Insurance Laws and Rules Quiz and Flashcards

Questions and Answers

Which of the following is an example of defamation?

A review that praises a competitor

A brochure including an untrue statement regarding a competitor's ability to pay claims (correct)

A statement that promotes competition

A truthful advertisement about product features

According to the Colorado Fraud Statute, all of the following must contain a warning against insurance fraud EXCEPT?

Insurance policies

Renewal notices

Claim forms

Certificates of authority (correct)

Paying insurance premiums on a more frequent basis will cause the policy to have:

Higher premiums

Employee or non-contributory group life policies must allow for all of the following EXCEPT:

Insured can determine the benefit amount Signup and view all the answers

A producer who violates a cease and desist order may, after a hearing, be fined up to:

$500 Signup and view all the answers

How many days is the free-look period for life insurance?

15 days Signup and view all the answers

How does the Commissioner attain this position?

Appointed by the governor Signup and view all the answers

As a condition to be approved for a loan, a creditor may require the borrower to:

Obtain an insurance policy through an insurer of the borrower's preference Signup and view all the answers

Which of the following documents are NOT required to mention the Colorado Fraud Statute?

Certificates of authority Signup and view all the answers

Which of the following potential insurance sales would be subject to replacement regulations?

A new policy causing an existing life insurance policy to be surrendered Signup and view all the answers

Ultimately, who is responsible for a producer-generated advertisement?

The insurer is responsible Signup and view all the answers

Which of the following is required for a life insurance Lapse Notice?

Reason stated why the policy will lapse Signup and view all the answers

Which of the following is not a problem when existing life insurance is replaced with new coverage?

Comprehensive coverage may increase under the new policy Signup and view all the answers

If a producer completes an insurance application, collects the initial premium, and issues the appropriate receipt, then:

Coverage will be contingent upon the insurer's underwriting policies Signup and view all the answers

With a life insurance underwriter is determining insurability, it is illegal to base these decisions on:

Sexual orientation Signup and view all the answers

An insurer cannot deny a claim unless:

There is a reasonable explanation of the claim Signup and view all the answers

If an applicant for an annuity refuses to provide suitability information, the producer should:

Obtain the consumer's signed statement documenting his or her refusal to provide suitability information Signup and view all the answers

If a producer is going to deposit any premium into a bank account prior to remitting the funds to the insurer, he/she must use a:

Separate insurance trust account Signup and view all the answers

Interest on life insurance proceeds is:

Required if the claim was not paid within 30 days of the date insurer received the claim Signup and view all the answers

Which of the following words may be used in the advertisement of life insurance or annuities?

Guaranteed is an allowable word Signup and view all the answers

If an annuity application was not taken in person, an insurer must provide the applicant a Buyer's Guide:

Within 5 business days of the insurer receiving the application Signup and view all the answers

From what point must the insurer pay interest on the proceeds of a death claim?

From the date of death Signup and view all the answers

A producer must remit premiums to the insurer within how many days after receipt?

45 days Signup and view all the answers

A license is deemed to be used for a controlled business if, during the immediately preceding 12-month period:

The licensee's total premiums on controlled business exceeded the total premiums on all other business Signup and view all the answers

When recommending the purchase or exchange of an annuity, a producer must determine the suitability of the purchase by performing all of the following EXCEPT:

Determining the marital status of the applicant Signup and view all the answers

Which of the following statements is true regarding the replacement of a life insurance policy in Colorado?

The replacing insurer must maintain copies of all records regarding the replacement for at least 5 years Signup and view all the answers

The USA Patriot Act was signed into law as a response to:

The 9/11 terrorist attacks Signup and view all the answers

If a producer chooses to conduct business under an assumed name, when must notification be given to the commissioner?

Prior to using the assumed name Signup and view all the answers

Renewing a producer's license requires __ hours of continued education every 2 years.

24 hours Signup and view all the answers

When replacing an existing life insurance policy, the replacing insurer must notify the existing insurer within:

5 business days Signup and view all the answers

A producer that only sells insurance to family members is said to be engaging in:

Controlled business Signup and view all the answers

On June 1, 2004, G takes out a $20,000 whole life insurance policy with an accidental death and dismemberment rider. On July 15, 2005, G intentionally overdoses and takes her own life. What will G's beneficiary receive as a death benefit?

