7.4 Topic Need to Knows

Question 1

insurance contract

not just life

Answer 1

is an agreement between a policy owner (often an insured) and an insurer, where the insurer agrees, for a consideration, to indemnify the insured for loss caused by specified events

Question 2

Following acts considered transacting insurance

Answer 2

• Solicitation
• Negotiations preliminary to execution
• Execution of an insurance contract
• Transaction of matters subsequent to execution of the contract and arising out of it
• Insuring.

Question 3

insurer

Answer 3

any person or company engaged as the principal party in the business of entering into insurance contracts.

Question 4

A person who issues insurance contracts in this state on behalf of an ______ may be held personally liable.

Answer 4

unauthorized insurer

Question 5

The Commissioner may also order replacement of ____ improperly placed with an unauthorized insurer with policies issued by an authorized insurer.

Answer 5

policies

Question 6

If certain coverages cannot be procured from authorized insurers, these coverages will be considered surplus lines. Surplus lines may be obtained from unauthorized insurers as long as:

Answer 6

• insurance is solicited through a surplus lines broker;
• potential insured has made a diligent effort and failed to obtain insurance from the insurers authorized to transact that kind of insurance in the state; and
• Coverage is not obtained from the unauthorized insurer in order to secure a lower premium rate than an authorized insurer would require

Question 7

Washington Life and Disability Insurance Guaranty Association does what?

Answer 7

protect policy owners, insureds, and beneficiaries from financial losses caused by insurers who become insolvent or otherwise unable to meet their contractual obligations.

Question 8

The Guaranty Association provides coverage to all insured state residents. Nonresidents may qualify for coverage by the Association only under the following circumstances:

Answer 8

• insurer which issued policy is domiciled in Washington
• the states in which the persons reside have associations similar to the Washington Association
• persons are not eligible for coverage by an association in any other state due to the fact that the insurer was not licensed in the state at the time specified in the state’s guaranty association law.

Question 9

The Guaranty Association covers most traditional types of life and disability insurance policies, and annuity contracts. Types of policies not covered by the Association include the following:

Answer 9

• Coverage by the Association of another state;
• The portion of the variable product that is not guaranteed
• Reinsurance policies
• Group plans that are self-funded or uninsured
• An unallocated annuity contract issued to or in connection with a benefit plan protected under the federal pension benefit guaranty corporation.

Question 10

I AM CONFUSION

The benefits that the Guaranty Association may become obligated to cover must not exceed the lesser of the amount the insurer would have been liable for if it had not become impaired, or $500,000, for any of the following:

Answer 10

• Total net cash surrender and net cash withdrawal values for life insurance;
• Life insurance death benefit for any one life;
• Health/disability insurance benefit for any one individual
• Present value of annuity benefits for any one life.

Question 11

Under direct supervision of the Commissioner, the association maintains two accounts.

Answer 11

• disability account

- life insurance and annuity account.

Question 12

Know: It is an unfair trade practice to make any statement that an insurer’s policies are guaranteed by the existence of the Insurance Guaranty Association.

Answer 12

c

Question 13

True or False: Insurers cannot advertise protection

by the Insurance Guaranty Association.

Answer 13

True

Question 14

The Insurance Commissioner in this state is elected for a term of ___ years

Answer 14

4

Question 15

_____ is the Washington Insurance Code and its purpose is to protect the public.

Answer 15

Title 48

Question 16

The general powers, duties, and responsibilities

of the Commissioner include, but are not limited to the following:

Answer 16

• Adopt rules and regulations to enforce provisions of the Insurance Code;
• Conduct examinations, investigations, and hearings to determine whether any person has violated any provisions of the Code;
• Maintain confidentiality of documents, materials, or other information used in regulatory or legal action;
• Issue a cease and desist order if any person is believed to have violated any provisions of the Code;
• Issue insurance licenses and certificates of authority, and take action against, fine, or suspend the license of any company and/or producers;
• Disseminate information concerning insurance laws of this state and provide assistance to the public in obtaining information about insurance products;
• Appoint a Chief Deputy Commissioner to assist the Commissioner, as well as additional deputies.

