During a sales presentation for a participating life insurance policy, an agent MUST include a statement that dividends are not guaranteed. Under the Nonforfeiture Law, a cash surrender value payment may be deferred by the insurance company for NO LONGER than how many months? An Insurance agent has a fiduciary responsibility to all of the following except. Common Law Duties of an Agent to its Insured. Importantly, fiduciaries are required to prevent a conflict of interest between the fiduciary and the principal. A fiduciary is required by law to disclose to the potential buyer the true condition of the property being sold, and they cannot receive any financial benefits from the sale. Michael Boyle is an experienced financial professional with more than 10 years working with financial planning, derivatives, equities, fixed income, project management, and analytics. (a.) "A survey shows an increase in drug use by young people. ERISA defines an "investment manager" as any fiduciary other than a trustee or named fiduciary who: Has the power to manage, acquire, or dispose of any asset of a plan; is one of the following types of entities: (i) certain registered investment advisers . 3. Other agents. Failure to make full disclosure to the principal is a breach of the agent's fiduciary duty and the agent is liable to account for any profit that the agent has made from such transaction in addition to other remedies available to the principal for the agent's breach of duty. b. B) Underwriters. With respect to the field of insurance, who are the two parties bound by the law of agency? How much higher (lower) would Casebolt Companys net income have been under the direct write-off method than under the allowance method? An insurer is NOT required to provide information on fraudulent claims if requested by. 6 months. Individuals who are related by blood. A creditor who requires a debtor to obtain insurance from a particular company or agent as a condition for a loan is guilty of. Originally, a charter for a _____ was much like one that states granted to corporations.. Identify each of the following as involving either demand or supply. other agents. An agent has a fiduciary duty to the insurer to disclose any pertinent information related to the policies the insurer assumes for the agent. The Commissioner of insurance has the power and duty to take all of these actions EXCEPT activate insurance companies' financial reserves. In addition to the fiduciary responsibility they have with all customer premiums and assets, producers are expected to do all the following EXCEPT.. Seek opportunities to replace existing policies with newer products. Before that could happen, the rule was vacated following a June 2018 decision by the Fifth U.S. Examples that may violate suitability include excessive trading, churning the account simply to generate more commissions, and frequently switching account assets to generate transaction income for the broker-dealer. In a life insurance policy, which provision states who may select policy options, designate and name a beneficiary, and be the recipient of any financial benefits from the policy? Failure to pay for coverage. Which of the following statements about noncontributory employee group life insurance is false? Steve is an agent for XYZ Insurance. Sec. \text { Eve Denton } & 5,180 \\ Commissioner. Legislated tort reforms have helped stem the tide, but the overall trend continues upward. The following situations require more discussion: An investment fiduciary is anyone with legal responsibility for managing somebody elses money, such as a member of the investment committee of a charity. Broker-dealers just have to meet the less-stringent suitability standard, which doesnt require putting the clients interests ahead of their own. The Commissioner of insurance may suspend, revoke, or refuse to renew the license of an agent who is found guilty of misrepresentation or fraud in obtaining the license. 10%. ABC is committing a prohibited act under Texas insurance laws covering. Why must an insurance applicant answer all questions on the application? Formalizing the investment process starts by creating the investment programs goals and objectives. Working with a fiduciary means that you can be assured that a financial professional will always be putting your interests first, and not their own. What conclusions can you reach about the mean starting salary upon graduation? unfair methods of competition. 12. The agency/company contract creates a "special relationship" between the agent and insurer, thereby increasing the required degree of care. A Long-Term Care policy must offer a MINIMUM benefit period of how many months? As an example, in the United Kingdom, fiduciaries cannot profit from their position, according to an English High Court ruling, Keech vs. Sandford (1726). A standard of care is established between these two parties that must be maintained, regardless of personal interests. which of these is not an example of doing insurance business? Strict care must be taken to ensure that no conflict of interest arises between the fiduciary and their principal. The U.S. Supreme Court states that the highest level of trust and confidence must exist between an attorney and a clientand that an attorney, as fiduciary, must act in complete fairness, loyalty, and fidelity in each representation of, and dealing with, clients. This duty of care extends beyond the actual transaction and lasts as long as you're representing the clienteven after the deal . d. What differences exist in the results of (a) and (c)? Is found guilty of misrepresentation or fraud in obtaining the license. Wait at least five years before applying for a new license. An insurance agent has a fiduciary responsibility to all of the following, EXCEPT. In Texas, which of these statements regarding the Suicide clause is TRUE? Statements and representations on the application are part of the consideration for issuing a policy. Which of these is NOT considered to be an element of an insurance contract? Study with Quizlet and memorize flashcards containing terms like A producer owes a fiduciary duty to: A. the customer only B. both the insurer and the customer C. neither the insurer nor the customer D. the