Chapter 17 State Specific Portion: Common To Life And A&h Insurance Regulation

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| By Vivian Tayor
Vivian Tayor, Insurance & Finance
Vivian, with over a decade of financial and insurance leadership, founded Celevi CE, an elite continuing education organization, aiming to empower industry experts with trust and respect.
Quizzes Created: 19 | Total Attempts: 40,762
Questions: 14 | Attempts: 1,496

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Regulation Quizzes & Trivia

Questions and Answers
  • 1. 

    A license that willfully violates the Insurance code is subject to:  

    • A.

      Criminal and administrative penalties

    • B.

      Criminal sanctions

    • C.

      Administrative penalties

    • D.

      A felony

    Correct Answer
    A. Criminal and administrative penalties
    Explanation
    A license that willfully violates the Insurance code is subject to criminal and administrative penalties because such violations are considered serious offenses that can result in legal consequences. Criminal penalties may include fines, imprisonment, or both, while administrative penalties may include license suspension or revocation, fines, or other disciplinary actions. This ensures that individuals or entities who intentionally violate the Insurance code are held accountable and deter others from engaging in similar misconduct.

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  • 2. 

    Dan, a licensed life producer, wrote a policy that covers the life of his brother. Since the policyowner was related, Dan refunded the commission earned on this policy to him. This is considered to be:  

    • A.

      An acceptable business practice

    • B.

      An Unfair claims Settlement practice

    • C.

      An Unfair Trade practice

    • D.

      An unfair Discrimination

    Correct Answer
    C. An Unfair Trade practice
    Explanation
    This is considered to be an Unfair Trade practice because Dan refunded the commission earned on the policy to his brother due to their relationship. This practice is unfair because it gives preferential treatment to a family member, which goes against the principles of fair and equal treatment in the insurance industry. It creates an unfair advantage for the policyowner and can potentially harm other policyholders who do not have the same familial relationship.

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  • 3. 

    One of the requirements for receiving an insurance advisor’s license is filing for a _____ bond.

    • A.

      $1,000

    • B.

      $2,000

    • C.

      $5,000

    • D.

      $10,000

    Correct Answer
    A. $1,000
    Explanation
    To receive an insurance advisor's license, one of the requirements is filing for a $1,000 bond. This bond serves as a form of financial protection for clients in case the advisor engages in any unethical or fraudulent behavior. By requiring this bond, it ensures that the advisor is financially accountable for their actions and provides a level of security for clients who may suffer financial losses due to the advisor's negligence or malpractice.

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  • 4. 

    A producer who omits a statement which may mislead or deceive the persons addressed has committed?

    • A.

      Defamation

    • B.

      Twisting

    • C.

      Coercion

    • D.

      D. Misrepresentation

    Correct Answer
    D. D. Misrepresentation
    Explanation
    Misrepresentation refers to the act of providing false or misleading information with the intention to deceive or mislead others. In this context, if a producer intentionally omits a statement that may mislead or deceive the persons addressed, it can be considered as an act of misrepresentation. This can be seen as a violation of ethical standards and can lead to legal consequences.

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  • 5. 

    Within the State of Maryland, health Organizations are regulated only by the:  

    • A.

      Maryland insurance Administration and the Department of Health and Mental Hygiene

    • B.

      Department of Health and Mental Hygiene

    • C.

      Department Office of Aging

    • D.

      Maryland Insurance Administration

    Correct Answer
    D. Maryland Insurance Administration
    Explanation
    Health organizations within the state of Maryland are regulated by the Maryland Insurance Administration. This means that the Maryland Insurance Administration is responsible for overseeing and regulating the activities of health organizations in the state, ensuring that they comply with relevant laws and regulations. The Department of Health and Mental Hygiene may also have some involvement in the regulation of health organizations, but the primary regulatory authority lies with the Maryland Insurance Administration. The Department Office of Aging is not mentioned as a regulatory authority for health organizations in Maryland.

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  • 6. 

    All of the following events will terminate a producer’s Certificate of Appointment EXCEPT:  

    • A.

      A new Commissioner is put into office

    • B.

      A producer’s license expires and is not renewed

    • C.

      A termination is issued by the appointing insurer

    • D.

      A producer’s license is suspended or revoked by the Department of Insurance

    Correct Answer
    A. A new Commissioner is put into office
    Explanation
    When a new Commissioner is put into office, it does not directly affect the producer's Certificate of Appointment. The Certificate of Appointment is issued by the appointing insurer, and it can be terminated if the producer's license expires and is not renewed, if a termination is issued by the appointing insurer, or if the producer's license is suspended or revoked by the Department of Insurance. However, the appointment of a new Commissioner does not have a direct impact on the producer's Certificate of Appointment.

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  • 7. 

    Fair discrimination is allowed. Unfair discrimination is not. Select the choice that is considered, “Unfair”.  

    • A.

      Requiring a 23 year old male to pay more for being a substandard risk

    • B.

      Requiring certain persons in the same classification to pay more for coverage

    • C.

      Requiring a higher Life Insurance premium for a person involved in a hazardous occupation

    • D.

