Unit 2 Flashcards
Producers are expected to adhere to all of the following standards to protect consumers and promote suitable sales EXCEPT:
(A) selling to customers’ needs
(B) determining the suitability of recommended products
(C) assessing prospects’ financial ability to pay commissions
(D) full and accurate disclosure
(C) assessing prospects’ financial ability to pay commissions
An insurance company organized and headquartered in Florida can be described as what type of company in Florida?
(A) Alien
(B) Home-based
(C) Foreign
(D) Domestic
(D) Domestic
Which of the following statements regarding types of insurers is NOT correct?
(A) Reinsurers usually deal with group policyowners
(B) Mutual insurance companies are “owned” by their policyowners
(C) Stock insurance companies seek a profit for their shareholders
(D) Fraternal benefit societies must be nonprofit organizations
(A) Reinsurers usually deal with group policyowners
Regarding landmark cases and laws involving the regulation of insurance, which of the following statements is NOT correct?
(A) Insurers are required to disclose when an applicant’s consumer/credit history is being investigated
(B) The Securities and Exchange Commission (SEC) may regulate insurers that sell variable annuities and variable life insurance
(C) The Federal Trade Commission (FTC) directly supervises all insurance marketing activities
(D) The McCarran-Ferguson Act (1945) led directly to our current understanding that the insurance industry is predominantly regulated by state governments
(C) The Federal Trade Commission (FTC) directly supervises all insurance marketing activities
Which of the following statements regarding the National Association of Insurance Commissioners (NAIC) is NOT correct?
(A) The NAIC is empowered to prosecute and punish criminal violators in the insurance industry
(B) The NAIC seeks to preserve state rather than federal regulation of the insurance industry
(C) The NAIC promotes uniformity in state insurance laws and regulations
(D) The NAIC seeks to promote efficient administration of insurance laws and regulations
(A) The NAIC is empowered to prosecute and punish criminal violators in the insurance industry
In an insurance transaction, licensed agents legally represent which of the following?
(A) Insurer
(B) Applicant & insured
(C) State office of insurance regulation
(D) Themselves
(A) Insurer
In Florida, properly licensed and appointed agents may act as brokers in insurance transactions, in which case they may legally represent:
(A) the insurer
(B) the applicant & insured
(C) the state office of insurance regulation
(D) themselves
(B) the applicant & insured
A life insurance company organized in Illinois, with its home office in Philadelphia, is licensed to conduct business in Florida. In Florida, this company is classified as:
(A) a domestic company
(B) an alien company
(C) a foreign company
(D) a regional company
(C) a foreign company
Which of the following is NOT a service provider?
(A) HMO
(B) Benefit plans offering medical services to subscribers
(C) Lloyd’s of London
(D) PPO
(C) Lloyd’s of London
A reinsurer is a company that:
(A) accepts all the risk from another insurer
(B) assumes a portion of the risk from another insurer
(C) cedes the risk
(D) does not take any risk
(B) assumes a portion of the risk from another insurer
The head of a state office of insurance regulation is generally responsible for all of the following EXCEPT:
(A) licensing and supervising agents & brokers
(B) overseeing insurance companies’ marketing practices
(C) issuing rules & regulations
(D) making insurance laws
(D) making insurance laws
In addition to the state, the organization that regulates variable life insurance & variable annuities is the:
(A) Federal Trade Commission (FTC)
(B) National Association of Insurance Commissioners (NAIC)
(C) Securities and Exchange Commission (SEC)
(D) Federal Communications Commission (FCC)
(C) Securities and Exchange Commission (SEC)
The Buyer’s Guide is intended to accomplish all of the following EXCEPT:
(A) help buyers choose the most suitable plan
(B) explain basic product features
(C) provide information about the recommended policy
(D) ensure that buyers obtain the lowest price for insurance
(D) ensure that buyers obtain the lowest price for insurance
The State Guaranty Association guarantees:
(A) that a policy will be issued
(B) that a claim will be paid if an insurer becomes insolvent
(C) that dividends will be paid
(D) the rate of return on a policy
(B) that a claim will be paid if an insurer becomes insolvent
All of the following methods support the sale of insurance through agents and brokers EXCEPT:
(A) independent agency system
(B) personal producing general agency system
(C) career agency system
(D) direct selling system
(D) direct selling system
