Life & Health Insurance Insurance Regulation and Ethics Flashcards
7 cards from real Life & Health Insurance Exam practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Life & Health Insurance Insurance Regulation and Ethics flashcards as text
An agent who knowingly submits a false application to obtain a policy for a client is guilty of:
Answer: Misrepresentation
Submitting false information on an application constitutes misrepresentation, which is both unethical and illegal.
Which regulatory body primarily oversees insurance company solvency in the United States?
Answer: State Insurance Department
Insurance is regulated at the state level, and each state's insurance department is responsible for monitoring insurer solvency.
The purpose of the NAIC (National Association of Insurance Commissioners) is to:
Answer: Coordinate regulatory standards among states
The NAIC is an organization of state insurance regulators that promotes uniformity and coordination of insurance regulation across states.
A producer who convinces a client to replace a life insurance policy primarily to earn another commission is engaging in:
Answer: Twisting
Twisting is the unethical or illegal practice of inducing a policyholder to drop an existing policy and buy a new one primarily for the agent's benefit.
Under state insurance law, which of the following is generally considered an unfair claims settlement practice?
Answer: Denying a claim without a reasonable investigation
Denying claims without conducting a reasonable investigation is a defined unfair claims settlement practice prohibited by state law.
An insurance agent's fiduciary duty to a client means the agent must:
Answer: Place the client's interests above their own
A fiduciary duty requires the agent to act in the best interest of the client rather than their own financial interests.
Which of the following best describes 'sliding' in insurance sales?
Answer: Adding unrequested coverages to a policy without disclosure
Sliding occurs when a producer adds coverage to an application without the applicant's knowledge or informed consent.