Insurance Regulation Life Insurance Flashcards
While Dept of Insurance falls primarily under executive branch of government, in order to serve its purpose, Dept may exercise powers from all 3 government branches
Legislative--making laws; Executive--enforcing laws; Judicial--interpreting laws
When it's in the best interest and safety of the public,
Department may promulgate rule and regulations (make public or put into action)
statute
is a formal written law enacted by legislature
In order to take office, Commissioner must
present a bond in the sum of $50,000 with surety
Commissioner is authorized
to participate in the National Association of Insurance Commissioners (NAIC)
general powers, duties, and responsibilities of Commissioner 1
Adopt rules and regulations to enforce provisions of the Insurance Code
general powers, duties, and responsibilities of Commissioner 2
Conduct examinations, investigations, and hearings to determine whether any person has violated any provision of the Code
general powers, duties, and responsibilities of Commissioner 3
Maintain confidentiality of documents, materials, or other information used in regulatory or legal action
general powers, duties, and responsibilities of Commissioner 4
Issue a cease and desist order if any person is believed to have violated any provisions of the Code
general powers, duties, and responsibilities of Commissioner 5
Issue insurance licenses and certificates of authority, take action against, fine, or suspend license of any company and/or producers
general powers, duties, and responsibilities of Commissioner 6
Disseminate information concerning insurance laws of this state and provide assistance to the public in obtaining information about insurance products
admitted or authorized insurer
an insurance company that has qualified and received Certificate of Authority from Dept of Insurance to transact insurance in the state
nonadmitted or nonauthorized insurer
insurance company that has not applied or has applied and been denied, a Certificate of Authority and may not transact insurance
When an insurance company has proven that it is compliant with Indiana insurance laws
Commissioner can issue a certificate of authority so the company can start conducting business.
Certificates of authority can be issued when Commissioner is confident of 1
The company has submitted a sound plan of operation
Certificates of authority can be issued when Commissioner is confident of 2
general character and experience of incorporators, directors, and proposed officers assures reasonable promise of a successful operation.
If a company transacts any business of insurance without a certificate, or if it transacts insurance business not specified in company's certificate of authority,
Commissioner may impose a max civil penalty of $25,000 on the director or officer responsible
Domestic insurer
insurance company that is incorporated in this state
foreign insurer
insurance company that is incorporated in another state or territorial possession
alien insurer
insurance company that is incorporated outside the U.S.
purpose of examination of companies is to ensure that the companies remain solvent and conduct business of insurance
in compliance with state laws and regulations pertaining to licensing, policy forms, rates, claims, market conduct
In lieu of an exam of any foreign or alien insurer licensed in Indiana, Commissioner may accept an examination report on company that is prepared by Insurance Dept of company's state of domicile or port-of-entry state under following circumstances 1
insurance dept that prepared report was at the time of the exam accredited under NAIC Financial Regulation Standards and Accreditation Program
In lieu of an exam of any foreign or alien insurer licensed in Indiana, Commissioner may accept an examination report on company that is prepared by Insurance Dept of company's state of domicile or port-of-entry state under following circumstances 2
exam is performed with the participation of 1 or more examiners who are employed by accredited State Insurance Dept and who after review of exam work papers and report state under oath that exam was performed in a manner consistent with standards and procedures required by their insurance dept
Any company selling life and/or health insurance
must belong to the Guaranty Association
Association's liability is generally limited to those of impaired insurance company
may not exceed lesser of the contractual obligations for which insurance company is liable
the following amount with respect to any one life, regardless of number of policies or contracts 1
$300,000 in life insurance death benefits, but not more than $100,000 in net cash surrender and net cash withdrawal values for life insurance
the following amount with respect to any one life, regardless of number of policies or contracts 2
$300,000 in health insurance benefits, but not more than $100,000 in any net cash surrender and net cash withdrawal values
the following amount with respect to any one life, regardless of number of policies or contracts 3
$100,000 in present value of annuity benefits, including net cash surrender and net cash withdrawal values
the following amount with respect to any one life, regardless of number of policies or contracts 4
