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WA Life Insurance Producer Exam > Chapter 12 - WA > Flashcards

Chapter 12 - WA Flashcards

1
Q

WA Insurance Commissioner

A

Chief officer of WA insurance department

Elected position, 4 year term

Makes rules and regulations to help carry out provisions of the WA insurance code

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2
Q

WA Commissioner Hearing

A

Commissioner can hold hearing whenever deemed necessary.

All hearings must be held or refused within 30 days after commissioner receives demand.

Must give notice of time and place at least 10 days ahead of time.

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3
Q

Penalties

A

After commissioner hearing, Commissioner can impose fine of up to $1,000 for each violation upon any person who violates WA insurance code

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4
Q

Cease and Desist

A

Commissioner can issue a cease and desist order to anyone violating WA insurance code

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5
Q

Rates and Forms

A

All insurance policy forms, applications, riders, or endorsements must be filed with and approved by Commissioner before they can be used.

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6
Q

Insurance - WA Definition

A

A contract in which one party (the insurer) agrees, for a consideration (premiums + application), to pay the other (insured) a specific amount upon determinable contingencies

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7
Q

Insurer (WA Definition)

A

Anyone in the business of making insurance contracts other than a fraternal benefit society

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8
Q

Premium

A

Payment (or consideration) for insurance coverage. Sometimes called assessments, policy fees, or service fees

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9
Q

Policy (WA Definition)

A

A written contract for insurance, including all clauses, riders, endorsements, and attached papers

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10
Q

Insurance Producer (WA Definition)

A

An individual who in any manner sells, solicits, or negotiates insurance on behalf of insurance companies for compensation

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11
Q

Assumed Names

A

An insurance producer doing business under any name other than the producer’s legal name. Must notify the Commissioner before using the assumed name

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12
Q

Commissions

A

Compensation as a percentage for selling insurance. No person shall pay or accept them to/from an unlicensed individual for the purpose of selling or negotiating insurance business.

Deferred ones can be paid as long as the person was licensed at the time of sale

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13
Q

Shared Commissions

A

May only be shared with another producer who is licensed in the same line of insurance

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14
Q

Protection of Public Interest

A

Insurers and agents are required to act in good faith, abstain from deception, and practice honesty and equity in all insurance matters.

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15
Q

Premium Accountability

A

An insurance producer must report to the insurer the exact amount of consideration charged as premium and the amount shall be shown in the contract and in the records of the producer

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16
Q

Fiduciary Responsibility

A

Someone in a position of trust. Any person who is a producer for an insurance company has this responsibility

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17
Q

Separate Account Requirement

A

All funds representing premiums or return premiums received by a producer shall be accounted for an maintained in a separate account from all other business and personal funds

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18
Q

Co-mingling

A

Premiums that have been combined with personal funds. A prohibited act.

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19
Q

Policy Delivery

A

Policies must be delivered within a reasonable period after they have been issued

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20
Q

NAIC Buyers Guide and Policy Summary

A

Producers must provide these as a part of solicitation and sales presentations

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21
Q

Policy Summary

A

Contains specific information on the provisions, benefits, and coverage of the policy applied for

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22
Q

Misrepresentation

A

Illegal to misrepresents any fact about an insurance policy, such as:
Terms
Benefits
Value
Cost
Effective Date
Existence of contract

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23
Q

False advertising

A

An illegal practice. Stating or publishing misleading in formation about insurance coverage. Includes making false statements about the financial condition of an insurer

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24
Q

Defamation

A

An illegal practice. Any public statement or advertisement that contains false information or unsubstantiated criticisms about an insurance company that are intended to harm or malign

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25
Q

False Financial Statements

A

An illegal practice. Stating or publishing and false financial information regarding a person or entity

26
Q

Unfair Discrimination

A

An illegal practice. Discriminating against a person in any way on an insurance-related matter.

27
Q

Fair discrimination

A

Necessary for the issuance of life insurance policies, which is based on mortality

28
Q

Reebating

A

An illegal practice. Offering a prospective client something of value that is not specified in a contract in order to induce the purchase of an insurance policy

29
Q

Twisting

A

Inducing or attempting to induce any insured person through misrepresentation to lapse, forfeit, or surrender insurance. Usually to sell an insurance policy with another insurer

30
Q

Free Look (Right to Return)

A

All individual life insurance policies must include this. A notice permitting the policyholder to return the policy for a full refund within 10 days of receipt for any reason

31
Q

Policy Summary

A

Contains specific information on provisions, benefits, and and coverage of the policy applied for

32
Q

Illustrations

A

A presentation, graph, or chart that includes non-guaranteed elements of a policy of life insurance over a period of years.