Question 17

the Commissioner may examine accounts, transaction records, and documents of all authorized insurers, rating organizations, joint underwriting associations, and any insurance producer or adjuster every ____ years

Answer 17

5

Question 18

A licensee also has a right to request that a hearing be presided over by an administrative law judge. Can this request be denied?

Answer 18

No.

Question 19

If a person whose license has been temporarily suspended demands a hearing, the Commissioner must hold the hearing within _____ days after receipt of the demand, or within _____ days of the effective date of a temporary license suspension issued after such demand, unless postponed by mutual consent.

Answer 19

30 days (for both)

Question 20

Every filing containing a certification by the chief executive officer (CEO) of the insurer, attesting that the filing complies with the Washington Administrative Code (WAC), may be used immediately after the filing. Any other filing must be made at least _____ days in advance of any such issuance, delivery, or use.

Answer 20

30 days

Question 21

Any person (licensee) receiving written notification of the Commissioner’s order has ____ days to respond back to the Commissioner and to request a hearing.

Answer 21

90 days

Question 22

insurance producer

Answer 22

a person required to be licensed under state law to transact insurance.
Title insurance agents and surplus lines brokers are not classified as producers.

Question 23

Requirements of license (Commissioner finds that)

Answer 23

• Is at least 18 years of age;
• Has not committed any act that is a ground for license denial, suspension or revocation;
• Has completed a prelicensing course of study for the appropriate line(s) of authority;
• Has paid the appropriate fees; and
• Has passed the examinations for the appropriate line(s) of authority.

Question 24

The Commissioner may issue a temporary insurance producer license for the servicing of an existing business, for a maximum of ____ days without requiring a written exam.

Answer 24

180 days

Question 25

nonresident producer

Answer 25

an individual who is domiciled and licensed as a resident producer in a state other than Washington.

Question 26

An insurance producer cannot act as the agent of an insurer unless the producer becomes appointed by ____

Answer 26

that same insurer

Question 27

To appoint a producer, the insurer must file a notice of appointment with the commissioner within ____days from the date the agency contract is executed or after the first insurance application is submitted (whichever is later).

Answer 27

15 days

Question 28

If the producer is eligible, the Commissioner will verify the appointment by electronic message within ___ days of receiving the notice from the insurer.

Answer 28

15 days

Question 29

if the producer is deemed ineligible, the Commissioner will notify the insurer within ____ days.
.

Answer 29

10 days

Question 30

Each appointment is effective until the producer’s license expires (or is revoked), the appointment has expired. It must be renewed every _____years

Answer 30

2 years

Question 31

The Commissioner will send the insurer an appointment renewal notification via e-mail identifying all the licensees whose appointments are about to expire. If an insurer is registered for online services, a notice will be provided _____ days in advance. The payment of renewal fees must occur by the renewal date.

Answer 31

60 days

Question 32

If a business entity terminates the affiliation of an insurance producer for cause, the commissioner must receive notice of that termination by electronic submission within _____ days of the termination date
.

Answer 32

30 days

Question 33

In the state of Washington, initial and reinstated licenses are valid from when?
.

Answer 33

from the date that they are issued until the last day of the licensee’s birth month, plus 1 year

Question 34

The renewal date of a business entity’s license is based on the date of application. The license is valid for _____ years

Answer 34

2 years

Question 35

The producer must retake and pass all applicable prelicensing education courses and license examinations after _____ months (agent starts from the beginning)

Answer 35

12 months

Question 36

Every licensed producer is required to complete
continuing education (CE) requirements every \_\_\_\_\_ years

Answer 36

2 years

Question 37

A producer must complete _____ hours of CE, including ______ hours in ethics (continuing education)

Answer 37

24 hours of CE and 3 hours in ethics

Question 38

The insurance education provider must issue a certificate of completion within _____ days after the completion of the course.

Answer 38

10 days

Question 39

The licensee must retain the certificate of completion (of continuing education too) for _____ years from the date on the certificate.

Answer 39

3 years

Question 40

A licensee may request (in writing) a _____ of the continuing education requirement based on a medical condition (medical waiver), or active military service (military waiver).

Answer 40

waiver

Question 41

Insurance producers must report any administrative action taken against them in another jurisdiction (or by another governmental agency in this state) to the commissioner within _____ days of the final disposition.

