Life specific Laws

Question 1

The Director determines

Answer 1

whether an ad is misleading or deceptive

Question 2

Each insurer must maintain control over its

Answer 2

life and annuity advertisements, and is responsible for its content regardless of who wrote, created, designed, or presented them.

Question 3

Insurers must maintain all ads at its

Answer 3

home office for 4 years.

Question 4

The term advertisement includes

Answer 4

Printed, published, and audio-visual material and descriptive literature used in direct mail, newspapers and magazines, radio and television scripts, and billboards and similar displays
Descriptive literature and sales aids an insurer or agent issues, including circulars, leaflets, booklets, depictions, illustrations, and form letters
Material used to recruit, train, and educate sales personnel, agents, solicitors, and brokers
Prepared sales talks, presentations, and material for use by sales personnel, agents, solicitors, and brokers

Question 5

The term advertisement does not include

Answer 5

Internal communication or materials not intended for the public
Communications with policyholders not urging policyholders to purchase, increase, modify, reinstate, or retain a policy
A general announcement from a group or blanket policyholder to eligible individuals on an employment or membership list, of a policy or program

Question 6

Disclosure requirements: An ad must be

Answer 6

truthful, have a clear form and content, and avoid deception.

Question 7

An ad must disclose

Answer 7

The insurer’s name and the type of policy being marketed
That dividends are not guaranteed
The source of any statistical info about an insurer or policy
An individual’s financial interest, if any, in an insurer for which he/she has made a testimonial or endorsement
Any conditions associated with a special or limited enrollment period, if the insurer uses successive enrollment periods as its usual marketing method
Accurate and complete comparisons of policies, benefits, dividends, or rates when referring to a competitor’s products

Question 8

Identity of insurer: Ads may not use language

Answer 8

So similar to a governmental program’s combination of words or symbols that they mislead prospective insureds to believing the solicitation is connected with the program. medicare

Question 9

Jurisdiction licensing: Ads may not

Answer 9

imply licensing beyond the limits of the jurisdiction in which the insurer is licensed

Question 10

Advertising and marketing of annuities and variable life:

any ad of annuities and VL contracts directed toward persons age

Answer 10

65 or older must disclose that an insurer or insurance producer may contact the applicant

Question 11

No advertisement may imply that the consumer may

Answer 11

lose a right or privilege or benefits under federal, Sate, or local law if he/she fails to respond to the ad

Question 12

No ad for an event where insurance products will be offered for sale may use the terms

Answer 12

“seminar” “class” “info meeting” or substantially equivalent terms to characterize the purpose of the public gathering or event unless it adds the words “and insurance sales presentation” immediately following those terms in the same size and font as those terms

Question 13

Penalties: an insurer who violates advertising provisions may be fined up to

Answer 13

1000 per violation, have its license or certificate of authority suspended or revoked, or both

Question 14

The purpose of replacement regulations is to

Answer 14

regulate insurer and producer activities
Protect life policy and annuity purchases from losing benefits
Assure that purchasers get enough info to make an informed decision
Reduce the opportunity for misrepresentation
Establish penalties for failure to comply with replacement rules

Question 15

replacement is any transaction in which a new life policy or annuity is to be purchased ant the producer

Answer 15

knows or should know that existing contracts will be:
Lapsed, forfeited, surrendered or terminated
Amended to reduce the coverages benefit or term
Reissued with a reduced cash value
Converted into paid-up insurance, continued as extended term insurance, or decreased in value by use of another form of nonforfeiture benefit
Pledged as collateral for a loan, or subjected to borrowing

Question 16

Exemptions:

The following types of policies are exempt from state replacement regulations:

Answer 16

Credit life insurance–> can never be convertible or renewable
Group life insurance or annuities
Life insurance policies in connection with a pension, profit sharing, or other benefit plan qualifying for tax deductibility of premiums.
Registered contracts, except that the appropriate prospectus or offering circular shall be given to the applicant
Existing life insurance that is non-convertible, is term and expires within 5 years
Transactions where the existing insurer and replacing insurer are the same.
Coverages whose total cash surrender value is less than $500, and whose total face value is less than $5,000

Question 17

A producer transacting insurance where replacement is involved must give the applicant:

Answer 17

A list of policies to be replaced
an outline of coverage
a notice of replacement signed by the producer
a copy of each sales proposal
a completed comparison statement
a reminder that new evidence of insurability may be required

Question 18

The surrender cost index is used to

Answer 18

compare cost of similar policies. The producer also needs to give his/her insurer a copy of any proposals and of the comparison statement, including the name of the insurer that issued the policy being replaced.

