Code/Ethics Practice Exam


 

1) The phrase "insurance agent" is best described by which of the following?

a) a person who is licensed to sell only travel insurance

b) a person who is authorized by the state to sell all classes of insurance

c) a person who is licensed to market one or more contracts from insurers

d) none of the above descriptions is correct

 

2) U.R. Wright is considering becoming a life insurance broker in his state. Which of the following best describes his best course of action?

a) Take the 52 hour course and pass the exam

b) File a Bond with the state to transact

c) Do not attempt this license because it does not exist

d) Find an authorized insurer to give him an appointment and pass the test

 

3) Dee Gladd has just become a solicitor and markets auto and homeowner policies. Mr. Goode, is the agent that Ms. Gladd works with, wants her to market life insurance. What should Ms. Gladd do to meet the requirements of the insurance Code?

a) Get a life broker license

b) Get an appointment from Mr. Goode through his insurer

c) File a Bond with the state and get an appointment from Mr. Goode

d) do none of the above actions

 

4) Which of the following best describes an "admitted (authorized) insurer?"

a) Home office located in California

b) An insurance company that has no legal authority to market in the state

c) Approved to market only in the county of the home office

d) Approved to sell within the state

 

5) Which of the following phrases best describes a "life agent?’

a) a person who authorized by the state to engage in marketing for one or greater admitted insurers of which the agent has an appointment by or for which an appointment exists on behalf of an organization

b) a person who is approved to transact all classes of insurance

c) a person who is able to transact classes of insurance from another licensee

d) none of the above

 

6) All of the following are correct in describing "transact" except:

a) solicitation, negotiation, execution, premiums

b) execution, solicitation, negotiation

c) negotiation, solicitation, execution

d) solicitation, execution, negotiation

 

7) Mr. Able just filled out an application for a disability policy and forgot to mentioned that skydiving is one of his favorite hobbies. The word that best describes this situation is:

a) misrepresentation by stealth

b) coercion

c) concealment

d) adhesion

 

8) Ms. Aviss applies for an personal auto policy. She represents that she has had no violations during the previous 3 years. A couple of days after the policy goes into force her car is stolen. Just after car was taken the insurance company finds out that she had several moving violations. Which is most likely to occur?

a) The above event is not considered to be a critical issue

b) The insurer must notify of any material discoveries

c) Insurer pays the claim

d) none of the above are germane

 

9) The principle of reinsurance is best described by:

a) The insurer is not liable for any portion of a claim

b) The insurer is responsible for the entire claim less expenses

c) The insurer is not responsible because of the aleatory concept

d) none of the above

 

10) Of the following activities which is not considered valid under the California Insurance Code?

a) Fred Strange is cancelled because of a substantial change in the risk insured against by his policy

b) Bob Tightwad did not pay his premium; therefore his policy is cancelled after due notice

c) Sam Smoothe’s consideration on a cancelled policy is held for 5 days

d) Michael Sycle’s personal auto policy is cancelled because of an accident he was involved in during his duty hours for the local police department

 

11) Considering Personal Automobile Policies; which of the following would be most correct?

a) Renewal notice sent within 10 days of the end of policy period

b) An insurer may cancel within 10 days of non-payment

c) An insurer may cancel if the risk has changed

d) all are accurate descriptions

 

12) If a Personal Auto Policy is cancelled; any unearned premium must be returned by:

a) 30 days

b) 31 days

c) 10 days

d) 25 days

 

13) " Inactive" is a term which is used to describe which of the following?

a) insurer’s license

b) appointment of an insurer

c) authorization of an insurer

d) insurance license of a natural person

 

14) Of the following names for organizations; which is not acceptable?

a) Frank Forest Insurance Company

b) Marvin and Martin Insurance Services

c) John C. Gull, CLU

d) all of these are unacceptable

 

15) In order to be qualified as a Life Analyst; one would need to have which of the following?

a) excellent knowledge of life and health insurance

b) a person considered appropriate to be a life analyst

c) overall reputation of good

d) all of the above

 