      Permitting a 50 year old male to pay a lower premium for Health Insurance than a 50 year old female

    Correct Answer
    B. Requiring certain persons in the same classification to pay more for coverage
    Explanation
    The choice "Requiring certain persons in the same classification to pay more for coverage" is considered "unfair" because it involves charging different individuals within the same classification different premiums for coverage. Fair discrimination allows for differences in premiums based on risk factors such as age or occupation, but it does not allow for discrimination within the same classification. Charging different premiums to individuals in the same classification could be seen as discriminatory and unfair.

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  • 8. 

    The Commissioner must examine the affairs, transactions,accounts, records, and assets of each domestic insurer at least every:

    • A.

      3 years

    • B.

      5 years

    • C.

      2 years

    • D.

      1 years

    Correct Answer
    B. 5 years
    Explanation
    The correct answer is 5 years because the Commissioner is required to examine the affairs, transactions, accounts, records, and assets of each domestic insurer at least every 5 years. This ensures that the insurer is operating in compliance with regulations and maintains financial stability. Regular examinations help identify any potential issues or risks that may affect the insurer's ability to fulfill its obligations to policyholders. By conducting these examinations every 5 years, the Commissioner can effectively monitor the insurer's operations and take necessary actions if any irregularities are found.

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  • 9. 

    Which of the following people would receive a commission from the sale of a policy?  

    • A.

      The consultant who found the agent for the client

    • B.

      The agent who took the client’s application

    • C.

      A retired agent who recommended the client to the agent

    • D.

      One of the agent’s clients who referred the customer

    Correct Answer
    B. The agent who took the client’s application
    Explanation
    The correct answer is the agent who took the client's application. This is because the agent is directly involved in the sale of the policy by taking the client's application. They would typically receive a commission as a result of their role in the sales process. The other options, such as the consultant who found the agent, a retired agent who recommended the client, or one of the agent's clients who referred the customer, may play a role in the process but would not typically receive a commission from the sale of the policy.

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  • 10. 

    When an authorized insurance company receives a claim from a covered insured they must complete the investigation of the claim:

    • A.

      Within 15 days

    • B.

      Promptly

    • C.

      Within 90 days

    • D.

      Within 30 days

    Correct Answer
    B. Promptly
    Explanation
    The term "promptly" implies that the insurance company is expected to complete the investigation of the claim in a timely manner. This means that they should not unnecessarily delay the process and should handle it with reasonable speed and efficiency. The specific time frame for completing the investigation is not mentioned, but it is understood that the company should act promptly and not prolong the process unnecessarily.

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  • 11. 

    The head of the Maryland insurance Administration is:  

    • A.

      The Lt. Governor

    • B.

      The Government

    • C.

      The commissioner

    • D.

      The Deputy Commissioner

    Correct Answer
    C. The commissioner
    Explanation
    The correct answer is "The commissioner." The head of the Maryland insurance Administration is referred to as the commissioner. This individual is responsible for overseeing and regulating the insurance industry in Maryland. They play a crucial role in ensuring that insurance companies comply with state laws and regulations, protecting consumers, and promoting fair and competitive insurance practices in the state.

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  • 12. 

     Which of the following is a true statement?  

    • A.

      The Commissioner is elected by the majority of the Senate

    • B.

      The Commissioner should advise the Governor on all matter regarding insurance

    • C.

      The Commissioner shall serve a term of 6 years

    • D.

      The Commissioner is entitled to a payment from the State Insurance Fund

    Correct Answer
    B. The Commissioner should advise the Governor on all matter regarding insurance
    Explanation
    The correct answer is "The Commissioner should advise the Governor on all matter regarding insurance." This statement indicates that it is the responsibility of the Commissioner to provide guidance and recommendations to the Governor on any issues related to insurance.

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  • 13. 

    Insurance trade practices are regulated by whom?  

    • A.

      The SEC

    • B.

      The Federal Trade Commission

    • C.

      The State

    • D.

      The NASD

    Correct Answer
    C. The State
    Explanation
    Insurance trade practices are regulated by the state. Each state has its own insurance department or regulatory agency that is responsible for overseeing insurance companies and ensuring that they comply with state laws and regulations. These departments set standards for fair business practices, investigate consumer complaints, and enforce penalties for any violations. The state's role in regulating insurance trade practices is crucial in protecting consumers and maintaining the integrity of the insurance industry.

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  • 14. 

    A licensed insurance producer represents which of the following?  

    • A.

      The Insurer

    • B.

      The Department of insurance

    • C.

      The national Association of Insurance Commissioner

    • D.

      The consuming public

    Correct Answer
    A. The Insurer
    Explanation
    A licensed insurance producer represents the insurer. They act as an intermediary between the insurer and the consumer, selling insurance products on behalf of the insurer. They are authorized to negotiate and bind insurance policies, provide advice and assistance to the insured, and handle claims on behalf of the insurer. The producer's primary responsibility is to represent the interests of the insurer and ensure that the insurance policies sold align with the insurer's guidelines and objectives.

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Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

  • Current Version
  • Mar 21, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Mar 25, 2012
    Quiz Created by
    Vivian Tayor
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