Regulation and Ethics Flashcards

A producer who replaces an existing life insurance policy must provide the policyowner with a:

Answer: Disclosure notice and comparison statement

Replacement regulations require producers to give the policyowner a written comparison and disclosure so they can make an informed decision.

Which of the following is NOT considered an unfair trade practice under state insurance laws?

Answer: Offering a volume discount on group plans

Legitimate group pricing and volume arrangements are legal business practices, unlike misrepresentation, rebating, and coercion.

When must an insurance producer disclose their license status to a prospective client?

Answer: At the first point of contact or solicitation

Producers are required to disclose their license status and the lines they are authorized to sell at the initial point of contact.

An insurer that engages in 'redlining' is guilty of:

Answer: Refusing to offer coverage in certain geographic areas based on discriminatory criteria

Redlining is the illegal practice of denying or limiting coverage based on location as a proxy for race or other protected characteristics.

A producer's continuing education requirement exists primarily to:

Answer: Ensure producers maintain current knowledge of laws and products

CE requirements ensure that producers stay current on regulatory changes, new products, and ethical standards to better serve consumers.

What is the purpose of the Insurance Guaranty Association?

Answer: To protect policyholders if a licensed insurer becomes insolvent

State guaranty associations pay covered claims up to statutory limits when a member insurer becomes insolvent.

A producer accepts a gift from an applicant worth $150 in exchange for submitting their application favorably. This is an example of:

Answer: Bribery and an ethical violation

Accepting gifts in exchange for favorable treatment is bribery and violates both ethical standards and insurance regulations.