An insurance broker should accept an insured s premium payment where it is in the insured s best interests to do so. The fixed cost for proposal A is $65,000, and for proposal B,$34,000. The agent's legal responsibilities to the client arise out of: The agent's legal responsibilities to the insurer arise out of: Negligence is defined as "failing to do something that a reasonable and prudent person would do, or doing something which a reasonable or prudent person would not do." Fiduciary accounts are deposit accounts established by a person or entity for the benefit of one or more other parties, also known as principals. The purpose for the Buyer's Guide, which must be given to every insurance prospect in the first meeting with a producer, is to: The purpose for the Policy Summary, which must be given to every insurance applicant before an application is signed, is to: Though not specifically cited in the producer's contract, the producer is expected to telephone prospects on the insurer's behalf to arrange sales appointments. T has an annuity that guarantees an income payment for the rest of his life. \text { Customer } & \text { Amount } \\ A newly licensed General Lines agent must complete a MINIMUM of 24 hours of continuing education within 24 months after initial licensure. closely regulated and requires full disclosure. 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? 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. coercion send termination notice to the Texas Department of Insurance. Which of the following circumstances would cause a Medicare Supplement policy to be cancelled? DOL Fiduciary Rule.. Which of the following actions does the Commissioner of Insurance NOT have the power to conduct? Any agent that sells an insurance policy for an unauthorized insurer runs the risk of being responsible for unpaid claims if the unauthorized insurer does not pay. When you hire an insurance broker, they work directly for you - not the insurance companies. Misrepresentation. A similar fiduciary duty can be held by corporate directors, as they can be considered trustees for stockholders if on the board of a corporation, or trustees of depositors if they serve as the director of a bank. Law 2121 (a) (McKinney 2000), a premium payment made to an insurance broker is deemed to be payment made to the insurer. 12. All the following statements regarding apparent authority are correct EXCEPT: When first meeting prospective insurance applicants, a producer must give them a document that explains the general features, benefits, and conditions of the type of insurance being considered, which is called a, GENERAL INSURANCE PRINCIPLES class3 INSURANCE, Quiz: Riders Covering Additional Insureds, Individual Disability Income Policy Provisions, Quiz: Insurance for Seniors and Special Needs, Fundamentals of Financial Management, Concise Edition, Marketing Essentials: The Deca Connection, Carl A. Woloszyk, Grady Kimbrell, Lois Schneider Farese, Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield. A foreign insurance company is one that is incorporated under the laws of another state. Fiduciary responsibility- Money collected with respect to an insurance transaction must be held in a position of trust by the agent or broker. insurance issued on a debtor to cover outstanding loan balances. Which actions will a life insurance company most likely take if an insured dies and it is discovered that the insured's age was misstated on the application? Sources of an Insurance Agent's Legal Responsibilities, An insurance agent serves two masters the insured and the insurer. A. the producer and the policyowner B. the insurer and the insured C. the insurance . A Medicare Supplement policy may be cancelled for which of the following reasons? During a sales presentation for a participating life insurance policy, an agent MUST. While board volunteers do not require certification, due diligence includes making sure that professionals working in these areas have the appropriate certifications or licenses for the tasks that they are performing. he also requests that the proceeds to be payable to an unrelated third-party. 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. Decedent is a legal term used by tax accountants, lawyers, and estate planners to refer to a deceased person. Prior to processing your investment instructions, please verify that the issuer or sponsor of your investment has . The interest is not taxable since it remains inside the insurance policy. An organization that solicits insurance only among its members is known as a fraternal benefit society. Attorneys are held liable for breaches of their fiduciary duties by the client and are accountable to the court in which that client is represented when a breach occurs. \text { Art Malloy } & 11,050 \\ The fiduciary rule has had a long and yet unclear implementation. This is what is known as a prudent person standard of care, a standard that originallystems from an 1830court ruling. \text { Variable overhead } & 65,000 \\ returning a portion of a premium as inducement to purchase insurance. Insurance agent has a fiduciary responsibility to all of the following EXCEPT? Fiduciaries must act prudently and must diversify the plan's investments in order to minimize the risk of large losses. Which of these factors does NOT influence an applicant's need for life insurance? In Texas, a domestic insurance company is defined as a company that, Chapter 8 Texas Laws and Rules Pertinent to I, Insurance license practice XCEL solutions Exa, Life Insurance Ch. For example, a fiduciary deed is used to transfer property rights in a sale when a fiduciary must act as an executor of the sale on behalf of the property owner. All states require real estate agents to be licensed by the state to engage in the sale of real estate. 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. Which of these is NOT a source of funding for Social Security benefits? Suicide may not be a defense against payment after the second year. Cash value may be borrowed against. The Carrefour Group reports the following description of its trading securities (titled financial assets reported at fair value in the income statement). 3. Which of the following statements is NOT CORRECT about the Commissioner of Insurance? 