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CHAPTER 15 ALABAMA STATE INSURANCE LAW (LIFE & HEALTH), Exams of Advanced Education

CHAPTER 15 ALABAMA STATE INSURANCE LAW (LIFE & HEALTH)

Typology: Exams

2024/2025

Available from 11/30/2024

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CHAPTER 15 ALABAMA STATE INSURANCE

LAW (LIFE & HEALTH)

In Alabama, an insurer may terminate a Medicare Supplement policy for which of the following reasons? a. The insured's rapid deteroriation of health b. The insured receives benefits from Original Medicare c. The insured's application included material misrepresentations d. The insured is placed in an assisted living facility The insured's application included material misrepresentations Producer X regularly places insurance with Company XYZ without being appointed by XYZ. What is the consequence of this action? a. The company's certificate of authority will be suspended b. The producer's license will be suspended for at least 1 year c. The company will be required to void all policies placed by Producer X d. The producer will be required to pay restitution The producer's license will be suspended for at least 1 year In Alabama, when is a producer required to give an applicant a Notice Regarding Replacement? a. At the time of application b. When the policy is delivered c. The policy issue dated. d. Ten days after policy delivery At the time of application Under Alabama law, a producer cannot pay any valuable consideration to a person if they are not licensed as a producer. If a producer violates this provision, they are subject to a fine of up to: a. 3 times the commission paid b. 3 times the premium paid c. $10, d. $1, 3 times the commission paid Individuals must meet all of the following qualifications to become licensed as an Alabama resident producer, except: a. The individual must submit an application to the Commissioner b. The individual must be at least 21 years of age c. The individual must not have violated insurance law d. The individual must pay required application fees The individual must be at least 21 years of age

Which of the following licensing candidates is not required to take a state licensing exam in Alabama? a. An applicant for health insurance b. An applicant for variable products c. An applicant for limited lines insurance d. An applicant for property insurance An applicant for limited lines insurance A change in which the following types of information does not require a producer to notify the Commissioner? a. Business website b. Businss email c. Businss email d. Business address Business website All of the following transactions are considered life insurance replacements and are subject to Alabama's replacement guidelines, except: a. A policy that will be lapsed or surrendered in order to purchase a new policy b. A term policy converted to whole life insurance c. A policy that has been converted to reduced paid up or extended term insurance to purchase a new policy d. A policy amended with reduced benefits to purchase a new policy A term policy converted to whole life insurance Annuity applicants in Alabama must be given a Buyer's Guide and which of the following documents? a. A disclosure statement b. An illustration c. A Notice Regarding Replacement d. An annuity worksheet A disclosure statement An 18-year-old is the beneficiary to a life insurance policy issued in Alabama. If there is no guardian, how much may they receive annually from the policy? a. $6, b. $4, c. $3, d. $5, $3, If an Alabama insurance company requests additional information regarding a pending claim, upon receiving the additional information, how many days does the insurer have to pay or deny the claim? a. 10

b. 60 c. 21 d. 30 21 If an insured in Alabama has reinstated their health insurance policy, when will they receive coverage for sickness? a. 45 days after a conditional receipt has been issued b. Immediately upon reinstatement c. 10 days after reinstatement d. 30 days after a conditional receipt has been issured 10 days after reinstatement All of the following are considered unfair trade practices in the business of insurance, except: a. Falsifying financial records to deceive an examiner b. Denying an insurance application solely due to the person's race c. Threatening another insurance company to restrain their business d. Denying liability coverage to a perpetrator of domestic abuse Denying liability coverage to a perpetrator of domestic abuse Based on the 3-stage incontestability process, an insurer in Alabama can deny a claim under an LTC insurance policy for any misrepresentation: a. If the policy has been in force more than 6 months, but less than 2 years b. At any time c. If the policy has been in force for less than 6 months d. After the policy has been in force 2 years If the policy has been in force for less than 6 months Which of the following statements correctly describes the act of conservation in a replacement transaction? a. The insured purchases a secondary policy to fill in coverage gaps b. The producer exaggerates a policy's benefits to persuade the insured to replace their existing policy c. The producer assists the insured in replacing an existing policy for one with lower premiums d. Because the death benefits are more favorable in the existing policy, the producer persuades the insured to not replace it Because the death benefits are more favorable in the existing policy, the producer persuades the insured to not replace it An applicant for one line of insurance in Alabama must complete how many hours of prelicensing education? a. 10 b. 12