insurer only, With respect to the field of insurance, who are the two parties bound by the law of agency? Funds must be remitted to the appropriate insurer or consumer in a timely manner. Firms in the goods market (c.) Firms in the financial market (d.) Households in the goods market (e.) Firms in the labor market (f.) Households in the financial market. Check all that apply. In order to process your investment in a timely manner, please ensure to complete all of the following form fields. When the insured dies or at the policy's maturity date, whichever happens first, Variable life products require a producer to, hold a Life Insurance license and a Securities license, M has an insurance policy that also has an outstanding policy loan at the time of M's death. If a member of a board of directors is found to be in breach of their fiduciary duty, they can be held liable in a court of law by the company itself or its shareholders. Also, the need to disclose potential conflicts of interest is not as strict a requirement for brokersan investment only has to be suitable; it doesnt necessarily have to be consistent with the individual investors objectives and profile. send termination notice to the Texas Department of Insurance. The phrase "transacting business" includes. Legal reserve agents. following form fields properly may cause delays in the processing of your investment. The first requirement above will not be satisfied if the purported agent or the custodian has entered into a debtor/creditor relationship with the purported owner as opposed to an The following common legal theories for errors and omissions claims illustrate the degree of care recognized in common law: Does an agent have a duty to explain policy terms and coverages to customers? The highest legal duty of one party to another, it also involves being . In response to the need for guidance for investment fiduciaries, the nonprofit Foundation for Fiduciary Studies was established to define the following prudent investment practices: The process begins with fiduciaries educating themselves on the laws and rules that will apply to their situations. Insurance- Insurance is the mechanism whereby an insured is protected against loss by a specified future contingency or peril in return for the present payment of premium. All of the following are defined as doing insurance business EXCEPT, Benefits for drug and alcohol treatment under a group health policy must include all of the following services EXCEPT, transportation to and from an outpatient facility. A license may be denied, suspended, or revoked if the licensee. The early years are charged more than what is needed, A license may be denied, suspended, or revoked if the licensee. All of these statements are correct about the policies reinstatement except, K will forfeit the right to use the automatic loan provision upon reinstatement. All of these would be acceptable annuity choices EXCEPT a(n). Legal corporate name. Which of the following statements is NOT CORRECT about the Commissioner of Insurance? Lane Company produced 50,000 units during its first year of operations and sold 47,300 at $12 per unit. Because boycott, coercion, and intimidation that result in the unreasonable restraint of trade are prohibited under the Texas Insurance Code covering unfair methods of competition. Insurance company agent appointments remain in force for which of the following maximum periods of time, if any? wait at least five years before applying for a new license. 31 days. Insurance agents and brokers may owe a fiduciary duty to both to the companies they represent and to the insurance . Fiduciary liability insurance is meant to fill in the gaps existing in traditional coverage offered through employee benefits liability or directors and officers policies. 2 years, under the Texas insurance code, an insurance company must pay death benefits for suicide if the policy has been in force for a MINIMUM of two years. Another agent with the same line of insurance. The insurer will deduct the outstanding loan balance from the. What is the bank guilty of? The premium has not been paid by the insured. They can be regulated by the U.S. Securities and Exchange Commission (SEC) or state securities regulators. The E&O claim is the insurance agent's malpractice suit. Under Texas insurance law, the term " transacting business" includes collecting premiums. A new agent must complete at LEAST ____ hours of continuing education within 24 months of initial licensure. Which of the following actions does the Commissioner of Insurance NOT have the power to conduct? The Common Disaster clause provides that if both the insured and the sole name beneficiary were to die in a common accident, which of the following is true? Anyone with retirement money under management, who made recommendations or solicitations for an individual retirement account (IRA) or other tax-advantaged retirement accounts, would be considered a fiduciary required to adhere to that standard, rather than to the suitability standard that was otherwise in effect. Fiduciary: Essentially, a fiduciary is a person or organization that owes to another the duties of good faith and trust. When such trust funds are deposited A business can insure the individuals who act as fiduciaries of a qualified retirement plan, such as the companys directors, officers, employees, and other natural person trustees. What is required for an agent whose license has been revoked? To act with the exclusive purpose of providing benefits to participants and beneficiaries and paying reasonable plan expenses. When making a recommendation, you must exercise reasonable diligence, care, and skill to know the consumer's financial situation, insurance needs, and financial objectives. The law prohibits misappropriation or theft of insurance funds . An insurer is NOT required to provide information on fraudulent claims if requested by. Prior to processing your investment instructions, please verify that the issuer or sponsor of your investment has . How long can a cash surrender value payment be deferred by the insurance company under the Nonforfeiture Law? What type of life policy has a death benefit that adjusts periodically and is written for a specific period of time? T