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IL Life and Health Insurance > IL Insurance Law (General) > Flashcards

IL Insurance Law (General) Flashcards

1
Q

McCarran-Ferguson Act

A

Federal law that allows most insurance regulation to be done at state level

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2
Q

IL Department of Insurance

A

Overseen by governor-appointed director

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3
Q

Director has the power to make reasonable rules and…

A

Regulations to enforce insurance laws

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4
Q

Director has the power to conduct reasonable investigations to determine…

A

Violations of state insurance requirements

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5
Q

Director has the power to issue immediate cease-and-desist orders to…

A

Halt illegal insurance practices

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6
Q

Director has the power to issue subpoenas in order to obtain…

A

Insurance documents

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7
Q

Director has the power to require individuals to…

A

Testify under oath about insurance matters

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8
Q

Director has the power to issue, deny, suspend, or revoke insurance licenses for…

A

Individuals and businesses

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9
Q

Failure to comply with director orders can result in…

A

$2000-$20000 in additional fines

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10
Q

Guilty party can be forced to…

A

Pay for independent investigations

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11
Q

Cease-and-desist orders generally include…

A

Right to a hearing within 30 days

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12
Q

Investigated parties must receive…

A

Copies of disciplinary reports before the public

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13
Q

Producer license generally required when doing the following for compensation…

A

Selling insurance; encouraging someone to buy insurance; negotiating terms of insurance; giving insurance advice; providing insurance quotes

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14
Q

Penalty of acting without a license

A

Class A misdemeanor, $2500 fine and 1 year in jail

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15
Q

An insurer.producer cannot compensate an unlicensed person for…

A

Selling or negotiating insurance

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16
Q

Possible exception for a formerly licensed person who is receiving…

A

Deferred compensation and was licensed at time of transaction

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17
Q

License Qualifications

A

18+, pre-license education, state exam, licensing fee, good moral character

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18
Q

Someone might not be eligible for a license if…

A

Committed a felony, fail to pay child support, have license revoked in another state

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19
Q

Each line of authority generally requires…

A

20 hours of pre-license education and a state exam

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20
Q

Lines of Authority

A

Life, accident and health, property (fire), casualty

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21
Q

Other lines of authority may have slightly different requirements

A

Personal lines, motor vehicle, variable contracts, limited lines

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22
Q

Limited Lines Producer

A

Allows someone to sell a limited set of insurance products that represent a narrow portion of the market

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23
Q

Pre-License exemptions required state exam but no pre-license education for…

A

College grads with a degree in insurance

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24
Q

No state exam and no pre-license education for…

A

Limited line producers; producers moving to IL who already licensed in same line of authority; non-residents of IL who are already licensed in the same line of authority in their home state

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25
Q

Producers moving to IL who area already licensed in same line of authority must…

A

Be in good standing and complete paperwork within 90 days of residency

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26
Q

Non-residents of IL who are already licensed in their home state must…

A

Be in good standing and obtain non-resident IL license before insuring to anyone in IL

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27
Q

Temp License: Upon Death and Disability

A

Allows for limited time to settle disabled or deceased producer’s business affairs

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28
Q

Temp License: Upon Death and Disability requires state exam?

A

No

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29
Q

Temp License: Upon Death and Disability issued for…

A

180 days and can get one extension for another 180 day period

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30
Q

Temp License: Upon Death and Disability can require supervision from…

A

Licensed producer

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31
Q

Temp License: Upon Death and Disability license terminates if…

A

Business is sold or dissolved

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32
Q

Temp License: Not Death or Disability

A

Allows licensing candidates to begin work while completing the licensing process

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33
Q

Temp License: Not Death or Disability is valid for…

A

90 days with no extension

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34
Q

Temp License: Not Death or Disability must be affiliated with…

A

Insurer

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35
Q

Temp License: Not Death or Disability insurers whose candidates don’t complete the licensing process can no longer…

A

Sponsor temporary licenses

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36
Q

Fees: Resident Producer License

A

$215 every 2 years

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37
Q

Fees: Non-Resident Producer License

A

$380 every 2 years

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38
Q

Fees: Temporary Producer License

A

$50

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39
Q

Fees: Insurance Business License

A

$150 every 2 years

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40
Q

Fees: Limited Lines Producer License

A

$50 every year

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41
Q

Fees: Licensing Exam

A

$50, plus other fees charged by the testing vendor

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42
Q

Fees: Operating as a pre-license or continuing education provider

A

$1,000 every year

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43
Q

Fees: Approval of a pre-license or continuing education course

A

$50 initial fee, then $20 every year

44
Q

Brokers must have a surety bond equal to at least…

A

$2500 or 5% of brokered premiums from previous year, whichever is more

45
Q

Broker Surety Bond max

A

$50,000

46
Q

Producer license is generally valid for…

A

2 years

47
Q

License renewal requires…

A

Fees and continuing education

48
Q

License renewal possible exemption

A

Actively serving in military

49
Q

License Reinstatement

A

1 year to reinstate by paying double the licensing fee and completing remaining CE hours

50
Q

Continuing Education Requirements

A

24 hours every 2 years before license renewal date; at least 3 hours must be ethics