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. If investment service providers are used, then any service agreements should be in writing. A Long-Term Care policy must offer a MINIMUM benefit period of how many months? Designate a licensed individual producer to be responsible for the business's compliance with the insurance laws of Alabama C. Be a publically owned company D. obtain an insurance producer license Which of the following is true about an insurance agency? An agent may legally share commissions only with another agent who is licenses in the same line of insurance. Under the Texas code, the MAXIMUM for which a spouse may be insured in a company group life program with a $50,000 death benefit is: An insurance agent does NOT have fiduciary responsibilities to. Extended Term. This is an example of what kind of producer authority? other agents. K's whole life insurance policy lapsed two months ago due to nonpayment. Specific duties include the following: Duty of care applies to the way the board makes decisions that affect the future of the business. Because the agent handles money of the insured and insurer, he/she has a fiduciary responsibility. Since corporate directors can be considered fiduciaries for shareholders, they possess the following three fiduciary duties: There are many examples of fiduciary duty. In estate law, the trustee may also be known as the estates executor. Why is an applicant's signature required on a life insurance application? Fiduciary responsibility. The challenge in these cases is proving the existence of a duty because in most jurisdictions insurance agents and brokers have only limited duties to their clients. Calculate the cost of one unit of product under variable costing. 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. A business entity acting as an insurance producer is required to do all of the following EXCEPT A. Which of the following statements about health coverage for newborns is NOT true? When such trust funds are deposited Failure to complete the . Transportation to and from a treatment facility. A group life insurance policy may NOT insure groups consisting exclusively of persons who are related by marriage, blood or legal adoption. 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. 504 . Which of the following may NOT charge fees for insurance advice? this employee's group life contract can be, converted to an individual permanent policy at an individual rate, In order for coverage on a non-medical insurance application to take effect the same day, the producer must collect a signed application and, How long can a cash surrender value payment be deferred by the insurance company under the nonforfeiture law, Consumer reports requested by an underwriter during the application process of a life insurance policy can be used to determine, probability of making timely premium payments, In Texas an individual life insurance policy is required to have a grace period of, A Nonforfeiture clause gives the policy owner, guaranteed values even if the policy has lapsed, An individual working part time has an annual income of $25,000. 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. Which of these statements is INCORRECT regarding the federal income tax treatment of life insurance? $25,000. These include white papers, government data, original reporting, and interviews with industry experts. 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. This has generally been considered to be derived from the directors' fiduciary duty of loyalty, which of loyalty obligates directors and officers to act in good faith and in the best interests . We can use the fact that radioactive materials decay exponentially to determine the ages of ancient bones from archaeological sites. An insurer is NOT required to provide information on fraudulent claims if requested by. Definition, Role, and Duties, Financial Advisor: Overview, FAQ, How to Choose One, Registered Investment Advisor (RIA) Definition, Office of the Comptroller of the Currency, Chamber of Commerce of the United States of America v. United States Department of Labor. From the list below, write the term that best completes each sentence. In addition, an agent has a fiduciary relationship with an insurer that requires an extraordinary degree of care. Under common law, an insurance agent owes a duty to use the degree of care necessary to protect the interest of the insured. C) Completing pre-licensing training. Note 10 to Carrefours 2008 financial statements reports EUR 117 million in unrealized gains for 2008 and EUR 63 million in unrealized losses for 2008, both included in the fair value of those financial assets held for trading. This applies to 'immediate' family, which includes spouse, children, siblings . The variable cost for A is 10, and for B, 14. Under Texas insurance law, the term " transacting business" includes collecting premiums. An insurance agent has a fiduciary responsibility to all of the following, EXCEPT. You must continue to take an active role in evaluating the agent. Casebolt Company wrote off the following accounts receivable as uncollectible for the first year of its operations ending December 31: CustomerAmountShawnBrooke$4,650EveDenton5,180ArtMalloy11,050CassieYost9,120Total$30,000\begin{array}{lr} Other descriptions of suitability include making sure that transaction costs are not excessive and that their recommendations are not unsuitable for the client. The agency/company contract creates a "special relationship" between the agent and insurer, thereby increasing the required degree of care. Wait at least five years before applying for a new license. A group life insurance policy may NOT insure groups consisting exclusively of persons who are related by marriage, blood or legal adoption. We also reference original research from other reputable publishers where appropriate. While recognizing the general rule in Florida that there is no duty for an agent to offer advice to his customer, the Court in Marsh recognized that when the agent and his customer have a "special relationship" the agent has a duty to give the customer advice. A license may be denied, suspended, or revoked if the licensee. What is the bank guilty of? Find the indicated quantities for y=f(x)=3x2y = f (x) = 3x^2y=f(x)=3x2. Fiduciary Returns. The minimum age at which a person can sign a life insurance application is. A standard of care is established between these two parties that must be maintained, regardless of personal interests. As a condition for a loan, a bank requires the borrower to purchase credit insurance from a specific company. revocation of all licenses; and insurance customers.Subject to a civil penalty of, at most, $50,000 per violation. More than one Insurer. A due diligence process must be designed to evaluate potential investments. On the other hand, a broker, who works for abroker-dealer, may not. For example, a situation where a fund manager (agent) is making more trades than necessary for a clients portfolio is a source of fiduciary risk because the fund manager is slowly eroding the clients gains by incurring higher transaction costs than are needed. Registered investment advisors and insurance agents have a fiduciary duty to clients. This would include all of the following except: .see more including answer and explanation . That means if you volunteered to sit on the investment committee of the board of your local charity or other organization, you have a fiduciary responsibility. Michigan Chapter 500. B. destruction or condemnation of the property. Which of these provisions is NOT required in life insurance policies? Because the agent handles money of the insured and insurer, he/she has a fiduciary responsibility. 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