Free South Carolina insurance law practice questions

Correct answer: D. At least 30 days before the hearing date

• A. Incorrect. Ten days is the notice period for license action in Section 38-43-130, not the general hearing notice.
• B. Incorrect. The general hearing notice period is thirty days, not 15.
• C. Incorrect. Twenty days is not the general hearing notice period; Section 38-3-170 says thirty days.
• D. Correct. Section 38-3-170 requires written notice at least thirty days before the designated date.

All hearings, unless otherwise specifically provided, must be held at the time and place designated in a written notice given by the director or his designee to the person cited to appear at least thirty days before the designated date.

Correct answer: A. Solicit

• A. Correct. Section 38-1-20(53) defines solicit as attempting to sell insurance or asking or urging a person to apply for a particular kind of insurance from a particular company.
• B. Incorrect. Sell means exchanging a contract of insurance for money or its equivalent on behalf of an insurer; no contract was exchanged.
• C. Incorrect. Negotiate means conferring with or advising a purchaser about the substantive benefits, terms, or conditions of a particular contract.
• D. Incorrect. Terminate refers to ending a producer's relationship with an insurer or authority to transact insurance.

As used in this title, unless the context otherwise requires: [...] (42) "Negotiate" means the act of conferring directly with or offering advice directly to a purchaser or prospective purchaser of a particular contract of insurance concerning substantive benefits, terms, or conditions of the contract, provided that the person engaged in that act either sells insurance or obtains insurance from insurers for purchasers. [...] (52) "Sell" means to exchange a contract of insurance by any means, for money or its equivalent, on behalf of an insurance company. (53) "Solicit" means attempting to sell insurance or asking or urging a person to apply for a particular kind of insurance from a particular company. [...] (58) "Terminate" means the cancellation of the relationship between an insurance producer and the insurer or the termination of a producer's authority to transact insurance.

Correct answer: C. To be licensed for the accident and health line of authority

• A. Incorrect. An appointment does not replace the line-of-authority license required by the statute.
• B. Incorrect. Supervision by another producer does not satisfy the license requirement for that line.
• C. Correct. Section 38-43-20(A) bars selling, soliciting, or negotiating any line unless the person is licensed for that line of authority.
• D. Incorrect. A license covers only the lines of authority for which the person is licensed.

(A) A person may not sell, solicit, or negotiate insurance in this State for any line or lines of insurance unless the person is licensed for that line of authority in accordance with this chapter.

Correct answer: B. 15 days

• A. Incorrect. The deadline is fifteen days, not ten.
• B. Correct. Section 38-43-50(C) requires the notice of appointment within fifteen days.
• C. Incorrect. Thirty days is the Director's verification limit, not the filing deadline.
• D. Incorrect. The deadline is fifteen days, not 45.

(C) To appoint a producer as its agent, the appointing insurer shall file, in a format approved by the director or his designee, a notice of appointment within fifteen days from the date the agency contract is executed or the first insurance application is submitted.

Correct answer: A. Two years after the revocation takes effect

• A. Correct. Section 38-43-130(D) bars reapplying until a two-year period has lapsed from the effective date of the revocation.
• B. Incorrect. The waiting period is two years, not one.
• C. Incorrect. The waiting period is two years, not five.
• D. Incorrect. The waiting period is two years, not six months.

A licensee whose license has been revoked or an applicant who has been refused a license by the director or his designee may not reapply for another license until a two-year period of time has lapsed from the effective date of the revocation or refusal or, if judicial review before the Administrative Law Court of the revocation or refusal is sought, after two years from the date of a final court order or decree affirming the revocation or suspension.

Correct answer: C. It is a violation punishable under § 38-2-10

• A. Incorrect. The failure is not made a felony.
• B. Incorrect. The statute does not cancel the license automatically.
• C. Correct. Section 38-43-107(B) makes the failure a violation of the title subject to the penalties in Section 38-2-10.
• D. Incorrect. The statute refers to Section 38-2-10 penalties, not a late fee.

(B) Failure to inform the director or his designee of a change in legal name or address within this period is a violation of this title and the producer is subject to the penalties provided in Section 38-2-10.

Correct answer: B. No, payment to such an unlicensed person is barred

• A. Incorrect. The statute has no exception for relatives.
• B. Correct. Section 38-43-200(A) bars paying a commission to a person who is required to be licensed and is not licensed.
• C. Incorrect. The statute has no dollar threshold.
• D. Incorrect. Insurer approval does not create an exception.

(A) An insurance company or insurance producer may not pay a commission, service fee, brokerage, or other valuable consideration to a person for selling, soliciting, or negotiating insurance in this State if that person is required to be licensed pursuant to the provisions of this chapter and is not licensed.