If a single owner owns more than 1 nongroup policy on multiple persons, guaranty association will not pay more than $5,000,000 to any 1 owner
A license can be issued to a business entity as long as business entity meets following qualifications 1-3
Is trustworthy; pays all required fees; designates licensed producer responsible for business entity's compliance with state insurance laws
A license can be issued to a business entity as long as business entity meets following qualifications 4
Has not committed any acts that are grounds for probation, suspension, revocation, or refusal of insurance license
The term business entity includes a
corporation, association, partnership, limited liability company, limited liability partnership, or other legal entity
A person may hold Indiana resident license without actually living in Indiana
as long as they do not hold any resident licenses in any other state
A nonresident person may receive a nonresident producer license if they meet the following criteria 1
Is currently licensed as a resident and in good standing in person's home state
A nonresident person may receive a nonresident producer license if they meet the following criteria 2
Has submitted proper request for a nonresident license and paid the required fees to Commissioner
A nonresident person may receive a nonresident producer license if they meet the following criteria 3
Has sent Commissioner a copy of license application submitted to person's home state or completed National Association of Insurance Commissioners (NAIC) Uniform Application
A nonresident person may receive a nonresident producer license if they meet the following criteria 4
Resides in a home state that awards nonresident producer licenses to residents of Indiana on same basis as nonresident producer licenses are awarded to residents of other states i.e. the 2 states have reciprocity
A consultant is person who, for a fee, offers any advice, counsel, opinion, or service regarding
benefits, advantages, or disadvantages promised under any policy of insurance that could be issued in Indiana
A consultant's license is valid for
24 months and may be renewed and extended in same manner as insurance producer's license
Commissioner designates on the license
which consulting services that the licensee is entitled to perform
An individual or corporation cannot hold a consultant's license
and an insurance producer's license, surplus lines producer's license, or limited lines producer's license at the same time
A consultant's license is not required for the following 1
An attorney licensed to practice law in the state, assuming that the person is acting in the role of an attorney when advice is given
A consultant's license is not required for the following 2
A duly licensed insurance producer or surplus lines producer
A consultant's license is not required for the following 3
A trust officer of a bank acting in normal course of trust officer's employment
A consultant's license is not required for the following 4
An actuary or certified public accountant who provides information, recommendations, advice, or services in a professional capacity
insurance producer cannot
hold a consultant's license
Commissioner may issue a temporary producer's license for a max period of 180 days to any of following 1
surviving spouse or court-appointed personal representative of a licensed individual insurance producer who dies or become physically or mentally disabled in order to allow for the following:
1. Adequate time for the sale of insurance business owned by producer
2. servicing of insurance business until recovery or return of producer to business
or 3.
training and licensing of new personnel to operate producer's business
Commissioner may issue a temporary producer's license for a max period of 180 days to any of following 2
To a member or employee of business entity licensed as insurance producer if individual designated in business entity application or license dies or becomes disabled
Commissioner may issue a temporary producer's license for a max period of 180 days to any of following 3
To designee of a licensed individual insurance producer entering active service in Armed Forces of U.S. of America
Commissioner may issue a temporary producer's license for a max period of 180 days to any of following 4
To an individual in any other circumstance considered by Commissioner to be in best interest of the public
A temporary insurance producer license expires at the time owner or personal representative disposes of the business
if it should occur sooner than the 180 day term of the license
limited lines insurance producer is authorized by Commissioner
to solicit only specialty insurance products
Due to nature of transactions
a limited lines producer is not required to take an exam prior to being licensed
Following lines don't require examination
Flight, Baggage, Travel, Title, Credit
Another limited license commonly used is
Funeral Director license
Funeral Director license
requires completing of standard life insurance prelicensing education and life producer's examination
Another type of person who doesn't need to be licensed as an insurance producer is an employee or authorized rep of a vendor that is
licensed as limited lines producer to sell, solicit, or negotiate portable electronics insurance incidental to and in connection with portable electronics transactions