51
Q

CE hours must be reported…

A

Prior to renewal deadline

52
Q

CE generally not applicable to…

A

Non-resident producers who complete CE in their home state

53
Q

Changes to physical and email addresses must be reported within…

A

30 days

54
Q

Assumed Names

A

Need to report to DOI if doing business under another name

55
Q

Insurance agencies and brokerages must be licensed as…

A

Producers

56
Q

Agencies and brokerages must have one…

A

Designated producer in charge of compliance

57
Q

There are separate producer licenses for…

A

Partnership, LLC, or corporation

58
Q

Felony convictions must be reported within…

A

30 days to the DOI

59
Q

Actions that can result in license suspension, revocation, or refusal and fines of $10,000 per occurrence (up to $100k max), Part 1

A

Felony conviction; Demonstrating incompetence or untrustworthiness in business; Having insurance license disciplined in another state; Forging an insurance document

60
Q

Actions that can result in license suspension, revocation, or refusal and fines of $10,000 per occurrence (up to $100k max), Part 2

A

Cheating on insurance exam; Knowingly doing business with an unlicensed producer; Failing to play child support; Failing to pay state income taxes; Making false statements on a licensing application; Violating laws, rules, or orders from DOI

61
Q

Actions that can result in license suspension, revocation, or refusal and fines of $10,000 per occurrence (up to $100k max), Part 3

A

Improper handling of funds obtained as part of an insurance transaction; Misrepresenting facts about insurance product; Committing fraud

62
Q

Suspensions might be…

A

Temporary

63
Q

Revocations are expected to be…

A

Permanent

64
Q

Producers who’ve been denied or revoked can reapply after…

A

3 years but can still be refused

65
Q

Disciplinary action requires written notice and right to request a hearing within…

A

30 days

66
Q

If an insurer or insurance business terminates a relationship with a producer because of legal violation…

A

Must inform DOI within 30 days

67
Q

Failure to report to the DOI or take preventative action after learning of a producer’s violations can lead to…

A

Business license revocation/suspension

68
Q

Can’t misrepresent…

A

Type or benefits of an insurance product

69
Q

Can’t disparage…

A

Competition to make a sale

70
Q

Can’t act as if…

A

Products are affiliated with the state or federal government

71
Q

Can’t engage in…

A

Boycott or intimidation to force a sale

72
Q

Misrepresentation can result in…

A

Fines of $200-$10,000 per occurrence

73
Q

Fees are not…

A

Commission

74
Q

Fees must be disclosed…

A

Before coverage is obtained, with records kept for 7 years

75
Q

No fee for…

A

Cancelling someone’s insurance

76
Q

Rebating

A

Sharing commission in order to induce a sale

77
Q

Things of value must be disclosed in…

A

Insurance Contract

78
Q

Rebating is a…

A

Class B misdemeanor, $1,500 fine and 6 months in jail

79
Q

Dividends are not…

A

Rebates

80
Q

Controlled Business

A

No more than half of business can be from insurance for yourself, your spouse your business, or your employer

81
Q

Money provided by consumer is generally held in…

A

Fiduciary capacity by producers

82
Q

Fiduciary money cannot be…

A

Commingled, misappropriated, or used for other purposes

83
Q

Insurers must continue to cover people when a producer misappropriates their funds but…

A

Producer can face legal consequences

84
Q

Premium Fund Trust Accounts (PFTA)

A

Can’t put principal dollars at risk

85
Q

Generally cannot withdraw from PFTA unless…

A

Transfer of premium to an insurer or transfer of earned commissions to producers

86
Q

PFTA: Must be from…

A

Federal or state bank or savings and loan

87
Q

Bank records and checks must indicate…

A

PFTA

88
Q

PFTA records must be maintained for…

A

7 years

89
Q

PFTA can be interest-bearing but…

A

Can only be kept if authorized by carrier

90
Q

PFTA Penalties: Misappropriating less than $150 in first offense

A

Class A misdemeanor, 1 year in prison and $2,500 fine

91
Q

PFTA Penalties: Misappropriating less than $150 in multiple offenses

A

Class 4 felony, 3 years in prison and $25,000 fine

92
Q

PFTA Penalties: Misappropriating more than $150

A

Class 3 felony, 5 years in prison and $25,000 fine

93
Q

IL Insurance Privacy Rules

A

Information obtained as part of an insurance transaction generally cannot be disclosed without written consent

94
Q

State privacy law applies to…

A

Nearly all types of insurance

95
Q

No discrimination based on…

A

Race, religion, color, national origin

96
Q

Can’t refuse to offer or renew insurance based on…

A

Gender, marital status, sexual orientation

97
Q

Price differences must be based on…

A

Sound actuarial data

98
Q

Unfair Claims Practice: Insurers can be fined for not responding to communication from a claimant within…

A

Reasonable amount of time

99
Q

Unfair Claims Practice: Insurers can be fined for not offering fair and prompt settlements when…

A

Insurer’s liability is reasonably clear

100
Q

Unfair Claims Practice: Insurers can be fined for frequently prompting claimants to sue in order to…

A

Receive the full amount owed to them

101
Q

Unfair Claims Practice: Insurers can be fined for being named in…

A

Disproportionately high number of consumer complaints

102
Q

Unfair Claims Practice: Insurers can be fined for denying claims without…

A

Conducting a reasonable investigation

103
Q

Unfair Claims Practice: Insurers can be fined for refusing to make a decision about…

A

Claim within a reasonable time

104
Q

Unfair Claims Practice: Insurers can be fined for requiring additional proof of a loss in order to…

A

Delay payment

105
Q

Unfair Claims Practice: Insurers can be fined for failing to explain why…

A

Claim was denied

IL Life and Health Insurance (29 decks)

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