Answer 41

30 days

Question 42

Know: If a producer is convicted of a felony, the Commissioner may revoke or refuse to renew the producer’s license immediately and without hearing if the facts leading to the conviction show the licensee to be untrustworthy.

Answer 42

immediately

Question 43

The license may be revoked or suspended by an order delivered to the licensee within _____ days prior to the effective date,
Also by an order of a hearing effective no less than _____ days after the date of the order.

Answer 43

15 days prior

10 days after

Question 44

Furthermore, the Commissioner may temporarily suspend a license by an order sent through the mail, not less than _____ days prior to the effective date.

Answer 44

3 days

Question 45

Every order suspending any such license must specify the period during which the suspension will be effective. This period may not last longer than
____ months.

Answer 45

12 months

Question 46

The order levying the fine must specify that the fine must be fully paid at a time between ____days from the date of the order.

Answer 46

15-30 days

Question 47

Advertisements cannot include any untrue, deceptive, or misleading statements that apply to the business of insurance or anyone who conducts it. The violation of this rule is called what?

Answer 47

false advertising

Question 48

False or deceptive advertising specifically includes misrepresenting any of the following:

Answer 48

• Terms, benefits, conditions, or advantages of any insurance policy
• Any dividends to be received from the policy, or previously paid out
• Financial condition of any person or the insurance company
• The true purpose of an assignment or loan against a policy.

Question 49

rebating

Answer 49

defined as any inducement offered in the sale of insurance products that is NOT specified in the policy.

ex: money, prizes, or merchandise, and could also include reductions in commissions, promises, employment, dividends, stocks, and personal services

Question 50

examples of illegal dealing in premiums

Answer 50

Collecting any sum as premium for insurance and then not providing the insurance;
Collecting any sum as premium for insurance in excess of the actual amount; or
Knowingly failing to return to the person, within a reasonable length of time, any excess premium collected.

Question 51

It is unlawful to offer any of the following as an

inducement to buy insurance:

Answer 51

• Any shares of stock or securities;
• Any special advisory board contact;
• Any agreement promising profits, special returns or special dividends; or
• Any prizes or goods with an aggregate value in excess of $100

Question 52

twisting

Answer 52

misrepresentation; incomplete or fraudulent comparison of insurance policies that persuades an insured/owner, to his or her detriment, to cancel, lapse, switch policies, or take out a policy with another insurer

Question 53

defamation

Answer 53

occurs when an oral or written statement is made that is intended to injure a person engaged in the insurance business. This also applies to statements that are maliciously critical of the financial condition
of any person or a company.

Question 54

Discrimination in rates, premiums, or policy benefits for persons within the same class or with the same life expectancy is what?

Answer 54

illegal

Question 55

The Commissioner may allow producers to enter into reasonable arrangements with insureds and prospective insureds to charge ____ in certain situations.

Answer 55

a reduced fee

Question 56

Claimant

Answer 56

first or third party claimant (or both)
-includes such claimant’s designated legal representative and a member of the claimant’s immediate family designated by the claimant

Question 57

Investigation

Answer 57

all activities of an insurer directly or indirectly related to the determination of liabilities under coverages afforded by an insurance policy or insurance contract;

Question 58

Notification of claim

Answer 58

any notification to an insurer or its producer, by a claimant, which reasonably apprises the insurer of the facts pertinent to a claim;

Question 59

Third party claimant

Answer 59

any individual, corporation, association, partnership, or other legal entity asserting a claim against any individual, corporation, association, partnership, or other legal entity insured under an insurance policy or insurance contract of an insurer.

Question 60

When an insurer receives the notification of a claim, it must acknowledge the receipt of such notice within _____ working days unless payment is made within such period of time.

Answer 60

10 working days

Question 61

Every insurer must complete the investigation of a claim within ____ days after notification of claim, unless the investigation cannot reasonably be completed within such time.

Answer 61

30 days

Question 62

Unfair practice: Utilizing a ____ day notice to increase premiums by a change of rates or to change the terms of a policy to the adverse interest of the insured, except on a one-time basis at policy renewal;

Answer 62

20 day notice

Question 63

Unfair practice: Effectuating a midterm change in rates or terms with less than ____ days advance written notice to the named insured;

Answer 63

45 days’

Question 64

Unfair practice: Procuring any policy of insurance that is cancelable by less than ____ days advance notice for nonpayment of premium, and ____ days for any other reason.