insurer that terminates producer's appointment employment or contract must notify Commissioner
no later than 30 days after effective date of termination
Insurance producers in this state may transact insurance in one or more of the following lines of authority 1-4
Life, Variable life and variable annuity products, accident/health or sickness, Property,
Insurance producers in this state may transact insurance in one or more of the following lines of authority 5-9
Casualty, Personal Lines, Title, Credit, Any other type of insurance permitted under Indiana laws or administrative rules
Life
coverage on human lives
Variable life and variable annuity products
insurance provided under variable contracts
Accident and health or sickness
coverage for sickness, bodily injury or accidental death, and disability income
Property
coverage for the direct and consequential loss or damage to property of every kind
Casualty
coverage against legal liability
Personal lines
noncommercial property and/or casualty coverage
Title
insurance coverage against loss or damage on account of defects in the title to real estate
Credit
debt insurance (limited line)
resident producers must pass written exam when applying for following licenses
insurance producer license; consultant's license; surplus lines producer license
Examinations required under regulations must test knowledge concerning following
Lines of authority for which application is made; Duties and responsibilities of a license; Insurance laws and administrative rules of Indiana
Under certain circumstances individuals may be exempt from either the whole or part of the exam 1
Persons who have obtained designation of Chartered Life Underwriter (CLU), Certified Financial Planner (CFP) or Chartered Financial Consultant (ChFC) would only be required to take Indiana law portion of exam when applying for life insurance license
Under certain circumstances individuals may be exempt from either the whole or part of the exam 2
Persons who are resident producers in good standing in another state would be exempt from Indiana prelicensing education/exam if they currently hold same type of license in another state
only if Indiana application is received
within 90 days of the cancellation of the other state's license
Controlled business is defined as insurance written on the interests of
applicant or licensee; applicant's or licensee's immediate family; applicant's or licensee's employer or business partner
A license is considered to be used (or intended to be used) for purpose of writing controlled business if the Commissioner finds that during any
12 month period aggregate commissions earned from controlled business exceeded 25% of aggregate commissions earned on all business written by licensee during the same period
Producer's license renewal dates are based upon the producer's
birth month, and the renewal will expire on the last day of the birth month
If producer has completed all of the required CE hrs and allow their license to lapse
license can be reinstated within 12 months
What is required for any renewal fee received after the expiration date of the license?
A penalty of 3 times the unpaid renewal fee
insurance dept may waive this penalty if the renewal fee is
received within 30 days after the expiration
Failure to report a change of address within 30 days of the change
will result in a penalty of $100
In order to renew a license, resident insurance producers in Indiana must complete
24 hours of credit continuing education courses
The following producers are not required to complete CE courses for a license renewal
limited lines producer licensed without exam; limited lines credit producer; nonresident limited lines producer with title qualification whose home state requires CE for title qualification, who has met those CE requirements
Carryover credits
are not allowed
If an insurance producer receives qualification for a license in more than one line of authority,
producer will not be required to complete total of more than 24 hours of credit in CE courses to renew the license
Misrepresentation
It's illegal to issue, publish, or circulate any illustration or sales material that is false, misleading, or deceptive as to policy benefits or terms, the payment of dividends, etc.
Rebating
any inducement offered to insured in sale of insurance products that isn't specified in policy
Twisting is a misrepresentation or incomplete or fraudulent comparison of insurance policies
that persuades an insured/owner, to their detriment, to cancel, lapse, switch policies, or take out a policy with another insurer
It's unlawful to pay, offer or accept any of the following as inducement to buy insurance:
Any special favor or advantage in dividends or benefits; any stocks, bonds, securities, accrued dividends or profits; Anything of value not specified in insurance contract
Discrimination in rates, premiums, or policy benefits for persons
within the same class or with same life expectancy is illegal
Defamation occurs
when an oral or written statement is made that is intended to injure a person engaged in the insurance business
This also applies to statements that are
maliciously critical of the financial condition of any person or a company
It is illegal to be involved in any activity of
boycott, coercion, or intimidation that's intended to restrict fair trade or to create a monopoly