16) Bob and Mary Storey operate a successful insurance agency. Mary holds an insurance license. Bob does the office work but is not licensed. If Mary were to die could Bob (her husband) take over her license?

a) true b) false

 

17) Materiality is determined:

a) the primary basis for bringing suit against another party

b) determined by the advantages upon review of an executed contract

c) determined by the disadvantages upon review of an executed contract

d) none of the above

 

18) Insurance companies that market Medicare plans may:

a) market plans that have been approved by the commissioner

b) market the approved plans from Medicare only

c) market only plans that have the approval of the Social Security administrator

d) all of the above are untrue

 

19) Insurance companies that market Medigap policies may ask for the birthplace of an applicant if the information used will not be for underwriting or discriminatory purposes?

a) true b) false

 

20) Medicare Supplement Policies and Medigap Policies are synonymous?

a) true b) false

 

21) Is there such an association as the California Life and Health Insurance GuarantyAssociation?

a) true b) false

 

22) In considering the Fair Claims regulations; which of the following is acceptable?

a) client signs a legal document holding the agent harmless

b) client signs a legal document holding the insurer harmless

c) client signs a legal document holding the agency harmless

d) client signs a legal document for settlement on an equitable basis as a result of finding liability exists

 

23) As a licensed life analyst certain information must be disclosed to clients. Of the following which is not required to be disclosed?

a) services to which a fee is charged must be agreed to by written format

b) services to which there is no fee must be outlined by written format

c) services to which the insurer will provide by the contract

d) all of the above

 

24) It is unlawful for any agent or broker to receive any financial benefit from an automobile repair facility. Of the following terms and /or phrases "financial benefit" is best described by:

a) monetary contributions

b) charges less than the norm for repair work

c) tips

d) employment opportunity with the repair facility

Select the correct choice below:

a) a,b,c, b) a,c,d c) b,c,d d) all of the above

 

25) The purpose of an insurer filing an "appointment" on behalf of an applicant is:

a) an admission that the applicant is of sufficient business knowledge

b) an admission that the applicant is of majority age

c) an admission that the applicant is worthy the license and is good reputation

d) none of the above

 

26) A managing general agent is best described by which of the following:

a) holds an expressed agreement and an appointment on file with one or more admitted insurers

b) has the expressed authority to terminate and appoint local agents

c) collect premiums from producing broker/agents and passes on those premiums to the admitted insurers for which an appointment is held

d) has the authority to change client contracts

Select the accurate response:

a) all of the above

b) a, b only

c) a,b,c

d) none of the above

 

27) An automobile theft claim form must include:

a) address of the insured and insurer’s home office

b) purchase location of subject vehicle

c) insured’s vehicle described in detail

d) an expressed warning that false statements/representations subject the insured to a penalty of perjury

Select the accurate response:

a) c only

b) b only

c) b,c,d only

d) a,b,c only

 

28) The insurance commissioner may deny an individual an application for a license without a hearing for which of the following reasons:

a) person has been charged with a misdemeanor

b) person has been charged with slander

c) within the previous 5 years an application was denied for cause

d) all of the above

 

29) The purpose of the policy replacement procedures regulations is to:

a) protect the insured’s exposure interests

b) provide factual disclosures

c) provide notice to all interested parties

d) assure that new agents do not interfere with mature agent’s issued business

Select the accurate response:

a) a only

b) b only

c) a, b,c only

d) all of the above

 

30) The commissioner has just held a hearing and has come to the conclusion that the individual under consideration has violated the insurance code with reference to a cease and desist order. A willful violation of a cease and desist order is punishable by a maximum fine of $10,000.

a) true b) false

 

31) John (a licensed life agent) has just concluded a lengthy presentation on annuities. During the presentation John illustrated the minimum guaranteed benefits. This is an example of:

a) material representation

b) required replacement

c) required substitution

d) required disclosure

 

32) Binders may be extended for:

a) 10 days b) 20 days c) 90 days d) 90 days not exceeding 150

 