Question 19

The producer must submit, with the application,

Answer 19

a statement signed by the applicant affirming whether the policy will replace any existing life policy insurance or annuity. the producer must keep a copy of replacement forms for 3 years.

Question 20

The replacing insurer must:

Answer 20

Ensure that all replacement actions are legal
Give the applicant a copy of the buyers guide
Notify each existing insurer within 3 working days after receiving the application and upon request give them a copy of any proposals and comparison statements
Keep copies of proposals, receipts, and comparison statement for at least 3 years.

Question 21

The existing policy should not be

Answer 21

terminated until the new policy is issued and delivered.

Question 22

Life solicitation:

The following apply to the solicitation of

Answer 22

individual life policies, except credit policies, policies connected with a pension or welfare plan defined by ERISA, or variable policies with variable death benefits

Question 23

Purpose:

The purpose of this section is to improve the buyer’s ability to

Answer 23

select the most appropriate plan of life insurance for his/her needs, improve the buyers understanding of the basic feature of the policy, and improve the ability of the buyer to evaluate the relative costs of similar plans of life insurance.

Question 24

Disclosure requirements: An insurer must give an applicant a

Answer 24

Buyer’s Guide before accepting an initial premium or premium deposit. For direct response sales, The buyers guide must be delivered before or with the policy

Question 25

A policy summary must be delivered

Answer 25

before or with a policy solicited through a producer or by direct response. Failure to provide a Buyer’s Guide or a Policy Summary, when required, constitutes a misrepresentation of the policy’s benefits, advantages, conditions, or terms.

Question 26

An agent must inform the prospective purchaser that

Answer 26

he is acting as a life agent

Question 27

Terms such as

Answer 27

financial planner, investment, advisor, financial consultant, or financial counseling may not be used to imply that the insurance agent is generally engaged in an advisory business in which compensation is unrelated to sales.

Question 28

Any reference to policy dividends

Answer 28

must include a statement that dividends are not guaranteed. A presentation of benefits may not display guaranteed and non-guaranteed benefits as a single sum.

Question 29

In recommending the purchase of exchange of an annuity, the producer, or the insurer if no producer is involved, must

Answer 29

reasonably believe that the recommendation is suitable for the consumer on the basis of the consumer’s financial needs, investments, and other insurance products

Question 30

Prior to the purchase or exchange of an annuity, the producer or insurer must make reasonable efforts to obtain data regarding the purchaser’s:

Answer 30

financial status
Tax status
investment objectives
Other information the produce or insurer considers to be reasonable n making a recommendation to the purchaser.

Question 31

There is obligation to a consumer concerning any recommendation if the consumer refuses to provide

Answer 31

information, or purchases an annuity without recommendation by the producer or insurer.

Question 32

Accelerated benefits: A life insurance contracts providing accelerate benefits must

Answer 32

meet filling requirements, include the phrase “accelerated benefit” in the title and state coverage conditions

Include all of the following:
A net death benefit greater than or equal to accelerated benefits
Guaranteed renewability and cost
Accelerated benefits effective for illness within 30 days after the effective date
A waiver of premium for either the entire contract or the accelerated benefit provisions only

Be nondiscriminatory with respect to qualifying events

Question 33

The insurer must explain

Answer 33

any continuing premium required if the benefit is claimed

Question 34

Before paying an accelerated benefit an insurer must get

Answer 34

any assignee’s or irrevocable beneficiary’s signed acceptance of the payment.

Question 35

an insurer must keep

Answer 35

benefit calculation procedures available for examination by the Director upon request.

Question 36

The payment must include

Answer 36

a lump sum option.

Question 37

An insurer may require the insured to

Answer 37

submit to a medical examination it orders

Question 38

Required Discloser:

Policy value information and any charge for the benefit must

Answer 38

be disclosed upon the policyholder’s request.

Question 39

Before or with the app, the producer must give the insured a written disclosure including the following

Answer 39

A brief description of the accelerated benefit
Conditions triggering payment of the benefits
Any benefit payment’s effect on the policy’s cash value, death benefit, premium, and policy loans. (if there is a charge for the benefit, this must be provided in a generic illustration)
A statement on the first page of any contract documents, that recipient should seek help from a personal tax advisor because the benefit payments may be taxable.

Question 40

When an accelerated benefit is requested

Answer 40

The producer must disclose in writing, that the accelerated benefits may be taxable so the insured should seek help from a personal tax advisor.
The insurer must notify the policyholder, in writing, of any benefit payment’s effect on the policy’s cash value, death benefit, premium, and policy loans

Question 41

Effect of payment on cash value

The policy’s cash value may

Answer 41

not be reduced by the benefit payment on more than a pro rate basis.

