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
Which professional designation is awarded by The American College and focuses on life insurance and financial planning competencies?
Answer: CLU
The Chartered Life Underwriter (CLU) designation, awarded by The American College, signifies advanced expertise in life insurance and financial planning.
What does errors and omissions (E&O) insurance protect an insurance agent against?
Answer: Claims arising from professional mistakes or negligence
E&O insurance covers agents for claims resulting from errors, omissions, or negligent acts in the performance of professional duties.
Which of the following is considered an unfair trade practice in the insurance industry?
Answer: Making false statements about a competitor's financial condition
Making false or misleading statements about a competitor's financial condition is a prohibited unfair trade practice under insurance regulations.
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:
Answer: Churning
Churning involves replacing policies repeatedly to generate commissions without a legitimate benefit to the policyholder.
What is the primary role of the National Association of Insurance Commissioners (NAIC) regarding professional standards?
Answer: Developing model laws and regulations for states to adopt
The NAIC develops model laws and regulations that individual states can adopt to promote uniformity in insurance regulation.
Which of the following would most likely require an agent to update a client's needs analysis?
Answer: A client getting married or having a child
Major life events like marriage or the birth of a child significantly change a client's coverage needs, requiring an updated needs analysis.
Under the principle of utmost good faith (uberrimae fidei), which party bears the primary obligation to disclose all relevant information?
Answer: Both the insurer and the insured
Utmost good faith is a mutual obligation: both the insurer and insured must fully disclose all material information relevant to the contract.