Insurance MCQ

Ken is a producer who has obtained Consumer Information Reports under false pretenses. Under the Fair Credit Reporting Act, what is the maximum penalty that may be imposed on Ken?  a) $1,000 b) $3,000 c) $5,000 d) $7,000 Answer: c) $5,000

Crimes that involve the business of insurance and affect interstate commerce fall under US Code 1033. Any violations would be prosecuted by  a) the US Attorney General b) the Director of Insurance c) the Insurance Department d) the FBI Answer: a) the US Attorney General

Karen is a producer who has obtained personal information about a client without having a legitimate reason to do so. Under the McCarran-Ferguson Act, what is the minimum penalty for this?  a) $0 b) $5,000 c) $10,000 d) $15,000 Answer: c) $10,000

Under a contract of adhesion,  a) there is the potential for an unequal exchange of value b) the insurer's obligations are dependent upon certain acts of the insured individual c) the terms must be accepted or rejected in full d) only one party makes any kind of enforceable promise Answer: c) the terms must be accepted or rejected in full

A beneficiary change can occur  a) only upon the request of the revocable beneficiary b) only on specified dates within the policy c) normally at any time during the policy term d) at no time Answer: c) normally at any time during the policy term

Under the subrogation clause, legal action can be taken by the insurer against the  a) responsible third party b) beneficiary c) policyowner d) State Answer: a) responsible third party

Which of the following is an annuity that is linked to a market-related index?  a) Market-related annuity b) Equity-indexed annuity c) Deferred-risk annuity d) Fixed-amount annuity Answer: b) Equity-indexed annuity

Which type of multiple protection policy pays on the death of the last person?  a) Joint life policy b) Survivorship life policy c) Dual life policy d) Multiple life policy Answer: b) Survivorship life policy

During the first two years a life insurance policy is in force, the insurer may contest a policy for all of the following reasons EXCEPT  a) Misstatement of age in the application b) Material misrepresentation in the application c) Fraud in the purchase of the policy d) Material concealment in the purchase of a policy Answer: a) Misstatement of age in the application

An agent who sells an individual life insurance policy in MUST deliver to the policy owner  a) An Underwriting Report Disclosure b) A Prospectus and Ledger Statement c) A Policy Summary and Buyer's Guide d) An Annual Financial Statement of the insurer Answer: c) A Policy Summary and Buyer's Guide

Which of the following basics is an agent's fiduciary responsibility?  a) Collecting premiums and paying them to the insurance company b) Maintaining a separate bank account for each insurance company the agent represents c) Acting as a referee in the event of a disagreement between an insured and the insurance company d) Advising prospective insureds of the lowest rates available Answer: a) Collecting premiums and paying them to the insurance company

Who reports an agent's termination of appointment to the CFO?  a) The agent b) The insurer c) The Insurance Department d) The State Answer: b) The insurer

When must a claim on a life insurance policy be paid after proof of loss has been received by the insurer?  a) Promptly b) Within 10 days c) Within 20 days d) Within 30 days Answer: a) Promptly

Under the Federal Fraud and False Statements Act, interstate commerce includes  a) Mexico b) Canada c) Bahamas d) Puerto Rico Answer: d) Puerto Rico

In order to act as an insurance agent, an agent must hold a valid insurance license and  a) Be appointed by an authorized insurance company b) Reside in this state c) Maintain an office in this state d) Obtain a certificate of authority Answer: a) Be appointed by an authorized insurance company

In accordance with federal fraud and false statements regulation, a prohibited person cannot transact insurance business without  a) The signed approval of the insurer b) A court order from the U.S. Attorney General c) The written consent of an insurance regulatory official d) Being grandfathered in by employment Answer: c) The written consent of an insurance regulatory official

The life insurance buyer's guide includes information about all of the following EXCEPT how to  a) take civil action against an insurer b) decide how much life insurance to buy c) compare life insurance policy rates d) compare life insurance policy requirements Answer: a) take civil action against an insurer

Which of the following is an example of replacement?  a) Canceling a term insurance policy to purchase a long-term care policy b) Canceling a whole life policy to purchase a term policy c) Canceling a term policy to purchase a disability policy d) Canceling a major medical insurance policy to purchase a disability policy Answer: b) Canceling a whole life policy to purchase a term policy

A group policy may be issued to a labor union. The members eligible for insurance under the policy shall be  a) members of any union b) all of the members of the union c) only members of the union who are under the age of 65 d) healthy members of the union Answer: b) all of the members of the union

Replacing an existing life insurance policy with a new one may result in  a) capital gains tax b) small business taxation c) an illegal transaction d) a surrender charge Answer: d) a surrender charge