IL State Regulations

Question 1

Who must secure a producer’s license for insurance?

Answer 1

Any person who sells, solicits, negotiates, procures, renews, or binds insurance policies.

Question 2

What are the lines of insurance that require a producer’s license?

Answer 2

Life, Accident and health, Property (i.e., fire), Casualty, Personal lines property and casualty, Motor vehicle.

Question 3

Who, apart from licensed producers, can service or offer advice on insurance contracts?

Answer 3

• Attorneys licensed to practice law and perform duties incidental to that position;
• Bank trust officers;
• Actuaries and CPAs performing professional duties incidental to their position or
• Licensed public adjusters acting within the scope of that license.

Question 4

What is the consequence of acting as a producer without a license?

Answer 4

It is a Class A misdemeanor.

Question 5

What is the consequence if funds are misused, misappropriated, or illegally commingled

Answer 5

It is a Class 4 felony

Question 6

What is the fee for a resident producer license?

Answer 6

$215 to be paid biennially.

Question 7

What must a resident individual do to apply for an insurance producer license?

Answer 7

Pass a state examination unless exempt

Question 8

What does the state examination for an insurance producer license test?

Answer 8

The candidate’s knowledge of the lines of insurance for which the application is made.

Question 9

What are the requirements for passing the insurance producer exam?

Answer 9

Part I (general portion) and Part II (Illinois law and regulations) must be passed within ninety (90) days of one another.

Question 10

What happens if a candidate fails or misses the insurance producer exam?

Answer 10

They must apply again and pay the appropriate fees; no refund is provided.

Question 11

What conditions must a nonresident meet to apply for a producer’s or limited insurance representative’s license?

Answer 11

A nonresident must hold a similar license in good standing in their resident state, submit the proper request and fee ($380 biennially), apply for a license from their home state or a “uniform application,” and their home state must reciprocate by awarding licenses to Illinois residents on the same basis.

Question 12

What affidavit must nonresidents file when applying for an insurance license?

Answer 12

Nonresidents must file an affidavit stating that the Director will be their agent for service of lawful process in any legal action against them.

Question 13

What must a nonresident producer do if they change their business or residence address?

Answer 13

They must notify the Illinois Director of Insurance within thirty (30) days of the change.

Question 14

What should a nonresident producer do if they move to another state?

Answer 14

They must notify the state of Illinois of the move and submit certification from the new resident state within thirty (30) days.

Question 15

What is a limited-line insurance license?

Answer 15

It is any authority granted by the home state that restricts the license’s authority to less than the total authority in the associated major line.

Question 16

Is a business entity required to register in order to engage in insurance business?

Answer 16

The business entity must also submit the appropriate forms and fee ($150 biennially) to the Director.
Each registered firm must appoint at least one (1) licensed producer responsible for the firm’s compliance with the state’s insurance laws, rules, and regulations. All other members, officers, or directors licensed as producers must also be disclosed.

Question 17

Within how many days must changes in personnel or the firm’s address be reported to the Director?

Answer 17

Within thirty (30) days of the change.

Question 18

How long will the business entity’s insurance producer license remain in effect?

Answer 18

This license will remain in effect until suspended or revoked by the Director for just cause.

Question 19

To whom temporary license can be issues?

Answer 19

According to Illinois law, there are two (2) types of temporary insurance producer licenses:
1. One type is issued to those who expect to become permanently licensed producers who are sponsored by the insurer, enrolled in a training course that satisfies the state pre-licensing education requirement, and Otherwise meet all the qualifications for holding a producer’s license.
2. Upon the death of the licensed producer. The temporary license can be issued to the executor or administrator of the deceased producer’s estate or the deceased’s surviving spouse, next of kin, or legal guardian if no executor or administrator exists for the estate.

Question 20

Who is exempted from the producer license?

Answer 20

A person who receives no commissions from the sale of insurance products does not need to hold a producer license.

Question 21

Reinstatement fees and requirement.

