsurers outstanding risks

When transacting business in this state an insurer formed under the laws of another country is known as a/an

Alien insurer

Which of the following best describes an agent's fiduciary capacity?

Promptly forwarding premiums to the insurer

The Commissioner has the authority to issue a cease and desist order against any person acting as an insurance agent or broker without being licensed. The Commissioner may also impose a penalty for each day the order is violated in what amount?

$5,000

The California Insurance Code is

Statutes established by the State Legislature

An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy?

Mutual

If an insurer's legal reserve funds are found to be less than the minimum required by law, the insurer is

Insolvent

All insurers doing business in California must maintain a department to investigate possible

Fraudulent claims by insureds

Which of the following is true regarding free insurance issued in this state?

It is illegal

Which of the following best describes a misrepresentation?

Issuing sales material with exaggerated statements about policy benefits

Which of the following is NOT true regarding a Certificate of Authority?

It is issued to group insurance participants

An insurance company is domiciled in Montana and transacts insurance in Wyoming. Which term best describes the insurer's classification in Wyoming?

Foreign

Which operating division of an insurer is responsible for advertising, promoting, and distributing the insurer's products to the public?

Marketing and sales

Which of he following terms is defined by the California Insurance Code as unassigned funds that must be reported on a stock insurer's annual statement?

Earned surplus

What is the purpose of the California Life and Health Guarantee Association?

To protect life and health policyholders and/or insureds should a member insurer become insolvent

Two individuals are in the same risk and age class; yet, they are charged different rates for their insurance policies due to an insignificant factor. What is this called?

Discrimination

On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are

Not taxable since the IRS treats them as a return of a portion of the premium paid

Which of the following statements regarding policy dividends is true?

They are a refund of unearned premiums

In a conservation or liquidation effort, what powers does the Commissioner have?

The commissioner has all of these powers

Which of the following insurers are owned by stockholders who have the usual rights of ownership, including the right of voting?

Stock

An agent has how many days in which to receive an appointment after the issuance of an insurance contract?

14 days

When a replacement carrier has a question regarding the prior carrier's coverage, from which of the following can they demand a clarification?

The prior carrier

An insurance policy that protects an insurance agent from financial losses that might be incurred if an insured files a lawsuit as a result of that agent either giving incorrect advice or not informing the client of important information is called

Errors & Omissions Coverage

Which of the following is NOT considered personally identifiable information?

Government Records

An insurer received a claim on May 1st. On May 31st, the claim was approved in its entirety. By what date can the claimant expect the payment?

June 30th

Intentionally misrepresenting or concealing a material fact to induce an insurance company to make a contract is know as

Fraud