Free Pennsylvania insurance law practice questions

Correct answer: B. Take part with the NAIC in a central producer license registry

• A. Incorrect. Section 310.2(b) does not authorize a yearly national activity report from each producer.
• B. Correct. Section 310.2(b)(2) allows the commissioner to participate with the NAIC in a centralized insurance producer license registry for submitting or obtaining licensing history, lines of authority and regulatory action.
• C. Incorrect. The registry named in section 310.2(b)(2) is with the NAIC, not FINRA.
• D. Incorrect. Section 310.2(b) does not provide for the FBI to publish regulatory histories.

(b) Authorizations.--The commissioner may do all of the following: [...] (2) Participate with the NAIC in a centralized insurance producer license registry for purposes of submitting or obtaining information on insurance producers, including licensing history, lines of authority and regulatory action.

Correct answer: B. CE for the lapsed period and the lapsed license fee

• A. Incorrect. Section 310.8(e) addresses CE for the lapsed period and the lapsed fee, not the exam or fingerprints.
• B. Correct. A licensee unable to comply because of military service or another extenuating circumstance may request a waiver of the CE for the lapsed period and of the lapsed license fee, with supporting documentation.
• C. Incorrect. The waiver covers the period in which the license had lapsed, not a future period.
• D. Incorrect. The waiver is not a permanent release from the ethics hours.

(e) Extenuating circumstances.--A licensee who is unable to timely comply with the requirements of subsection (a) as a result of military service or other extenuating circumstance may request the department to waive the requirements of having to complete continuing education for the period in which the license had lapsed and payment of the lapsed license fee. The request shall include sufficient detail and supporting documentation to determine the necessity of the waiver.

Correct answer: D. It is prohibited even if nothing stated is false

• A. Incorrect. An incomplete comparison is prohibited even when each statement in it is true.
• B. Incorrect. Section 310.48 provides no waiver by the client.
• C. Incorrect. Section 310.48 does not require proof of harm to the client.
• D. Correct. A producer may not misrepresent or make an incomplete comparison of contracts to induce an insured of another insurer to lapse, forfeit or surrender a contract and buy a similar one.

(a) Prohibition.--No insurance producer shall, directly or indirectly, misrepresent or make an incomplete comparison of contracts of insurance for the purpose of inducing an insured of another insurer to lapse, forfeit or surrender his contract of insurance and to take out a contract of insurance insuring against similar risks with the licensee or solicitor's insurer.

Correct answer: A. Impose penalties such as a cease and desist order

• A. Correct. Upon failure of the person to appear, if a violation is found, the commissioner may impose any combination of penalties, including an order to cease and desist.
• B. Incorrect. Section 310.91(d) allows penalties upon failure to appear.
• C. Incorrect. The commissioner has penalty power in addition to any penalty a court may impose.
• D. Incorrect. Section 310.91(d) allows penalties after a failure to appear; rescheduling is not required.

(d) Penalties.--After the hearing or upon failure of the person to appear at the hearing, if a violation of this act is found, the commissioner may, in addition to any penalty which may be imposed by a court, impose any combination of the following deemed appropriate: (1) Denial, suspension, refusal to renew or revocation of the license, if any, of the person. (2) A civil penalty not to exceed $5,000 for each action in violation of this act. (3) An order to cease and desist. (4) Any other conditions as the commissioner deems appropriate.

Correct answer: C. First-party claimants

• A. Incorrect. § 146.4(a) names first-party claimants, not third-party claimants.
• B. Incorrect. Reinsurers are not mentioned; the duty runs to first-party claimants.
• C. Correct. § 146.4(a) says an insurer or agent may not fail to fully disclose pertinent benefits, coverages or other provisions to first-party claimants.
• D. Incorrect. The disclosure duty in § 146.4(a) runs to first-party claimants, not to the Department.

(a) An insurer or agent may not fail to fully disclose to first-party claimants pertinent benefits, coverages or other provisions of an insurance policy or insurance contract under which a claim is presented.

Correct answer: B. Applicant and agent statements on whether replacement is involved

• A. Incorrect. Commission comparisons are not required by § 81.4(a).
• B. Correct. § 81.4(a) requires a statement signed by the applicant as to whether replacement is involved and a signed statement as to whether the agent knows replacement is or may be involved.
• C. Incorrect. § 81.4(a) requires signed statements, not copies of existing policies.
• D. Incorrect. § 81.4(a) does not mention a suitability worksheet.

(a) The agent or broker who initiates the application shall submit to the insurer to which an application for life insurance or annuity is presented, with or as part of each application: [...] (1) A statement signed by the applicant as part of each application as to whether replacement of existing life insurance or annuity is involved in the transaction. [...] (2) A signed statement as to whether the agent or broker knows replacement is or may be involved in the transaction.

Correct answer: D. At least once in any 12 consecutive months

• A. Incorrect. Annually means once in any 12 consecutive months.
• B. Incorrect. Annually means once in any 12 consecutive months.
• C. Incorrect. The annual notice is required unless the § 146a.12(b) exemption applies.
• D. Correct. § 146a.12(a)(1) requires notice not less than annually, meaning at least once in any period of 12 consecutive months during the relationship.

