Life Insurance Advertising Regulations Quiz

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Questions and Answers

What must an advertisement for a life insurance product clearly identify?

Type of policy benefits

The health status of the insured

An insurer (correct)

Premium amounts

Which phrase must appear in the title of an advertisement for life insurance or annuity?

Guaranteed returns

Investment opportunity

Life insurance or annuity (correct)

Flexible term options

What is required when using testimonials in advertisements?

They must be from any individual

They must clearly state if they are paid endorsements (correct)

They can represent anyone's opinion

They should be edited for clarity

Which of the following must be included in life insurance policy illustrations?

Name and business address of the insurer Signup and view all the answers

What must an advertisement that uses terms like 'no medical examination required' include?

Clarification that issuance may depend on health questions Signup and view all the answers

What type of policies are not subject to illustration provisions?

Variable life policies Signup and view all the answers

Which information must be included regarding the proposed insured in policy illustrations?

Name, age, and sex Signup and view all the answers

What is the required disclosure regarding policies with non-level premiums?

Prominently display premium changes Signup and view all the answers

Which detail is NOT required to be included in every insurance policy form issued in the state?

The geographical area covered by the insurance Signup and view all the answers

What is the minimum type size required for printed portions of an insurance policy and any endorsements?

10-point type Signup and view all the answers

What is the deadline for filing annual statements by authorized insurers?

March 1 Signup and view all the answers

Which of the following reports must be filed quarterly by authorized insurers?

Statement of financial condition Signup and view all the answers

For how long must insurers maintain a file of advertisements?

4 years or until the next examination Signup and view all the answers

What must be done if an insurer fails to file its annual statement on time?

The Commissioner may revoke its certificate of authority Signup and view all the answers

Which statement about advertisements for insurance is true?

Direct-response advertisements must not imply cost savings unless true. Signup and view all the answers

What is the penalty for not filing quarterly reports on time?

The insurer will be fined. Signup and view all the answers

Which of the following producers are exempt from continuing education requirements?

Producers aged 65 or older with 15 years' experience Signup and view all the answers

What is a requirement for individual producers selling annuity products?

4-hour one-time training course Signup and view all the answers

Who is responsible for enforcing the Louisiana Insurance Code?

The Commissioner of Insurance Signup and view all the answers

What must a producer do if they are unable to comply with renewal procedures due to military service?

Request a waiver of the renewal procedures Signup and view all the answers

How long is the term for the Commissioner of Insurance?

4 years Signup and view all the answers

What can the Commissioner of Insurance issue if there are suspected violations of the Insurance Code?

Cease and desist orders Signup and view all the answers

What does the examination of insurers by the Commissioner aim to ensure?

Compliance with state laws and regulations Signup and view all the answers

Which of the following producers is NOT exempt from continuing education requirements?

A producer aged 30 with 12 years of experience Signup and view all the answers

What is the maximum fine that the Commissioner may impose for each violation committed by a producer?

$500 Signup and view all the answers

What action is taken if a producer intentionally withholds premium payments?

Charge of theft Signup and view all the answers

If a producer's license is revoked a second time, what is the duration before they can apply for a new license?

5 years Signup and view all the answers

What is required for a producer to challenge a license denial by the Commissioner?

Written demand for a hearing within 30 days Signup and view all the answers

Under what condition can a producer be charged with unauthorized use?

If they lack intent to permanently deprive the owner Signup and view all the answers

What is the maximum total fine for multiple violations during a calendar year?

$10,000 Signup and view all the answers

What action may be taken against a producer besides fines for violations?

Suspending or revoking their license Signup and view all the answers

What can a producer do after a license revocation if they decide to seek judicial review?

File for a new application within 5 years Signup and view all the answers

Which of the following actions is prohibited when using an illustration for a life insurance policy?

Implying that premium payments may not be required for the policy Signup and view all the answers

What is the purpose of Guaranty Associations?

To protect policyowners from insurer incompetence and insolvency Signup and view all the answers

Which statement must a life and health insurance policy disclaimer contain?

The name and address of the Guaranty Association and insurance department Signup and view all the answers

What is a lapse-supported illustration in the context of life insurance?

An illustration that fails the self-supporting test Signup and view all the answers

Which of the following is NOT a requirement for the disclaimer on life and health insurance policies in Louisiana?

A detailed selling strategy for agents to follow Signup and view all the answers

What is prohibited regarding the payment guarantees in life insurance illustrations?

Stating that payments are guaranteed Signup and view all the answers

Which statement about nonforfeiture values is accurate?

Only some instances allow use of lapse-supported illustrations Signup and view all the answers

What should insurers ensure while describing nonguaranteed elements of a policy?