would like to be assured $10,000 is available in 10 years to replace a roof on his house. An applicant MUST receive an Outline of Coverage when an application is taken for a(n). Some brokerage firms dont want or allow their brokers to be fiduciaries. was formed under the laws of another state. two years. A Medicare Supplement policy may be cancelled for which of the following reasons? D. mutual agreement! If an applicant for a life insurance policy and person to be insured by the policy are two different people, the underwriter would be concerned about. A key distinction in terms of loyalty is also important: A brokers primary duty is to their employer, the broker-dealer for whom they work, not to their clients. Definition. Care. The company will most likely pay the policy proceeds in the amount the premiums would have purchased at the insured's actual age. Multiple fiduciary duties may at times be in conflict with one another, a problem that often occurs with real estate agents and lawyers. Group life insurance on an employee's spouse may not exceed 1/2 of the amount of insurance on the life of the insured employee under the group policy. See Auction Information for full details." B) Passing examination with 75% or higher score. The trustee is an organization or individual that is responsible for managing the assets of a third party, often found within estates, pensions, and charities. You can learn more about the standards we follow in producing accurate, unbiased content in our. For all 350 Questions with complete . This formulation of theprudent-person rule required that a person acting as fiduciary was required to act first and foremost with the needs of beneficiaries in mind. activate insurance companies' financial reserves. In Texas, how long must a policy be in force before an insurance company must pay death benefits for suicide? On the other hand, a broker, who works for abroker-dealer, may not. an insurance company organized under New York laws and licensed to do business in Texas is considered a(n), ABC insurance company is actively engaging in boycott, coercion, and intimidation that results in the unreasonable restraint of trade. The Commissioner of insurance may suspend, revoke, or refuse to renew the license of an agent who if found guilty of misrepresentation or fraud in obtaining the license. Search Michigan Compiled Laws. In this situation, the agent may be guilty of coercion, A group life insurance policy may NOT insure groups consisting exclusively of persons who are. Failing to pay the premium would cause a Medicare Supplement policy to be cancelled. This applies to 'immediate' family, which includes spouse, children, siblings . Life insurance companies are required to establish and maintain an anti-money laundering compliance program according to which federal regulation? \end{array} Generally, the courts have said the answer to these questions is "NO." This is an example of what kind of producer authority? Study with Quizlet and memorize flashcards containing terms like An insurance company that has been denied or not yet applied for a Certificate of Authority is called, When determining whether an annuity is suitable for a client, the producer should ask about which of the following?, Before a licensed producer is eligible to transact insurance sales, they must be and more. To terminate an agent's appointment, an insurance company must. A standard of care is established between these two parties that must be maintained, regardless of personal interests. W is a 39-year old female who just purchased an annuity to provide income for life starting at age 60. So, you can think of an insurance broker as an intermediary between insurers and businesses, with no stakeholder interest in the policy itself. The company chose practical activity-at 50,000 units-to compute its predetermined overhead rate. This would include all of the following except: .see more including answer and explanation . Suicide may not be a defense against payment after the second year. With whom may an agent legally share commissions? The court noted that the relationship between an insurance agent and its insured is similar to that of an attorney fiduciary: [noun] one that holds a fiduciary relation or acts in a fiduciary capacity. All of these are characteristics of an Adjustable Life policy EXCEPT: face amount can be adjusted using policy dividends, A certificate of ____ permits an insurance company to transact business in Texas. Broker-dealers are regulated by the Financial Industry Regulatory Authority (FINRA) under standards that require them to make suitable recommendations to their clients. Specific duties include the following: Duty of care applies to the way the board makes decisions that affect the future of the business. Accounts receivable from Transportation to and from a treatment facility. A 15-year mortgage is best protected by what kind of life policy? elated by marriage, blood or legal adoption At an expected volume of 8,300 units, which alternative should be chosen? Responsibilities. Commissioner of Insurance. Calculate the cost of ending inventory under variable costing. Which of the following is NOT grounds for termination of an agency relationship. If the agent is negligent in his or her actions . Even while the beneficiary has no knowledge, the trustee has a fiduciary duty to invest the corpus according to the prudent person standard of conduct. This item is part of Moore Auctioneering Spring Gun Auction. U.S. Assets held in or administered by the branch or agency's trust department are excluded from all of the other schedules of this report except when trust funds are deposited by the trust department of the reporting institution. An insurance company that terminates an agent's appointment must send notice of the termination to the Texas Department of Insurance. Cutbacks in education efforts have decreased awareness of the dangers of drug addiction. On a life insurance policy, who is qualified to change the beneficiary designation? A $20,000 life insurance policy application is completed, however the producer does not collect the initial premium. Which of these provisions is NOT required in life insurance policies? 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