Answer 21

An individual insurance producer who allows their license to lapse may, within twelve (12) months after the due date of the renewal fee, be issued a license without the necessity of passing a written examination. The fees is $430

Question 22

Minimum age to get a producer license

Answer 22

18 years

Question 23

Other requirements for a producer license

Answer 23

• Be competent, trustworthy, and of good business reputation;
• Complete an approved pre-licensing course of study for the lines of authority for which the individual has applied;
• File or post a bond, unless exempt;
• Pass a state examination;
• Be sponsored by an insurer if working for one (1) insurer;
• Has not committed any act that is a ground for denial, suspension, or revocation of a license; and
• Pay the appropriate fees.

Question 24

How long must a producer wait if the license has been revoked?

Answer 24

A person whose license is suspended or revoked or whose application for a license is denied pursuant to Illinois law, is ineligible to apply for any license for three (3) years following the suspension, revocation, or denial

Question 25

How much fee does a business entity need to pay?

Answer 25

$150

Question 26

Fees for temporary producer license

Answer 26

$50

Question 27

Fees for non-resident producers?

Answer 27

$380

Question 28

fee for reinstating a lapsed license

Answer 28

$420

Question 29

The annual fee for the registration of an educational provider?

Answer 29

$1000

Question 30

Fees generally are paid into a special fund in the State Treasury called the ………

Answer 30

Insurance Producer Administration Fund, which is used only to pay the Insurance Department’s expenses in administering, executing, and enforcing the state’s insurance laws.

Question 31

When does a producer need a bond?

Answer 31

A producer who brokers business must post a bond with the state. The amount must be at least $2,500 or 5% of the premiums brokered in the previous year, whichever is greater, but not more than $50,000 in total aggregate liability.

Question 32

Continuing education

Answer 32

This section of Illinois law states that an insurance producer must satisfactorily complete at least twenty-four (24) credit hours of continuing education before each license renewal. Three (3) of the twenty-four (24) hours of course study must consist of ethics instruction.

Question 33

What is a Controlled Business?

Answer 33

Controlled business is a disproportionate amount of insurance written on a producer’s life, person, property, or risks, or the life, person, property, or risks of the producer’s spouse, employer, employees, or partners. No producer’s license will be issued or renewed if the Director of Insurance has reason to believe that the producer has written more controlled business than non-controlled business in either of the last two (2) calendar years

Question 34

The hearing must be held no more than ________ days after the director mails the notice of hearing.

Answer 34

30 days

Question 35

In addition to or instead of any applicable denial, suspension, or revocation of a license, an individual may, after a hearing, be subject to a civil penalty of up to ___________for each cause for denial, suspension, or revocation (to a maximum of ________)

Answer 35

$10,000.
To a maximum to $100,000

Question 36

A single instance of misusing, misappropriating, or improperly withholding ______ or less of premium funds is a _____________. A repeat offense or subsequent conversions is a ________

Answer 36

$150, Class A misdemeanor, and class 4 felony

Question 37

When a producer intentionally and knowingly misappropriates, converts to personal use, or illegally withholds premiums in excess of _____, the producer is guilty of a ________. Producers may also be charged with larceny for such illegal acts.

Answer 37

$150, Class 3 felony

Question 38

Where is the life insurance solicitation regulation applied?

Answer 38

life insurance

Question 39

Where is insurance solicitation regulation NOT applied?

Answer 39

(1) annuities;
(2) credit life insurance;
(3) group life coverage;
(4) insurance policies that are issued in conjunction with pension or welfare plans as defined by ERISA;
(5) franchise life insurance;
(6) variable life insurance

Question 40

What is buyer’s guide?

Answer 40

A Buyer’s Guide must be provided to each buyer. The exact wording of the Buyer’s Guide is prescribed by law, and it may contain nothing less or nothing more, according to Illinois law. This guide includes a description of the various forms of life insurance that are available. It is designed to assist the buyer in selecting the amount of coverage to carry, the right type of policy to purchase, and a method by which to compare the cost of life insurance plans by utilizing a cost index

Question 41

When should a buyer’s guide be provided?