They should be fully transparent and clear Signup and view all the answers

What is the maximum prison time for embezzlement involving an amount less than $5,000?

1 year Signup and view all the answers

What must an individual convicted of a crime involving dishonesty obtain to work in the insurance business affecting interstate commerce?

1033 waiver Signup and view all the answers

What are the possible penalties for engaging in the business of insurance after a felony involving dishonesty or breach of trust?

Fine, imprisonment up to 5 years, or both Signup and view all the answers

Under the Gramm-Leach-Bliley Act, when must an insurance company provide two disclosures to a customer?

When the relationship is established and before disclosing protected information Signup and view all the answers

What is the civil penalty for violating Section 1033 as stated in Section 1034?

Up to $50,000 or the amount received, whichever is greater Signup and view all the answers

What must an insurance company do before disclosing a consumer's nonpublic personal information to a third party?

Inform the consumer in writing and provide an opportunity to opt-out Signup and view all the answers

Which of the following is NOT a reason an insurance company can disclose nonpublic personal information under the Gramm-Leach-Bliley Act?

Consumers do not respond to inquiries Signup and view all the answers

What annual requirement does the Gramm-Leach-Bliley Act impose on insurance companies regarding consumer privacy?

Annual privacy disclosures Signup and view all the answers

Study Notes

Insurance Regulation

Insurance policies are covered by regulations unique to each state
Key terms for the exam include authorized insurer, cease and desist, commission payment, commissioner, domicile, home office, inducement, moral turpitude, reciprocity, and statute
A person cannot sell, solicit, or negotiate insurance without a license for the appropriate line of authority
Licensing ensures producers meet educational and ethical standards
Insurance professionals must be properly licensed for a specific line of authority before transacting insurance
An insurance license is not required if a person does not receive a commission for transactions
An executive administrative managerial or clerical person may not be required to get a license
Life, variable life, variable annuity, health, property, casualty, personal lines, title, credit, travel, and surplus lines are some types of insurance lines of authority
Producers can be individuals or business entities
Individual producer qualifications include being at least 18 years of age, residing in the state, having no acts that could lead to denial, suspension, or revocation, and having completed a prelicensing course
Business entities must obtain a producer's license and members/employees must be registered under the entity's license
Nonresident producers must be licensed in their home state and complete an application
Temporary licenses are issued for specific circumstances for a maximum of 180 days
Temporary licenses may be issued to surviving spouse, next of kin, employee of a deceased or disabled producer, a member or employee of a business entity, a designee of a licensed producer in active service, or any other person deemed fit by the Commissioner
The Commissioner may require temporary licensees to be monitored

Business Regulation

A business entity is a corporation, association, partnership, limited liability company, limited liability partnership, or other legal entity
Business entities act as producers if they obtain producer's licenses
A member or employee must register with the Department of Insurance under the business's license and obtain an individual producer's license

Resident vs. Nonresident

Individuals not residing in Louisiana can obtain a nonresident producer license
Current resident license with good standing, requested license with payment of the licensing fees, providing the commissioner with a uniform application or the home-state application, and the producer's home state awarding non-resident producer licenses under reciprocity are qualifications for a nonresident producer license

Temporary Licensing

Temporary licenses may be issued, are valid for 180 days
Temporary licenses are issued to certain people, like surviving spouses or family members of deceased insured producers

Expiration

Producer licenses remain in effect unless revoked, suspended, or non-renewed
Licenses ending in an even number expire in even-numbered years, and licenses ending in an odd number expire in odd-numbered years
Renewals must be completed by the last day of the birth month, 90 days before expiration

Renewal

Producers renew licenses every 2 years
Renewals are due by the last day of the producer's birth month

Change of Name and Address

Licensees must notify the Commissioner of any changes to residential, mailing, business, or email address or phone number within 30 days
Name changes must also be reported within 30 days
A $50 penalty will be applied for violations

Assumed Names

Producers must notify the Commissioner before using assumed or trade names
Unregistered trade names result in a fine of up to $250, with additional fines for sustained use (up to $5,000)

Reporting of Actions

Insurance producers must report administrative actions or convictions in other jurisdictions to the Commissioner within 30 days
Conviction reports must be made within 30 days

Continuing Education

All licensed producers must complete 24 hours of continuing education instruction or self-study and have at least 3 hours in ethics
Producers who write property, casualty, property and casualty or personal lines must also complete 3 credit hours in flood insurance
Up to 10 hours of excess CE credits may be carried forward to the next renewal period
A licensed agent or broker who belongs to and participates in a national insurance association may receive 4 CE credits
Producers who are 65 or older, and have 15 years, as well as members of the legislature and are renewing their licenses, may be exempt from continuing education requirements