Answer 64

10 days

20 days

Question 65

Know: If the court determines that the claim denial was unfair, the insurer may be ordered to pay damages up to 3 times the original claim amount

Answer 65

c

Question 66

True or False: It is acceptable for a producer to merely obtain a receipt indicating a delivery and then to retain the policy, for safekeeping in the producer’s possession.

Answer 66

False: It is not acceptable for a producer to do so (retain the policy)

Question 67

Know: The funds received in the fiduciary capacity will be promptly accounted for and paid to the insured, insurer, or producer as entitled.

Answer 67

c

Question 68

Commingling of funds is not allowed. Each willful violation of this regulation constitutes as a what?

Answer 68

misdemeanor

Question 69

Every licensed person in this state must reply within ___ business days to an inquiry of the Commissioner regarding the business of insurance.

Answer 69

15 business days

Question 70

In order to receive a commission, service fee or other valuable consideration for transacting insurance, a person must be what

Answer 70

licensed

Question 71

A disclosure signed by both the producer and the insured must be provided prior to the sale of the policy. Producers must maintain written disclosures for _____ years

Answer 71

5

Question 72

It is considered an _____ for any insurance producer or surplus line broker providing services in connection with the procurement of insurance to charge a fee in excess of the usual commission without having advised the insured, in writing, in advance of the rendering of services, that there will be a charge and its amount.

Answer 72

unfair practice

Question 73

Fair Credit Reporting Act protects _____ against the circulation of inaccurate/obsolete personal/financial information.

Answer 73

protects consumers

The Fair Credit Reporting Act
established procedures that consumer-reporting agencies must follow in order to ensure that records are confidential, accurate, relevant, and properly used.

Question 74

Fair Credit Reporting Act reports fall under 2 categories, What are they?

Answer 74

• Consumer Reports

- Investigative Consumer Reports

Question 75

consumer reports

Answer 75

consumer credit, character, reputation, or habits collected by a reporting agency from employment records, credit reports, and other public sources

Question 76

Investigative Consumer Reports

Answer 76

also provide information on the consumer’s character, reputation, and habits.
primary difference: info obtained with associates.

Question 77

An individual who violates the Fair Credit Reporting Act knowingly vs unknowingly.

Answer 77

unknowingly: liable to amount = loss to consumer (and reasonable autourny fee)
knowingly: penalty up to $2.5k

Question 78

According to Fair Credit Reporting Act does the consumer have the right to know what was in the report ?

Answer 78

yes

Question 79

Consumer reports: Prohibited vs negative

(prohibited to contain and negative to know)

Answer 79

Prohibited: bankruptcies more than 10 years old, civil suits, records of arrest or convictions of crimes, etc

Negative information: info regarding customer’s delinquencies, late payments, insolvency or any other form of default.

Question 80

When any person engaged in the business of insurance to willfully, and with the intent to deceive, make any oral or written statement that are either false or omit material facts, this is considered what?

Answer 80

unlawful insurance fraud

Question 81

unlawful prison fraud punishment

Answer 81

fined or imprisoned for up to 10 years (or both). If activity jeopardized security of accompanied insurer, the punishment can be up to 15 years.
.

Question 82

Conservation

Answer 82

means any attempt by the existing insurer or its producer to dissuade a current policyowner from the replacement of existing life insurance or annuity

Question 83

Existing insurer

Answer 83

means the insurance company whose policy being replaced.

Question 84

Existing life insurance or annuity

Answer 84

any life insurance or annuity in force, including life insurance under a binding/conditional receipt, or a life insurance policy/ annuity that is within an unconditional refund period.

Question 85

Replacing insurer

Answer 85

the insurance company that issues (or proposes to issue) a new policy or contract that is a replacement of existing life insurance or annuity.

Question 86

Replacing insurer

Answer 86

the insurance company that issues or proposes to issue a new policy or contract that is a replacement of existing life insurance or annuity.