c. 20 d. 40 20 In order to transact insurance business in Alabama, insurance companies must: a. Be authorized in a home domicile for at least 5 years b. Obtain licenses in every line of authority c. Be domiciled in Alabama d. Obtain an Alabama certificate of authority from the Commissioner Obtain an Alabama certificate of authority from the Commissioner Altering health insurance rates based on which of the following characteristics would be considered unfair discrimination? a. National origin b. Age c. Sex/gender d. Occupation National origin Which of the following situations is an example of twisting? a. A producer misrepresents a policy to convince the insured to surrender an existing policy b. The applicant makes false statements on an application for insurance c. An insurer makes derogatory remarks about another insurance company's financial condition d. A producer offers an applicant a $200 gift for submitting an insurance application A producer misrepresents a policy to convince the insured to surrender an existing policy Which of the following statements about continuing education requirements for producers licensed in Alabama is correct? a. Licensees must complete 24 hours of CE, plus an additional 3 hours for ethics instruction b. CE requirements must be met during each annual license renewal period c. Excess CE hours earned in one renewal period may be carried over into the next renewal period d. Failure to meet CE requirements will result in a misdemeanor charge Excess CE hours earned in one renewal period may be carried over into the next renewal period A producer who violates the Alabama long-term care insurance regulation may be fined up to 3 times the amount of any commissions paid for each policy involved or up to ________, whichever is greater. a. 10, b. $15,

c. $5, d. $25, 10, When an annuity application is taken over the phone, when must the producer provide the required documents to the applicant? a. Within 5 days after the application is received b. By the delivery of the annuity contract c. Within 15 days after the application is received d. Before the time of application Within 5 days after the application is received A temporary producer license may be issued for which of the following reasons? a. Only to transfer or terminate business after a producer's death b. Either due to the disruption of existing business, or in the case of on-the-job training c. Only when a person is hired by an insurance company on a preliminary basis and still needs to complete licensing requirements d. Only due to the disruption of existing business, such as a producer's military duty Either due to the disruption of existing business, or in the case of on-the-job training An agent in Alabama must follow illustration regulations on which of the following contracts? a. Fixed annuity b. Whole life insurance c. Variable life insurance d. Credit life insurance Whole life insurance In Alabama, an advertisement for a life insurance policy may use which of the following terms to describe premiums? a. Deposit b. Premium c. Premium deposit d. Guaranteed investment Premium In Alabama, how many activities of daily living (ADLs) must an insured be unable to perform to trigger LTC benefits? a. 1 b. 4 c. 3 d. 5 3 In Alabama, which of the following statements about business entities is true? a. The Commissioner is responsible for a business entity's complicance with state law

b. All employees of business entities must be licensed c. A producer employed by a business entity may transact any line of insurance d. Business entities may be licensed as producers Business entities may be licensed as producers Which of the following statements is false regarding health insurance coverage of newborns in Alabama? a. Coverage must be provided for medically necessary care b. New borns will receive coverage once the insured notifes the insurer of their birth c. Treatment of congenital defects must be covered d. All health insurance policies covering dependents must cover newborns New borns will receive coverage once the insured notifes the insurer of their birth Once an insurance company in Alabama receives proof of death, it must pay the death claim within what length of time? a. 3 months b. 2 months c. 1 month d. 6 months 2 months Which of the following insurers may not be authorized to transact insurance in Alabama? a. An insurer in Florida that meets the eligibility requirements b. An insurer domiciled in Alabama that has received its charter c. Any insurer that fails to pay the renewal fee d. An insurer domiciled in Spain that seeks admission Any insurer that fails to pay the renewal fee Producer X has a resident license in Georgia. Which of the following statements is incorrect regarding the producer's eligibility for an Alabama nonresident license? a. Producer X must submit an application and pay the licensing fee b. Producer X can only receive a nonresident license if Georgia awards nonresident licenses on a reciprocal basis c. Producer X cannot receive a nonresident license if their current license is suspended d. Producer X must pass Alabama's licensing examination prior to approval Producer X must pass Alabama's licensing examination prior to approval A company learns that an insured now has a more dangerous occupation. Based on the optional Change of Occupation provision, which of the following statements is correct? a. The benefit and premium amounts will stay the same b. The insurer may decrease the benefit to match the new occupation c. The insurer may decrease the premium to match the new occupation d. The insurer may void the policy The insurer may decrease the benefit to match the new occupation