Answer 41

A Buyer’s Guide must be provided to prospective purchasers before accepting any premium. In a direct-response sale, the Buyer’s Guide must be provided to purchasers either with or before policy delivery.

Question 42

When the policy summary should be delivered?

Answer 42

Policy Summary must be delivered by no later than the policy itself

Question 43

What basic information should the producer provide before beginning a sales presentation?

Answer 43

Producers must provide prospects with the full name of the insurer they represent and verbalize that they are acting as producers. They cannot use terms such as “investment adviser” or “financial planner” to imply that their compensation is not related to sales

Question 44

What is the record-keeping requirement for the insurance agent while selling an annuity?

Answer 44

Insurers, general agents, independent agencies, and insurance agents must maintain or be able to maintain records of the information that is collected from the consumer and used in making the recommendations that were the basis for insurance transactions for seven (7) years after the insurance transaction is completed by the insurer.

Question 45

What is the training requirement for selling annuities?

Answer 45

All producers who sell annuity products must complete a one-time, four (4) hour annuity suitability training course. These hours may also be used toward the biennial continuing education requirement for a resident producer

Question 46

In how much time an insurance company should complete the settlement of the claim?

Answer 46

This provision states that when there is a claim due to the death of the insured, settlement shall be made upon receipt of proof of death and not later than two (2) months after the receipt of such proof.
If the policy provides for the payment of proceeds in installments, the insurer shall pay interest at a rate of 10% per annum (unless the claim is paid within 31 days of the date of death).

Question 47

The accelerated benefits provision is applied to…..

Answer 47

individual and group life insurance

Question 48

The accelerated benefits provision does NOT apply to…..

Answer 48

This regulation does not apply to long-term care insurance

Question 49

The benefits can be accelerated if the insured has which condition?

Answer 49

Benefits may be accelerated if a terminal medical condition which would generally result in the insured’s death within two years or less (i.e., 24 months), or any condition which requires continuous confinement in an eligible institution where the insured is expected to remain until death occurs.

Question 50

What percentage of policy’s face amoutn can be paid as the Accelerated benefit?

Answer 50

A qualified covered condition when it occurs, may result in the payment of an accelerated benefit up to 75% of the policy’s face amount

Question 51

is a consent of benefiticary is required by the insurer for issuing the accelerated death benefit?

Answer 51

The policyholder, asignee and any** irrevocable** beneficiary must provide their written consent to the payment of any accelerated benefits

Question 52

What disclosur should be given for accelerated benefit?

Answer 52

A written disclosure, including a brief description of the accelerated benefit, definitions of the conditions or occurrences which trigger payment of the benefits, and an explanation of any effect of the payment of a benefit on the policy must be provided to the applicant. A disclosure statement is also required at the time the accelerated benefit payment is submitted. The statement must be present which indicates that accelerated benefits may be taxable

Question 54

What is the requirement for accelerated benefit?

Answer 54

Benefits may be accelerated if a terminal medical condition which would generally result in the insured’s death within two years or less (i.e., 24 months), or any condition which requires continuous confinement in an eligible institution where the insured is expected to remain until death occurs.

Question 55

Can Director of insurance “Approving and regulating insurance premium rates”

Answer 55

yes

Question 56

What is the penalty for violating cease and desist order?

Answer 56

$1000

Question 57

What is the penalty for violating a subpoena by the director of insurance?

Answer 57

Anyone who refuses to attend when subpoenaed or refuses to cooperate may be fined up to $2,000 and charged with contempt of court. Further refusal may result in another fine, imprisonment, or both.

Question 58

How many days must a person report an objection before the examination by the director of insurance?

Answer 58

An examined person has fourteen (14) days to state written objections to the report and ask the Director for a hearing.

Question 59

How many days notice does the director provide before the hearing?

Answer 59

The Director must provide ten (10) days advance notice of the time and place of the hearing.

Question 60

All the penalties are payable to ____________of the state of Illinois?