(1) General rule. A licensee shall provide a clear and conspicuous notice to customers that accurately reflects its privacy policies and practices not less than annually during the continuation of the customer relationship. Annually means at least once in any period of 12 consecutive months during which that relationship exists.

Correct answer: D. As the insurer's agent

• A. Incorrect. The person is deemed the company's agent.
• B. Incorrect. The person is deemed the company's agent.
• C. Incorrect. The person is deemed the company's agent, not a co-insurer.
• D. Correct. § 47(b) says such a person shall be deemed the agent of the company in any legal proceedings brought against it, and is also subject to a civil penalty.

(b) Any person negotiating or soliciting any policy of insurance or suretyship in this Commonwealth, collecting or forwarding premiums or delivering policies for any company, association, or exchange to which a certificate of authority has not been granted, shall be deemed to be the agent of the company, association, or exchange, in any legal proceedings brought against it.

Correct answer: D. The insurer whose policy is advertised

• A. Incorrect. Who designed the ad does not matter; the advertised company is responsible.
• B. Incorrect. § 51.3(a) places responsibility on the company whose contracts are advertised.
• C. Incorrect. The Department does not take on responsibility for a company's ads.
• D. Correct. § 51.3(a) makes advertisements, regardless of by whom written, created or designed, the responsibility of the company whose contracts are being advertised.

(a) Every company shall maintain complete control over the content, form and method of dissemination of advertisements of its contracts. The advertisements, regardless of by whom written, created or designed, shall be the responsibility of the company whose contracts are being advertised.

Correct answer: C. Yes, if it breaks no rule in the chapter or other law

• A. Incorrect. Section 83.1(b) expressly allows additional solicitation material that does not violate the law.
• B. Incorrect. Section 83.1(b) conditions its use on not violating the law; it does not require Commissioner approval.
• C. Correct. Section 83.1(b) says the subchapter is not intended to prohibit additional solicitation material that does not violate the chapter, applicable Commonwealth statutes or other provisions of the title.
• D. Incorrect. Section 83.1(b) applies to any life insurance agent or insurer, not only fraternal societies.

(b) This subchapter is not intended to prohibit a life insurance agent or insurer from using additional solicitation material which is not in violation of this chapter, applicable Commonwealth statutes or other applicable provisions of this title.

Correct answer: B. $500

• A. Incorrect. Section 477a sets the maximum fine at $500.
• B. Correct. The offender is guilty of a misdemeanor and, upon conviction, shall pay a fine not exceeding $500.
• C. Incorrect. The maximum fine on conviction is $500.
• D. Incorrect. Section 477a caps the fine at $500.

Any person, corporation, insurance company, association, or exchange that shall, either as principal or agent, issue, or cause to be issued, any policy or contract of insurance within this Commonwealth, contrary to this section, shall be guilty of a misdemeanor, and upon conviction thereof, shall be sentenced to pay a fine not exceeding five hundred dollars ($500.00).

Correct answer: A. Right after the form's caption, on page one, in prominent type

• A. Correct. The statement appears immediately following the caption of the form in prominent type on the first page of the rider.
• B. Incorrect. It must appear on the first page, right after the caption, in prominent type.
• C. Incorrect. The statement must be in the rider itself, on its first page.
• D. Incorrect. Section 90f.3(g)(1) places the statement on the first page of the rider.

(g) Death benefit reduced. (1) The form contains a clear statement that the death benefit and any accumulation values and cash values will be reduced if an accelerated death benefit is paid. The statement appears immediately following the caption of the form in prominent type on the first page of the rider.

Correct answer: B. Three years

• A. Incorrect. Section 510(k) allows reinstatement within three years.
• B. Correct. The holder is entitled to reinstatement within three years from the date of default, with evidence of insurability and payment of overdue premiums with interest.
• C. Incorrect. The reinstatement period is three years from default.
• D. Incorrect. Section 510(k) sets three years, not five.

No policy of life or endowment insurance, except policies of industrial insurance where the premiums are payable monthly or oftener, shall hereafter be delivered in this Commonwealth unless it contains, in substance, the following provisions or provisions which, in the opinion of the Insurance Commissioner, are more favorable to the policyholder: [...] (k) A provision that the holder of a policy shall be entitled to have the policy reinstated, upon written application therefor, at any time within three years from the date of default in premium payments, unless the policy has been duly surrendered or the extension period expired, upon the production of evidence of insurability satisfactory to the company, and the payment of all overdue premiums with interest at a rate to be specified in the policy but not exceeding eight per centum per annum, and the payment of any other indebtedness to the company upon said policy with interest at a rate or rates determined in accordance with section four hundred and ten F, compounded annually.

Correct answer: D. Investment results of an insurer separate account

• A. Incorrect. The definition refers to a separate account, not general account dividends.
• B. Incorrect. Payments vary with separate account investment experience, not the annuitant's age.
• C. Incorrect. A fixed rate would not vary; the definition ties payments to separate account investment experience.
• D. Correct. A variable annuity contract provides payments whose amount, after payments have commenced, varies according to the investment experience of a separate account maintained by the insurer to fund the contract.

