Life Insurance Flashcards
Admitted Insurer
An insurer entitled and certified to transact insurance business in California, having complied with the state’s laws associated with transacting such business.
Non-Admitted Insurer
An insurer that is not entitled or certified to transact insurance business in California, having not complied with the laws associated with transacting such business.
domestic insurer
An insurer organized under the laws of California, whether or not admitted.
foreign insurer
An insurer not organized under the laws of California, whether or not admitted.
Alien Insurer
Another country
Insurance
A contract whereby one undertakes, in exchange for consideration, to indemnify another against loss, damage, or liability arising from a contingent or unknown event. Examples of life insurance include whole life, term life, universal life, and variable life insurance. Examples of health insurance include medical expense and Medicare supplement insurance. Examples of property insurance include homeowners, dwelling, marine, commercial property, boiler and machinery, and flood insurance. Examples of casualty insurance include personal auto, commercial auto, commercial general liability, professional liability, workers’ compensation, crime, and surety insurance.
Insurance Commissioner
issioner has the duty and power to
investigate complaints and respond to inquiries;
prosecute insurers or agencies when appropriate;
review insurer rates;
report on complaint and enforcement information regarding individual insurers and agencies;
make all allowable documents available for public inspection;
provide education and information regarding insurance to the general public and to insurers and their agents;
adopt emergency regulations in response to problems;
issue cease and desist orders; and
impose fines.
The Commissioner is an advocate for California insurance consumers and is charged with ensuring that they are well served by the insurance industry, its products, and all those who represent the industry.
Key Points
In the language of the California Insurance Code, the term “shall” is mandatory; the term “may” expresses permission.
The price of insurance for each exposure unit is called the rate.
In California, the Commissioner of Insurance heads the state’s Department of Insurance and serves as an advocate for the state’s insurance consumers.
I
24 Hour Insurance
Twenty-four hour coverage is the joint issuance of a workers’ compensation policy with a disability insurance policy, health-care service plan contract, or other medical insurance coverage for nonoccupational injuries and illnesses.
In California, the insurance business is regulated by
State and federal government
Which of the following entities regulates the business of insurance in California?
State and federal governments
What is the main purpose of the California Department of Insurance
to protect the interests of California insurance consumers
Any person capable of making a contract may be an insurer
it means person, association, organization, partnership, business trust, limited liability company, or corporation capable of making a contract.
To be considered an applicant insurer in CA the commissioner determines each case of what criteria
operating record
management integrity
financial condition and quality of investments
reasonable and sufficient surplus
minimum capital requirements, as specified in state statutes`
Stock insurer
owned by stock holders
Mutual insurer
owned by policyowners
Reinsurance
insurance for insurers
Surplus Lines of Insurance
Property and casualty insurance. Hard to find or hard to place insurance.
De-mutualization
De-mutualization is the process by which a mutual insurer converts to a stock insurer.
A primary insurer is
transfers its loss exposure to another insurer in a reinsurance transaction.
Being admitted to operate as an insurer and to transact one or more lines of insurance in California is
evidenced by a certificate of authority
The prohibition against and penalty for acting on behalf of a nonadmitted insurer does not apply to whom?
licensed surplus lines brokers
Within how many calendar days of receiving proof of a claim, every insurer must either accept or deny the claim
- The insurer must also continue to send the claimant update notices every 30 days until the issue is resolved
In California, when an insurer (or agent) receives any inquiry about a claim, it must respond to the claimant within how many days.
15
disclosing an insurer’s membership in the California Insurance Guarantee Association
It is prohibited
an insurer that cancels a policy based on medical information it requests and receives after the policy was issued
is post-claims underwriting
coverage provided by the California Insurance Guarantee Association
It does not cover benefits of a covered contract that were not guaranteed by the issuing insurer
replacement of a group health insurance policy
The replacement policy must cover eligible employees and dependents
An insurer that, within 60 days, provides a replacement policy for a terminated group health insurance policy must cover all employees and dependents who were validly covered under the previous policy at the time of discontinuance. This coverage extends to eligible former employees. If the succeeding policy has a pre-existing exclusion provision, it cannot be applied to those employees, former employees, and dependents who were validly insured under the prior carrier’s policy on the date of discontinuance.
Who determines whether an insurance trade practice is unfair or deceptive in California?
California Insurance commissioner
For which of the following reason(s) could the California Insurance Commissioner not seize an insurer and impose conservatorship?
failure to exceed projected revenue
an insurer that picks up and assumes coverage for a discontinued employer group medical insurance policy within 60 days of the discontinuance?
may not impose its pre-existing exclusion provision upon those who were covered under the discontinued policy.
an insurer that does not meet the state’s paid-in capital requirement?
Its assets are less than its liabilities.
Under California’s Insurance Information and Privacy Protection Act, when must an insurer obtain authorization to release personal information?
Before disclosing privileged information about a person
What is the primary purpose of California’s Insurance Information and Privacy Protection Act?
to protect the sanctity of personal and privileged information that insurers collect on their policyowners
According to California’s Insurance Information and Privacy Protection Act, under what circumstance(s) does an insurer have to obtain authorization to release personal information?
before disclosing privileged information about a person
Under the Health Insurance Portability and Accountability Act of 1996 (HIPAA), which of the following types of nonpublic personal information can be disclosed only with specific permission from consumers and customers?
health or medical information
Matters that do not have to be communicated in an insurance contract are
known information
Express warranties
Statements of fact in a policy regarding the person or thing insured are express warranties
Twisting is
a form of misrepresentation with the intention of inducing an insured to lapse or surrender an existing contract and purchase another. Those found guilty of twisting may be fined, jailed, and/or subject to license suspension.
California requires all insurance policies to identify six specific points:
1) the parties to the contract; 2) the property or life being insured; 3) the interest of the insured in the property, if he or she does not own it absolutely; 4) the risks insured against; 5) the period over which the insurance extends; and 6) the premium.
Under what basis is a false representation grounds for an insurer to rescind an insurance contract?
if the misrepresentation is material
In California, all of the following must be specified in an insurance contract EXCEPT:
Financial Rating
All of the following statements regarding insurance fraud laws in California are true, EXCEPT
Certain select insurers are chosen by the Department of Insurance to establish and maintain fraud investigation divisions, which then share information with other insurers.
What does a representation in an insurance contract qualify as?
an implied warranty
How does a tort differ from a contract?
A tort arises through the violation of others’ rights or breach of duties owed to them.
All of the following statements about insurers’ anti-fraud activities are correct EXCEPT:
Insurers must penalize insureds who submit fraudulent claim forms.
Which of the following statements about a tort is correct?
A tort is a violation of rights created by law.
life and disability insurance analyst
A person who, for compensation of any kind paid by a source other than an insurer, advises insureds, beneficiaries, or anyone who has an interest in a life or disability insurance contract in any manner concerning that contract or the person’s rights under the contract. Employees of an insurer are not eligible for this kind of license.
insurance solicitor
A natural person employed to aid an insurance agent or insurance broker in transacting insurance other than life, disability, or health insurance. (Note: There is no line of authority as a “life solicitor” or an “accident and health solicitor”.)