Question 42

an illustration must:

Answer 42

Show the date it was prepared
Clearly identify the assume premium due dates and benefit payout dates
Identify the assumed payments on which the benefits and values are based as premium due dates or benefit outlay dates.
Label guaranteed values as guaranteed
Display the page number and total number of ages on each page
Identify the surrender value by the name the value is given in the policy.

Question 43

An illustration of non-guaranteed elements must indicate that:

Answer 43

The benefits and values are not guaranteed
The assumptions on which they are based may be changed by the insurer
Actual results may be more or less favorable.

Question 44

An illustration showing that policy charges may

Answer 44

be paid using non-guranteed values must disclose that a charge continues to be required and that the insured may need to continue or resume premium payments.

Question 45

Illustrations provided at policy delivery must include the following statements to be signed and dated.

Answer 45

By the applicant “I have received a copy of this illustration and understand that any non-guaranteed elements illustrated are subject to changed and could be either higher or lower. The agent has told me they are not guaranteed
By the producer “I certify that this illustration has been presented to the applicant and that I have explained that nay non-guaranteed elements illustrated are subject to change. I have made no statements that are inconsistent with the illustration”

Question 46

An illustration may show

Answer 46

benefits and values in graphic or chart form in addition to tabular form

Question 47

An illustration may not

Answer 47

base non-guaranteed elements on a scale that is more favorable to the policy owner than the insurers illustrated scale.

Question 48

A basic illustration

Answer 48

briefly describe the policy, its premium, and any features, riders, or pitons shows and the impact they have on the policy’s benefits and values
Identify and briefly define column headings and key terms
State: “This illustration assumes that the currently illustrated non-guaranteed elements will continue unchanged for all years shown. This is not likely to occur, and actual results may be more or less favorable than those shown.

Question 49

Standards for supplemental illustrations: supplemental illustrations must

Answer 49

Be accompanies or preceded by a basic illustration
Show non-guaranteed elements as the same as or less favorable to the policy owner than the non-guaranteed elements used in the basic illustration
State that non-guaranteed elements are not guaranteed
Show the same premium shown in the basic illustration
Refer the insured to the basic illustration for guaranteed elements and other information

Question 50

General rules and prohibitions

An illustration used to sell a life policy must be clearly labeled

Answer 50

“life insurance illustration” and contain the following info:

The name of the insurer and producer, the producer’s business address, and except where a composite illustration is permitted, the proposed insured name, age and sex.
The illustration’s underwriting or rating classification
The policy’s generic name, name from the insurer (if different) and form number
The initial death benefit
The dividend options are application of non-guaranteed elements, if applicable

Question 51

An insurer or producer using an illustration in life policy sales may not:

Answer 51

Represent the policy as anything other than a life policy
Use non-guaranteed elements in a misleading manner
imply that non-guaranteed elements are guaranteed
Use an illustration that is illegal, incomplete, or self-contradictory; shows performance more favorable that the performance produced by the insurer’s illustrated scale; or unless the policy cannot develop nonforfeiture values, is lapse-supported.
Falsely represent that premium payments will not be required for each policy year in order to maintaining the illustrated death benefits
Use the term “vanish” or “vanishing premium” or similar term imply the policy becomes paid up by suing non-guaranteed elements to pay a portion of future premiums.

Question 52

An illustration that shows the interest rate used to determine the non-guaranteed elements may not

Answer 52

show an interest rate higher than the earned interest rate underlying the discipline current scale

Question 53

A producer using an illustration when selling a life policy must

Answer 53

get a copy of the illustration signed accordingly, give a copy to the applicant, and submit a copy with the application

Question 54

if a policy is issued other than as applied for,

Answer 54

the applicant and producer must sign and date the revised basic illustration at policy delivery

Question 55

A producer not using an illustration when selling a life policy, or applying for a policy other than as illustrated must

Answer 55

certify and have the applicant certify, to that effect in writing on a from from the insurer and submit the form with the application.

Question 56

A basic illustration must be delivered with

Answer 56

the policy and signed before or during policy deliver. the producer must give the insurer and the policy owner a copy

Question 57

An insurer must keep a copy of any illustration and any certification until

Answer 57

3 years after the policy is no longer in force

Question 58

Viatical settlements:

an individual, partnership, corporation, or other entity must

Answer 58

apply, pay a fee for, and obtain a license from the Director in order to act as a viatical settlement provider.

Question 59

The director must investigate each applicant and may issue a license if

Answer 59

the applicant has provided a detailed plan of operation, is competent and trustworthy, has a good business reputation, and has had qualifying experience, training, or education.

Question 60

A viatical settlement provider must file a

Answer 60

viatical settlement contract with the Director and get the Director’s approval of the contract before using it.