The following words and terms, when used in this chapter, have the following meanings, unless the context clearly indicates otherwise: [...] Variable annuity contract [...] Any policy or contract which provides for deferred or immediate annuity payments, the amount of which, after such payments have commenced, varies according to the investment experience of a separate account maintained by the insurer for the purpose of funding this contract.

Correct answer: B. An exception

• A. Incorrect. A limitation restricts coverage or benefits but is something other than an exception or reduction.
• B. Correct. § 51.1 defines exception as a provision whereby coverage for a specified risk is entirely eliminated.
• C. Incorrect. A reduction lowers the benefit amount by a dollar or time limit; it does not eliminate coverage for a risk.
• D. Incorrect. § 51.1 lists a rider as a kind of contract, not as a provision that eliminates coverage.

The following words and terms, when used in this chapter, have the following meanings, unless the context clearly indicates otherwise: [...] Contract [...] A policy, plan, certificate issued by a fraternal benefit society, agreement, statement of coverage, binder, rider or endorsement which provides insurance or service benefits. [...] Exception [...] A provision in a contract whereby coverage for a specified risk is entirely eliminated. [...] Limitation [...] A provision other than an exception or reduction which restricts coverage or benefits under the contract. [...] Reduction [...] A provision which reduces the amount of the benefit which would otherwise be payable either by limitation as to dollar amount or by limitation as to period of time.

Correct answer: A. Still required, regardless of that

• A. Correct. Newborn coverage shall be provided regardless of whether the form provides for obstetrical coverage.
• B. Incorrect. The lack of obstetrical coverage does not delay newborn coverage.
• C. Incorrect. Newborn coverage is the full dependent (or insured) coverage, not just congenital defects.
• D. Incorrect. The coverage is required, not optional.

Coverage for newborn children [...] The same coverage provided under the terms of the form for dependent children for sickness, disease or injury. If the form does not provide coverage for dependent children, the coverage shall be the same as that provided the insured or subscriber. For purposes of compliance with Act 81, injury or sickness shall include medically diagnosed congenital defects, birth abnormalities, prematurity and routine nursery care. If the form provides coverage for routine well baby care, the same coverage shall be provided for newborn children. The coverage shall be provided regardless of whether the form provides for obstetrical coverage.

Correct answer: A. From the moment of birth

• A. Correct. Benefits are payable with respect to a newborn child of the insured or subscriber from the moment of birth.
• B. Incorrect. Coverage does not wait for the birth to be reported.
• C. Incorrect. Coverage begins at the moment of birth, not day 15.
• D. Incorrect. Coverage begins at birth, not discharge.

All health insurance policies providing coverage on an expense incurred basis [...] also provide that the health insurance benefits or health services applicable shall be payable with respect to a newborn child of the insured or subscriber the moment of birth.

Correct answer: A. Must pay benefits with no preexisting condition exclusion

• A. Correct. With at least 6 months of continuous creditable coverage, the issuer may not exclude benefits based on a preexisting condition.
• B. Incorrect. With 6 or more months of creditable coverage, no preexisting exclusion is allowed.
• C. Incorrect. No exclusion period is allowed at all when creditable coverage is at least 6 months.
• D. Incorrect. Subsection (a) bars pricing discrimination based on medical condition during open enrollment.

(b) Exclusion of benefits based on a pre-existing condition prohibited. If an applicant qualifies under subsection (a) and submits an application during the time period referenced in subsection (a) and, as of the date of application, has had a continuous period of creditable coverage of at least 6 months, the issuer may not exclude benefits based on a preexisting condition.

Correct answer: D. The insurer has no right to change the premium

• A. Incorrect. Group status is not the exception.
• B. Incorrect. Age at issue is not the exception.
• C. Incorrect. Guaranteed renewable policies may have class rate changes, so the statement is still required.
• D. Correct. A policy, other than one in which the insurer does not have the right to change the premium, shall include a statement that premium rates may change.

(a) Renewability. Individual long-term care insurance policies shall contain a renewability provision. [...] (2) A long-term care insurance policy or certificate, other than one in which the insurer does not have the right to change the premium, shall include a statement that premium rates may change.

Correct answer: B. Before presenting an application or enrollment form

• A. Incorrect. The guide comes before the application is presented, not at delivery.
• B. Correct. In producer solicitations, the producer shall deliver the shopper's guide prior to the presentation of an application or enrollment form.
• C. Incorrect. The guide comes before the application is presented.
• D. Incorrect. The guide comes before the application is presented.

A long-term care insurance shopper’s guide in the format developed by the National Association of Insurance Commissioners, or a guide developed or approved by the Commissioner, shall be provided to all prospective applicants of a long-term care insurance policy or certificate. [...] (1) In the case of producer solicitations, a producer shall deliver the shopper’s guide prior to the presentation of an application or enrollment form.