Answer 60

The General Revenue Fund of Illinois

Question 61

In how many days is a licensee required to report a felony to the director of insurance?

Answer 61

30 Days from the entry date of the judgment. Within the period of thirty (30) days, the person must also provide the Director with a copy of the judgment, the probation or commitment order, and any other relevant documents.

Question 62

What is rebating?

Answer 62

Anything of value a producer or insurer offers to an applicant not specified in the policy as an inducement or incentive to purchase insurance is considered rebating . An offer of a rebate or an agreement to accept a rebate is illegal .

Question 63

What is the minimum and maximum penalties for Defamation?

Answer 63

200 to 10,000

Question 64

Replacement regulation applies only to ……

Answer 64

Life insurance
Illinois replacement regulations do not apply to credit life; group life and group annuities; life coverage in a tax-qualified pension or profit-sharing retirement or employee benefit plan; variable life and variable annuities; transactions in which the replacing insurer and existing insurer are the same; or situations in which total existing coverage to be replaced represents less than $500 in cash value and less than $5,000 in face amount.

Question 65

What is the duty of a producer in case of a replacement?

Answer 65

In life insurance or annuity applications, the applicant and the producer must sign statements indicating if the sale involves replacement. No further action is needed if the existing and replacing insurers are the same. In other replacement situations, the producer must provide the applicant with a “Notice Regarding Replacement of Life Insurance or Annuity,” advising them to gather information before replacing their coverage. The producer must list the policies proposed for replacement, apply to the replacing insurer, and send a signed notice detailing the insured and the replacement policies to the existing insurer.

Question 66

What is the penalty for misrepresentation?

Answer 66

Misrepresenting the terms, benefits, or dividends of a policy or circulating or allowing false representations of the same is considered misrepresentation.
Any form of misrepresentation is illegal and may be punishable by a monetary fine of not less than $200 nor more than $10,000

Question 67

How long the records for the claims should be maintained?

Answer 67

Claim records must be kept for all open and closed claim files during the current year and the previous two (2) years.

Question 68

How quickly should the insurer make payment after they have affirmed their liability?

Answer 68

The insurer must also offer payment within thirty (30) days after confirming its liability as long as the claim is not in dispute.

Question 69

What is the ILLINOIS INSURANCE GUARANTY FUND?

Answer 69

The Property and Casualty Insurance Guaranty Fund consists of all property and casualty insurers authorized to do business in Illinois

Question 70

What is LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION?

Answer 70

The Life and Health Insurance Guaranty Fund comprises all life and health insurers authorized to do business in Illinois. This association’s purpose is to protect the public against insurers’ failure to pay claims due to insolvency.

Question 71

In an illustration, what are the non-guaranteed elements of a life insurance policy over a period of years?

Answer 71

Here is a summary of the requirements for life insurance illustrations:

1. The illustration must include the preparation date.
2. Each page must be numbered and indicate its position in the document.
3. The insured’s age in tabular details should reflect the issue age plus the policy duration.
4. Payment receipt and benefit payout dates must be clearly identified.
5. Guaranteed death benefits and surrender values must be labeled as “guaranteed.”
6. Non-guaranteed elements cannot be more favorable than the insurer’s illustrated scale and must be labeled as “non-guaranteed.”
7. Guaranteed elements must be shown before non-guaranteed elements and specifically referenced on any page showing non-guaranteed elements.
8. Surrender values must be identified by their policy name and represent the lump sum after deductions.
9. Policy benefits and values can be displayed in graphic or chart form.
10. If policy charges may be paid using non-guaranteed values, it must be disclosed that charges are still required, and premium outlays may need to continue or resume based on actual results.

Question 72

Is the amount recieved in vatical settlement taxable?

Answer 72

policy owner/insured will be required to pay taxes only on the excess that’s received over what was paid in premiums

Question 73

The initial license fee for Viatical settlement provider is _____________.

Answer 73

$3000

Question 74

The fee for renewing Viatical settlement provider license is _____________.

Answer 74

$1500