Question 87

One of the duties of the replacing producer includes presenting applicant a ________ that is signed by both the applicant and producer

Answer 87

Notice Regarding Replacement

Question 88

Replacing insurance company free look period: ___days

Answer 88

20 days instead of 10

Question 89

A replacing insurer must maintain evidence that all requirements were met during the policy replacement for at least ____ years or until the next schedule examination by the Insurance Department

Answer 89

3 years

Question 90

exemptions for replacement regulation

Answer 90

Credit life insurance;
Group life or annuity contracts unless the new coverage is solicited on an individual basis;
An application to the existing insurer that issued the existing life insurance when a contractual change or conversion privilege is being exercised;
Proposed life insurance that is to replace life insurance under a binding or conditional receipt issued by the same company; and
Transactions where the replacing insurer and the existing insurer are the same, or are subsidiaries or affiliates under common ownership or control.

Question 91

The purpose of the regulation on
disclosure
for life insurance products

Answer 91

• improve the buyer’s ability to select the most appropriate plan of life insurance for the buyer’s needs -improve the buyer’s understanding of the basic features of the policy under consideration or that has been purchased
• improve the ability of the buyer to evaluate the relative costs of similar plans of life insurance.

Question 92

a company must use the current Buyer’s Guide

no later than ___ months after approval by the NAIC.

Answer 92

6

Question 93

The insurer must provide a _____ to any prospective purchaser prior to accepting the applicant’s initial application, premium, or premium deposit

Answer 93

buyer’s guide

Question 94

If the policy for which application is made or its policy summary does not contain an unconditional refund provision of at least ____ days , the policy summary must be delivered prior to delivery of the policy;

Answer 94

10 days

Question 95

Each insurer must maintain at its home office or principal office, a complete file containing one copy of each document authorized by the insurer for use
under this regulation for a period of ____ years following the date of its last authorized use unless otherwise provided by this regulation.

Answer 95

3 years

Question 96

illustration

Answer 96

a presentation or depiction that includes non-guaranteed elements of a policy of individual or group life insurance over a period of years

Question 97

All life insurance policy illustrations must clearly be titled “_______”

Answer 97

Life Insurance Illustration

Question 98

An agent may sell, solicit, or negotiate the sale of annuity contracts if the have successfully completed a one-time, 4-hour ______training

Answer 98

4-hour annuity suitability training

Question 99

Grace period for payment of premiums — a grace period of _____

Answer 99

1 month

Question 100

An insurer must provide a copy of the application within ___ days of the initial request.

Answer 100

15 days

Question 101

after ___ full years of premium payments, the policy owner is entitled to a policy loan. A maximum interest rate on a policy loan is 8% per annum

Answer 101

3

Question 102

If the benefits have not been paid to the beneficiary within ___ days of the receipt of proof of death, starting on the 91st day, the insurer will be required to pay interest at the stated rate plus 3%.

Answer 102

90 days

Question 103

Public employee associations

Answer 103

policies issued to an employer, or to the trustees of a fund established by an employer, to insure employees.

Question 104

for public employee associations, the policy must cover at least ____ persons at date of issue

Answer 104

25 persons

Question 105

for public employee associations, the policy must cover at least ____ persons at date of issue

Answer 105

25 persons

Question 106

Insurers are obligated to pay the proceeds of any benefits under a group life insurance policy within
___ days after the insurer receives satisfactory proof of death

Answer 106

30 days

Question 107

Labor union groups

Answer 107

policies issued to insure the members of a union or organization

Question 108

Public employees

Answer 108

employees of the United States government, or of any state, or of any political subdivision or instrumentality of any of them.

Question 109

Entire Contract, Representations vs. Warranties

Answer 109

This provision states that a copy of the application must be attached to the policy when issued. All statements made by the policyholder or by the persons insured will be deemed representations
and not warranties.

Question 110

Insurability

Answer 110

The insurer reserves the right to require an insurance applicant to provide evidence of individual insurability as a condition to coverage.

Question 111

Certificate of Insurance

Answer 111

The insurer is required to issue to the policyholder for delivery to each individual insured a certificate of insurance

Question 112

Limitation of Liability

Answer 112

The insurer may provide that it is not liable, or liable for reduced amounts only for losses resulting from war, military service, or aviation losses as specified in policy exclusions.

Question 113

coversion right should be exercised within __ days of group policy termination.

Answer 113

31