Insurance Professional Standards & Competencies 5

Question 1

In insurance, which term refers to the legal concept that prevents a party from asserting a position inconsistent with one previously taken if the other party relied on the earlier position?

Accepted Answer

Estoppel

Answer

Estoppel prevents an insurer from denying coverage based on a position it previously abandoned if the insured relied on that position to their detriment.

Question 2

An insurance agent's license can be suspended for failing to notify the state insurance department of which of the following within the required timeframe?

Accepted Answer

A felony criminal conviction

Answer

Most states require agents to report felony convictions to the insurance department within a specified period, and failure to do so can result in license suspension.

Question 3

Which professional competency involves an agent's ability to analyze a client's existing coverage and identify protection gaps?

Accepted Answer

Needs analysis

Answer

Needs analysis is the process of reviewing a client's current coverage, financial situation, and life circumstances to identify gaps and recommend appropriate solutions.

Question 4

What is the ethical obligation of an agent when a client makes a statement on an application that the agent knows is false?

Accepted Answer

Correct the application and inform the client of the importance of accuracy

Answer

An agent must ensure the application is accurate and counsel the client that false statements can void coverage or result in claim denial.

Question 5

Which of the following actions by an insurer constitutes unfair claims settlement practices?

Accepted Answer

Denying a claim without a reasonable investigation

Answer

Denying a claim without conducting a reasonable investigation is a prohibited unfair claims settlement practice under most state insurance codes.

Insurance Practice Test

Insurance Practice Test

Insurance Professional Standards & Competencies 5