Company Regulation

Insurance companies need to obtain a Certificate of Authority from the Commissioner
The certificate indicates the Commissioner has examined financial stability and organization
Insurers organized in other states can become domestic insurers after meeting organizational and licensing requirements
Domestic insurers can transfer domicile to another state, but must cease being a domestic, and become a foreign insurer

Producer Appointment

The insurer must file an appointment notice within 15 days of the agency agreement's execution
The insurer pays appointment fees.
The Commissioner has 30 days to verify that the producer is eligible for appointment

Termination of Appointment

If an insurer terminates a producer's appointment, the Commissioner must be notified within 30 days of the effective date of termination
Notifications are sent to the producer, along with the opportunity to send comments to the Commissioner

Unfair Claims Settlement Practices

Misrepresenting policy details or promptly processing claims is considered unfair practices

Policy Forms

Policy forms in Louisiana must comply with Insurance Code standards
Policies need to clearly indicate the names of parties, subject, risks, premium, and conditions

Annual Reports

Insurers in Louisiana must file annual and quarterly financial statements with the Commissioner
Statements are on Commissioner-required forms, confirmed by 2 company officers, and filed electronically

Advertising

Insurers must maintain an advertising file for 4 years or any future exam date
Advertisements must be clear, accurate, and not misleading
For life insurance advertisements, certain details must be clearly included like identifying an insurer, including life insurance or annuity, identifying the source of statistics, clarifying non-medical policies, prominent display of any limitations on graded or modified policies, and ensuring testimonials must be genuine and state any compensation
Advertisements for products targeting students cannot imply endorsement by the school

Foreign and Alien Insurers

Foreign and alien insurers licensed in Louisiana are not examined by the Commissioner. Instead, the Commissioner may accept an examination report provided by the insurer's home state.

Examination of Books and Records

The Commissioner has the power to examine and investigate insurance company affairs
Examining insurers to ensure compliance with state laws

State Regulation

The Commissioner is responsible for enforcing Louisiana Insurance Code provisions
The Commissioner conducts legal hearings, issues cease and desist orders, examines insurers, and issues/renews/suspends/revokes licenses

Misrepresentation

False or misleading statements regarding insurance policies, dividends, etc., are illegal
Insurance businesses cannot make oral or written statements that omit material facts on policy applications, renewals, claims, or insurer financial status

Rebating

Offering inducements/rebates that aren't in the policy is forbidden
Illegal rebates include rebates on premiums, special favors, advantages in dividends, or stocks, bonds, profits

Boycott, Coercion, and Intimidation

Engaging in unfair actions to influence agents or clients, or to create a monopoly is illegal

False Advertising

Any inaccurate, deceptive, or misleading advertising is prohibited
Advertisements are about policies, benefits, premium payments, financial conditions, or policy purpose

Discrimination

Discriminating against individuals based on factors like gender or race for insurance rates, premiums, or benefits is illegal

Refusing to Insure

Insurers are prohibited from refusing to insure individuals solely due to certain characteristics like sex, marital status, race, religion, or national origin
Insurers cannot deny insurance for policies where coverage depends on an existing policy

Unfair Financial Planning Practices

Producers must disclose all their financial planning activities to prospective clients

Insurance Fraud

Making false statements about insurance policies, premiums, payments, or insurer financial status is illegal

Privacy of Consumer Financial Information

Consumers' financial records are protected and cannot be accessed without consent.
Insurance companies disclose their privacy policies annually

Federal Credit Reporting Act

The Fair Credit Reporting Act mandates that consumer reports are accurate and confidential
Insurance companies must not use certain information for assessing risk

Fraud and False Statements

Fraudulent or false statements in policy applications or claims are illegal
Insurers or producers who commit fraudulent acts may face penalties
Deliberate omission of fact on policy documents is against the law

National Do Not Call List

Regulations regarding telemarketing calls and the national do not call list
Telemarketers must verify and follow rules and regulations

Policy Replacement

Regulations require the replacing insurer to notify the existing insurer within 5 days of the intent to replace and the policyowner within 5 days of notification
Insurers must provide a "free-look" period of 30 days to allow policyowners to review replaced policy before a transaction is finalized, and the records need to be maintained for at least 5 years

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Description

Test your knowledge on the regulations and requirements for advertising life insurance products. This quiz covers essential topics like disclosures, testimonials, and policy illustrations. Perfect for anyone studying insurance or looking to ensure compliance in their advertising efforts.