quiz 2 prep 03b

1. An agent or broker may charge an extra fee for services that go above and beyond what are considered normal duties. Which of the following is NOT considered an extra service?
Application paperwork
Services performed as a convenience to the insured that result in extra expense to the broker or agent
Additional activities
Additional research

A- The extra services may include: a) Additional research; b) Additional activities; c) Services performed as a convenience to the insured that result in extra expense to the broker or agent.

2. After providing an opportunity for a hearing, the Commissioner may deny an application for a license based on the following reasons EXCEPT:
the applicant lied on the application
the applicant has acted as a licensed person before the license was issued
the applicant is disabled
the applicant was convicted of a felony

C-No disabled person may have an application denied strictly due to being disabled.

3. Every applicant for a license to act as an agent must have filed with the Commissioner:
a notice of appointment to do business in the state.
an application for employment with the company employed with.
a request for application prior to being licensed in the state.
a license number to be approved prior to receiving a license.

A- Every applicant for a license to act as an agent must have filed with the Commissioner a notice of appointment to do business in the state of California.

4. When can a partnership continue if a new partner joins?
After the Commissioner is notified and a new license is issued.
After the department is notified within 30 days and the changes are approved.
After the new partner is issued a license by the department and the old license is terminated.
After all the partners file a written notice with the Commissioner within 45 days.

B- The paperwork for this change needs to be submitted and received within 30 days of the change.

5. All of the following are examples of fiduciaries EXCEPT:
Executors
Administrators
Corporate directors
Vendor

D- A vendor doesn`t handle the affairs and funds of clients, but typically works as a retail service.

6. A Fire and Casualty Agent of more then 4 years is required to continue their education by completing:
a total of 55 hours during the first 2 years of licensing.
a total of 30 hours per license term.
a total of 50 hours during the first 2 years of licensing.
a total of 100 hours during the first 4 years of licensing.

B- Fire and Casualty agents or more then four years are required to complete 30 hours of continuing education. FC agents of less then 4 years are required to complete 25 hours per year.

7. To handle long term care insurance, an agent of more then four years must satisfy the continuing education requirement of:
8 hours of LTC training each license term.
an 8 hour course in each of the first 4 years of licensing.
a 4 hour course in each of the first 4 years of licensing.
a 4 hour course in each of the first 2 years of licensing.

A- 8 hours of LTC training each license term is required. (terms are 2 years)

8. Which of the following is NOT true about the California Insurance Code and the California Code of Regulations.
The CIC is written, updated, and changed by the California State legislature.
The CIC gives the Commissioner the power to institute rules and regulations which are called the California Code of Regulations.
The CIC and the CCR are a complete guide to ethical behavior.
The Department of Insurance implements, enforces and monitors the CIC.

C- These codes are not a complete guide for ALL ethical behavior.

9. In order to update, add or change a statute a bill must be passed by the legislature and then presented to the governor. If the statute is passed, it will go into effect:
immediately
on the next fiscal year
on the next January 1st
on the next August 1st

C- On the next January first if there are 90 days prior to the first of January. If not, the bill must wait until the following January first.

10. A licensee may surrender his/her license:
after notifying the Commissioner and a mandatory 30 day waiting period.
upon written notice to the Department of Insurance at any time.
after the termination of employment with an insurer.
after written notice to the Department and the Commissioner after the next January 1.

B- There is no requirement other than sending a written notice to the DOI.

11. If a license is in the possession of the insurer or the licensee`s employer, the licensee may surrender his/her license:
after notifying the Commissioner and a mandatory 30 days waiting period.
at any time.
after the termination of employment with an insurer.
after written notice is delivered to the Commissioner.

D- The most correct answer will include written notice.

12. An organization ceases to exist as an entity eligible to hold a license upon all of the following EXCEPT:
upon dissolution of a co partnership or upon any change in membership of a co partnership.
upon the termination of an association.
upon the termination of a key employee.
upon dissolution of a corporation.

C- Key employees do not affect the existence of an entity or its ability to retain a license.

13. What is the difference between an admitted and a non-admitted insurer?
An admitted insurer is a company that has met most of the qualifications designed by the DOI and has received a Certificate of Authority from the DOI to transact insurance in California, whereas a non-admitted insurer has not applied or has been denied.
An admitted insurer is a company that has met all of the qualifications designed by the DOI and received a Certificate of Authority from the DOI to transact insurance in California, whereas a non-admitted insurer has not complied or been denied.
An admitted insurer has met all the qualifications designed by the DOI but hasn`t received a Certificate of Authority because they are not licensed in the state of California and a non-admitted insurer is licensed in the state of California.
A non-admitted insurer is a company that has met all of the qualifications designed by the DOI and has received a Certificate of Authority from the DOI to transact insurance in California, whereas an admitted insurer has not complied or been denied.

B- Remember, admitted is `admitted` in California.

14. The marketing/sales department is responsible for:
receiving applications for insurance and then deciding if the company should approve or reject the application.
receiving claim requests, evaluating them, and paying those claims that are covered by the terms of the contract and rejecting those that are not.
advertising, promoting and distributing an insurer`s products to the public.
using claims history, statistics, and computer data to predict losses.

C- The marketing department doesn`t handle claims, applications, or premiums.

15. The actuarial department is responsible for:
receiving applications for insurance and then deciding if the company should approve or reject the application.
receiving claim requests, evaluating them and paying those claims that are covered by the terms of the contract and rejecting those that is not.
advertising, promoting and distributing an insurer`s products to the public.
using claims history, statistics and computer data to predict losses.

D- The actuarial department deals with `actual` facts and data to help in ratemaking, etc.

16. According to the qualifications of an insurer under the California Code a `person` can be any of the following EXCEPT:
a human being at least age 16 who is competent and not intoxicated
a corporation
a trust
an estate of a deceased person

A- Age limit is 18.

17. Insolvency means:
a company has more earned premium than claims made
a company has more claims than earned premium to pay for those claims
an insurer`s inability to meet its financial obligations when they are due
an insurer`s inability to meet the standards set by the DOI

C- Earned Premium is not typically a factor in the financial strength of a company. It involves premiums collected, expenses, and losses absorbed.

18. What is the role of the Commissioner and the Department of Insurance in relation to consumers?
The Commissioner and the DOI are responsible for regulating the conduct of agents and insurers.
The Commissioner and the DOI are responsible for making sure the public is given the opportunity to purchase insurance.
The Commissioner and the DOI are responsible for making sure companies bring in more income than claims paid out.
The Commissioner and the DOI are responsible for advertising to the public the roles and responsibilities of insurance.

A- Protection, regulation, and conduct of insurance companies and agents.

19. What is the significance of the SEUA case of 1944?
The court decided the federal government should regulate insurance.
The court exempted the insurance industry from the federal regulation required for most interstate commerce industries.
The court gave authority to the federal government to apply antitrust laws to the insurance business that was not being regulated by the state level.
The court established the right of the states, instead of the federal government, to regulate insurance.

A- This law overturned the Paul vs. Virginia legislation.

20. Which court case reversed the Paul vs. Virginia case of 1868?
McCarren-Ferguson Act of 1945
Public Law 15
SEUA case of 1944
Houghton-Mifflin case of 1938

C- No further explanation is needed here.