33
Q

Grace Period

A

30 day period in which the policy remains in force after a premium is due if it hasn’t been paid. If insured dies during this time the death proceeds will still be paid minus the premium due

34
Q

Entire Contract

A

The policy plus the application. All statements made by policyholder are considered representations

35
Q

Conversion

A

Upon termination of group plan or termination of an employee, a person covered has the right to convert to an individual policy

36
Q

Insurability

A

A provision setting forth the conditions under which insurer reserves the right to require a person eligible for insurance to furnish evidence of their insurability

37
Q

Repreesentations

A

All statements by policy holder. These are not warranties.

38
Q

Group Life Certificate

A

Under a group life policy each insured will receive this stating the insurance protection provided, to whom the benefits are payable, and the policy rights and conditions

39
Q

Contract Premium (illustration)

A

Required gross minimum for a fixed premium policy

40
Q

Currently Payable Scale (illustration)

A

A scale of nonguaranteed elements in effect for a policy

41
Q

Generic name (illustration)

A

Short title descriptive of the illustrated policy, such as whole life, term life, flexible premium adjustable life

42
Q

Guaranteed elements (illustration)

A

Life policy values or charges guaranteed and determined at issue

43
Q

Nonguaranteed elements (illustration)

A

Life policy values or charges neither guaranteed nor determined when the policy was issued

44
Q

Illustrated scale

A

A scale on nonguaranteed elements currently being illustrated

45
Q

Illustration

A

A presentation or depiction that includes nonguaranteed elements of a life insurance policy over time

46
Q

Self-supporting illustration

A

One for which it can be demonstrated that when illustrating points in time FIFTEEN YEARS OR MORE in the future, accumulated values being shown will equal or exceed the values available when using the experience assumptions underlying the disciplined current scale

47
Q

Lapse-supported illustration

A

An illustration of a policy form that fails the test of being self-supporting

48
Q

Annuities Suitability

A

Data useful for determining whether the purchase of an annuity is appropriate for consumers and in their best interest

49
Q

Required suitability data

A

Financial time horizon
Annual income
Existing assets
Financial situation and needs
Liquidity needs
Financial experience
Liquid net worth
Financial objectives
Risk tolerance
Intended use of annuity

50
Q

Annuity suitability education

A

A person may not sell, solicit, or negotiate the sale of an annuity product without an appropriate license and without successfully completing required 4-hour annuity suitability training. Must be commissioner approved, and qualify for 4 continuing education credits

51
Q

Maximum fixed interest rate for policy LOANS

A

8% in Washington

52
Q

Policy loan availability

A

Policy loans must be made available on life insurance policies with cash value after the policy has been in force for 3 years

53
Q

Policy loan adjustable interest rates

A

Based on Moody’s Corporate Bond Yield Average. May not exceed the higher of: 1) the published monthly rate, or 2) 1% higher than the rate used to compute policy’s cash surrender values

54
Q

Policy settlement interest rate

A

Insurer must pay interest at rate of at least 8% on benefits due for the time between death of insured and when benefits are paid. If benefits nor paid within 90 days, additional 3% fee is added

55
Q

Incontestability

A

Provision stating that a life policy’s terms shall be incontestable after it has been in force for two years from date of issue

56
Q

Limitation of liability

A

An insurer may reduce the limit of its liability (payout) in a life insurance or annuity contract to the reserve value of policy. This can be as little as the paid premiums plus interest. May occur when death from:
War
Military service
Suicide within 2 years of issue
Aviation under conditions specified in policy

57
Q

Minimum nonforfeiture amounts

A

Interest rate used to determine minimum nonforfeiture values of an annuity is the LESSER of 1) 3% a year, or 2) The interest rate on 5 US Treasury Bills minus 1.25%.

Absolute initial minimum of 1%

58
Q

Groups eligible for Group Life in WA

A

Must insure the lives of more than 1 person that are NOT related by blood, marriage, or legal adoption.

Business partner relationships are not eligible.

59
Q

Grace period - GROUP life policies

A

31 days

60
Q
A

WA Life Insurance Producer Exam (2 decks)

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