Professional Standards & Competencies Flashcards
7 cards from real Insurance practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Professional Standards & Competencies flashcards as text
An agent who offers a client a portion of their commission as an inducement to purchase a policy is committing:
Answer: Rebating
Rebating is the illegal practice of returning part of the premium or commission to induce a person to buy insurance.
Which of the following best describes the concept of 'know your customer' (KYC) as applied to insurance professionals?
Answer: Understanding a client's financial situation, needs, and risk tolerance before making recommendations
KYC in insurance requires agents to gather sufficient information about clients to ensure product recommendations are suitable and appropriate.
Which action demonstrates a violation of client confidentiality by an insurance agent?
Answer: Discussing a client's policy details with their adult child without authorization
Disclosing a client's private policy or health information to a third party without the client's explicit authorization violates confidentiality.
What is the significance of the 'free look' period in insurance policies?
Answer: It gives new policyholders time to review their contract and cancel for a full refund
The free look period (typically 10–30 days) gives policyholders the right to cancel a new policy for any reason and receive a full premium refund.
A producer who is found guilty of misrepresenting policy terms to clients can face which of the following consequences?
Answer: License suspension or revocation, fines, and potential criminal charges
Misrepresentation is a serious violation that can result in license suspension or revocation, substantial fines, and criminal prosecution.
What does 'apparent authority' mean in the context of an insurance agent's professional role?
Answer: Authority that a third party reasonably believes the agent possesses based on the principal's conduct
Apparent authority exists when an insurer's actions lead a reasonable person to believe the agent has authority, even if not explicitly granted.
Which document must a life insurance agent provide to a prospective client comparing the costs of different policies before the sale?
Answer: A buyer's guide and policy summary
Agents must provide a buyer's guide and policy summary to help consumers understand and compare life insurance policy costs and features.