Insurance Professional Standards & Competencies 3

Question 1

Which professional designation is awarded by The American College and focuses on life insurance and financial planning competencies?

Accepted Answer

CLU

Answer

The Chartered Life Underwriter (CLU) designation, awarded by The American College, signifies advanced expertise in life insurance and financial planning.

Question 2

What does errors and omissions (E&O) insurance protect an insurance agent against?

Accepted Answer

Claims arising from professional mistakes or negligence

Answer

E&O insurance covers agents for claims resulting from errors, omissions, or negligent acts in the performance of professional duties.

Question 3

Which of the following is considered an unfair trade practice in the insurance industry?

Accepted Answer

Making false statements about a competitor's financial condition

Answer

Making false or misleading statements about a competitor's financial condition is a prohibited unfair trade practice under insurance regulations.

Question 4

An agent who replaces an existing policy with a new one primarily to earn additional commissions, to the detriment of the client, is engaging in:

Accepted Answer

Churning

Answer

Churning involves replacing policies repeatedly to generate commissions without a legitimate benefit to the policyholder.

Question 5

What is the primary role of the National Association of Insurance Commissioners (NAIC) regarding professional standards?

Accepted Answer

Developing model laws and regulations for states to adopt

Answer

The NAIC develops model laws and regulations that individual states can adopt to promote uniformity in insurance regulation.

Insurance Practice Test

Insurance Practice Test

Insurance Professional Standards & Competencies 3