Which of the following statements is incorrect regarding the Alabama Health Insurance Plan (AHIP)? a. AHIP is a high risk pool of coverage b. AHIP premiums are 75% of standard rates c. An applicant must first exhaust any available COBRA coverage before applying for AHIP d. Health insurers in Alabama share the deficits associate with AHIP AHIP premiums are 75% of standard rates The Commissioner may do all of the following, except: a. Change insurance laws for the good of the general public b. Enforce insurance law c. Manage and supervise the Department of Insurance d. Examine and investigate insurance matters Change insurance laws for the good of the general public What action can the Commissioner take if they believe a producer has committed an unfair trade practice? a. Order the producer's arrest b. Issue a cease and desist order c. Terminate the producer's appointments d. Immediately suspend the producer's license Issue a cease and desist order All of the following acts are reasons that the Commissioner may suspend a producer's license, except: a. Failing to comply with a child support order b. Lying on their application for license c. Failing to pay state income tax d. Conviction of any misdemeanor Conviction of any misdemeanor A health benefit plan covering surgical services for a mastectomy must provide mammography screenings for women age 50 or older at least every: a. 5 years b. Year c. 3 Years d. 2 Years Year In Alabama, an HMO is required to provide a certificate of coverage to: a. Enrollees, only upon request b. Every enrollee c. The plan sponsor d. The producer

Every enrollee Generally, willful violations of Alabama insurance law are considered: a. Fraud b. Misdemeanor offenses c. Theft offenses d. Felony offenses Misdemeanor offenses A producer is rebating if they perform which of the following actions? a. Use pressure tactics to convince the applicant to replace an existing policy with a new one b. Fail to provide a conditional receipt upon receiving a signed application with payment of premium c. Give a prospect a discount or kickback in order to induce a sale d. Make derogatory remarks regarding another insurance company to the applicant Give a prospect a discount or kickback in order to induce a sale A producer who uses monies held in a fiduciary capacity for personal reasons is guilty of: a. Theft b. Rebating c. Fraud d. A felony Theft What is the minimum free look period for replacement policies in Alabama? a. 10 days b. 30 days c. 60 days d. 20 days 30 days In Alabama, the standard grace period for a life insurance policy is: a. 30 days b. 21 days c. 45 days d. 15 days 30 days To avoid retaking a prelicensing course, a producer in Alabama must reinstate their expired license within: a. 24 months b. 15 months c. 12 months d. 18 months

12 months To appoint a licensed producer in Alabama, the insurance company must file a Notice of Appointment and pay the appropriate fee within how many days? 15 days of executing the agency contract An insurance producer licensed in another state moves to Alabama. The producer may apply for a resident producer license in Alabama without needing to complete prelicensing education or pass an exam by applying for a resident producer license within: 90 days of establishing residency Which of the following statements regarding dividends is a prohibited advertisement in Alabama? Dividend payments are guaranteed Which of the following statements is true regarding the credentials of a caretaker providing home health services to an individual insured under a Long-Term Care policy? They are not required to be licensed if services can be covered by a home health aid Which of the following most accurately describes the continuing education requirement for producers that want to solicit Long-Term Care Partnership policies in Alabama? An initial 8-hour course, followed by a 4-hour course each renewal period The Alabama Life and Disability Insurance Guaranty Association is obligated to pay the claims of which of the following insurers? An insolvent insurer What is the primary purpose or function of a Long-Term Care Partnership policy? It helps with the spending down of assets for Medicaid eligibility If an insurer in Alabama receives an applicant's genetic test results, which of the following statements is true? The insurer must issue the policy without using the results to determine insurability Once an Alabama health insurer has received a clean claim in the mail, the insurer must pay for medical or hospital expense benefits within how many days? 45 After failing the Alabama licensing exam twice, how long must an applicant wait before retaking the exam? 3 months Which of the following statements is incorrect regarding the Alabama Health Insurance Plan (AHIP)? AHIP premiums are 75% of standard rates In order to transact insurance business in Alabama, insurance companies must: Obtain an Alabama certificate of authority from the Commissioner A company learns that an insured now has a more dangerous occupation. Based on the optional Change of Occupation provision, which of the following statements is correct? The insurer may decrease the benefit to match the new occupation In Alabama, an insurer may terminate a Medicare Supplement policy for which of the following reasons? The insured's application included material misrepresentations During the application for an annuity contract, an applicant refuses to provide their suitability information. Which of the following statements is most accurate regarding the producer's recommendation in this interaction?

The producer is not obligated to provide a recommendation Which of the following life insurance illustration types is not self-supporting? Supplemental illustration For the most part, the insurance industry is regulated by the: State Government In Alabama, which of the following charges for insurance is prohibited? Money for insurance that an insurer accepts without providing coverage Temporary licenses issued in Alabama may be granted for: 6 months How often must the Commissioner examine an HMO? 3 years If a producer is charged with a violation of Alabama State Insurance Law, which of the following is true? At the court's discretion, the producer may be fined, imprisoned, or sentenced to hard labor Alabama insurance laws require producers to keep complete records pertaining to transactions under the producer's license for at least: 3 Years Which of the following IS true about an HMO under Alabama Law? The Commissioner of insurance can regulate them and impose a fine