$20,000 Signup and view all the answers

If a producer is found to be writing primarily controlled business, then:

The Commissioner will not renew the license Signup and view all the answers

Upon request, when must the Colorado Supplement to the Summary of Benefits and Coverage Form be provided?

Within seven business days upon request Signup and view all the answers

A producer license may be suspended or revoked if the producer is found to be engaging in:

Misrepresentation Signup and view all the answers

When is it appropriate for the producer's spouse to be the primary beneficiary on an applicant's life insurance policy?

When insurable interest exists Signup and view all the answers

What is the maximum amount the commissioner can fine an insurer for each violation of a cease and desist order?

$10,000 Signup and view all the answers

A life insurance applicant realized he failed to disclose material medical history and called the producer. Any changes made to the application must be initialed by the:

Applicant Signup and view all the answers

An insurer that terminates a producer's appointment must inform the Commissioner within how many days?

30 days Signup and view all the answers

Licensing is required for all of the following EXCEPT:

Selling prepaid legal services Signup and view all the answers

When may the Commissioner issue an emergency cease and desist order?

If there is suspicion of an unauthorized person engaging in insurance business without being licensed Signup and view all the answers

Which of the following is a duty of the Commissioner?

Reviewing and approving license applications Signup and view all the answers

Which information is not included in the Colorado Supplement to the Summary of Benefits and Coverage form?

Insurer's prior year financials Signup and view all the answers

What is the Unfair Trade Practices Act?

Originally created to deal with inappropriate use of advertising Signup and view all the answers

Study Notes

Defamation and Insurance Fraud

Defamation example: A brochure that contains false statements about a competitor’s financial capabilities.
Colorado Fraud Statute mandates warnings against insurance fraud in most documents, except certificates of authority.

Insurance Premiums and Policies

Paying insurance premiums frequently results in higher costs.
Non-contributory group life policies do not allow insured individuals to choose their own benefit amounts.

Producer Regulations and Responsibilities

Producers violating cease and desist orders may be fined up to $500 after a hearing.
Insurance coverage from a completed application is contingent on the insurer's underwriting policies.
Producers must remit collected premiums to the insurer within 45 days.

Life Insurance Procedures

The life insurance free-look period is 15 days, allowing cancellation without penalty.
Lapse notices for life insurance must specify the reason for impending policy cancellation.
Insurers pay interest on life insurance proceeds if claims are unpaid for over 30 days.

Annuities and Suitability Requirements

Loans may require borrowers to obtain insurance from a preferred insurer.
Producers should document any refusal for suitability information when applying for an annuity.

Advertising and Marketing Regulations

"Guaranteed" can be used in advertisements for life insurance.
The replacing insurer must maintain records of policy replacement for at least 5 years.

Licensing and Controlled Business

A license is considered for controlled business if premiums from it exceed other premiums in the past year.
Producers focusing solely on family members are said to be engaging in controlled business, risking license non-renewal.

Commissioner Duties and Actions

The Commissioner is appointed by the governor and responsible for reviewing license applications.
An emergency cease and desist order can be issued if unauthorized insurance activities are suspected.
Insurers must inform the Commissioner about producer appointments terminated within 30 days.

Miscellaneous Regulations and Provisions

Insurers cannot deny claims without reasonable justification.
The USA PATRIOT Act was a response to the 9/11 terrorist attacks, enhancing security measures.
Suitability determinations for annuities do not require knowledge of the applicant's marital status.

Death Benefits and Claims

For a suicide case, a beneficiary receives the policy amount unless explicitly excluded.
Changes to an insurance application due to undisclosed information must be initialed by the applicant.

Consumer Protection and Coverage Guidelines

The Colorado Supplement to the Summary of Benefits and Coverage must be provided within seven business days upon request.
Financial information from the prior year is not part of the Colorado Supplement document.
Unfair Trade Practices Act addresses deceptive advertising practices and has been adopted in various states.

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Description

Test your knowledge of laws and rules with this exam review quiz. Questions cover topics like defamation and fraud statutes, helping you prepare effectively. Perfect for students and professionals looking to brush up on legal terminology.

Laws and Rules Exam Review