33) Is it true that an individual needs the approval of the Department of Insurance to use true names in connection with insurance?

a) true b) false

 

34) A medical insurer provider may not be held to the California Insurance Code (CIC) if that entity can establish it is under the jurisdiction of which of the following:

a) a state agency other than California

b) an agency of another country

c) another agency in another state

d) U.S. Government

Select the accurate response:

a) a only b) b only c) a, c,d only d) a,b,d only

 

35) A lending institution may require coverage on the property. Of the following statements which one is correct?

a) lenders may make specific agents names available as required by law

b) lenders are required to list all agents in the local zip code

c) lenders may not recommend local agents

d) lenders may approve or disapprove the insurance carrier selected by clients

 

36) Property/Casualty Broker-Agents shall transact with unauthorized carriers?

a) true b) false

 

37) Personal Auto Policies can be cancelled for which of the following?

a) insured fails to report an accident

b) insured’s attained age

c) driver’s license suspension

d) none of the above

 

38) "Twisting" is a term that refers to which of the following statements?

a) illegal policy conditions

b) illegal policy auditing

c) illegal policy claims

d) illegal policy replacement

 

39) Two life agents known as Mr. Mustard and Mrs. Sandwich plan to organize a partnership and market to their clients as Mustard and Sandwich Insurance Agency. They must:

a) form a corporation

b) file legal documents with the Department of Labor as a partnership

c) file an application with the Department of Insurance and the Department of Labor for an organizational license

d) file an application with the Department of Insurance of the name of their organization license

 

40) The California Insurance Code or CIC is most appropriately described by which of the following statements:

a) ethics b) regulations c) insurance laws d) a, b, c

 

41) In the CIC an organization has been formed to assist in the payments of claims should a member insurer become insolvent. Which of the following pertains to that organization?

a) California Insurance Warranty Association

b) California Insurance Regulatory Association

c) California Insurance Guaranty Association

d) California Insurance Department Association

 

42) An insurance adjuster represents which of the following?

a) client b) insurer c) both a,b d) none

 

43) A public insurance adjuster represents?

a) insured b) insurer c) beneficiaries d) attorneys

 

44) When does coverage begin with reference to a binder?

a) after 10 day waiting period

b) after 1 day grace period

c) immediately at signing and exchange of considerations

d) immediately after home office approves coverage for a policy

 

45) Which of the following terms best describes the process of forming an insurance contract? Remember, the insurer prepares the contract with little or no assistance from the proposed insured.

a) aversion b) advertisement c) adversity d) adhesion

 

46) An insurance company gives a life agent authority through the insurer’s agreement. The following terms/phrases best describing this arrangement is:

a) implied warranty

b) expressed rights

c) implied rights

d) expressed authority

 

47) All of the following gives the insurer the right to rescind an insurance policy except:

a) concealment of the insured

b) concealment of the insurer

c) fraudulent omission by the insured

d) oral representations by the insureds

 

48) Insurance coverage that can not be obtained through the admitted market place may be placed with which of the following?

a) non-admission insurers

b) non-reinsurers

c) non-admittance carriers

d) non- admitted insurers

 

49) A licensed person who does receive compensation for claims investigations and other actions on the insured’s behalf is also known as:

a) insurance adjuster

b) insurance public appraiser

c) insurance corrections official

d) public adjuster

 

50) "Noncancellable" can be best described as which of the following:

a) insurer has the right to adjust premiums annually

b) insurer has no right to change established premiums

c) insurer has the right to change policy provisions

d) insurer has the right to cancel based upon non-payment

 

Answers

1) d 2) c 3) d 4) d 5) a 6)b 7)c 8)c 9)d 10) d

11) d 12) d 13) c 14) a 15) d 16) a 17) c 18) a 19) b 20) a

21) a 22) d 23) b 24) d 25) c 26) c 27) c 28) c 29) c 30) b

31) d 32) d 33) a 34) c 35) d 36) b 37) c 38) d 39) d 40) c

41) c 42) b 43) a 44) c 45) d 46) d 47) d 48) d 49) d 50) b