Correct answer: B. as clearly stated in the written policy

• A. Incorrect. A client's letter does not satisfy the requirement that terms be plainly expressed in the policy.
• B. Correct. The section bars making a contract of insurance or agreement as to a contract other than as plainly expressed in the policy issued.
• C. Incorrect. Approval by an agency manager is not a basis the section recognizes.
• D. Incorrect. The section contains no filing procedure for side agreements.

An insurer, its agent, or an insurance broker may not make a contract of insurance or agreement as to a contract other than as plainly expressed in the policy issued.

Correct answer: C. Twenty days

• A. Incorrect. Ten days is shorter than the period stated in S.C. Code § 38-59-10.
• B. Incorrect. Fifteen days is not the period stated in the section.
• C. Correct. The forms must be furnished within twenty days after receipt of the notice.
• D. Incorrect. Thirty days is longer than the twenty-day period stated in the section.

When an insurer under an insurance policy requires a written proof of loss after the notice of the loss has been given by the insured or beneficiary, the insurer or its representative shall furnish a blank to be used for that purpose. If the forms are not furnished within twenty days after the receipt of the notice, the claimant is considered to have complied with the requirements of the policy as to proof of loss upon submitting within the time fixed in the policy for filing proofs of loss written proof covering the occurrence, character, and extent of the loss for which claim is made.

Correct answer: C. $500,000

• A. Incorrect. $100,000 is not a limit stated in the quoted section.
• B. Incorrect. $300,000 applies to other coverages, such as disability income and long-term care, not health benefit plans.
• C. Correct. The limit for health benefit plans is $500,000.
• D. Incorrect. $5,000,000 is the cap for one owner of multiple nongroup life policies.

(3) The benefits that the association may become obligated to cover may not exceed the lesser of: [...] (b)(i) with respect to one life, regardless of the number of policies or contracts: [...] (B) for health insurance benefits: (1) $300,000 for coverages not defined as disability income insurance or health benefit plans or long-term care insurance, including any net cash surrender and net cash withdrawal values; (2) $300,000 for disability income insurance and $300,000 for long-term care insurance; (3) $500,000 for health benefit plans;

Correct answer: D. The beneficiary's creditors

• A. Incorrect. The provision protects the beneficiary from the beneficiary's creditors, not the insurer.
• B. Incorrect. The producer's creditors are not addressed by this provision.
• C. Incorrect. The provision concerns the beneficiary's creditors, not a group policyholder's.
• D. Correct. Section 38-63-40(B) allows proceeds held by the insurer by agreement to be exempt from claims of the beneficiary's creditors.

(B) Proceeds of life insurance or annuity contracts, by agreement, may be held by the insurer exempt from claims of the beneficiary's creditors.

Correct answer: C. Another ID, like an application number

• A. Incorrect. The regulation names an application or receipt number, not a Social Security number.
• B. Incorrect. The regulation requires alternative identification; the policy is not left off.
• C. Correct. If no policy or contract number has been issued, alternative identification such as an application or receipt number must be listed.
• D. Incorrect. The producer's license number does not identify the policy being replaced.

C. The notice shall list all life insurance policies or annuities proposed to be replaced, properly identified by name of insurer, the insured or annuitant, and policy or contract number if available; and shall include a statement as to whether each policy or contract will be replaced or whether a policy will be used as a source of financing for the new policy or contract. If a policy or contract number has not been issued by the existing insurer, alternative identification, such as an application or receipt number, shall be listed.

Correct answer: D. The existing insurer

• A. Incorrect. The notice names the existing insurer, not the producer.
• B. Incorrect. The notice names the existing insurer, not the replacing insurer.
• C. Incorrect. The notice names the existing insurer, not the Department.
• D. Correct. The notice says the existing insurer must send it if requested.

APPENDIX A IMPORTANT NOTICE: REPLACEMENT OF LIFE INSURANCE OR ANNUITIES [...] Make sure you know the facts. Contact your existing company or its agent for information about the old policy or contract. If you request one, an in force illustration, policy summary or available disclosure documents must be sent to you by the existing insurer.

Correct answer: C. 8% a year, compounded annually

• A. Incorrect. The cap is eight percent, not six.
• B. Incorrect. The cap is eight percent compounded annually.
• C. Correct. Interest on both premiums and indebtedness may not exceed eight percent a year compounded annually.
• D. Incorrect. The cap is eight percent compounded annually, not twelve percent.

All individual life insurance policies must contain in substance the following: [...] (j) a provision that the policy may be reinstated at any time within three years after the date of default in the payment of any premium, unless the policy has been surrendered for its cash value or unless the extended term insurance, if any, has expired, upon evidence of insurability satisfactory to the insurer and the payment of all overdue premiums and payment (or within the limits permitted by the then cash value of the policy reinstatement) of any other indebtedness to the insurer upon the policy with interest as to both premiums and indebtedness at a rate not exceeding eight percent a year compounded annually.

Correct answer: B. A separate acknowledgment form the owner signs

• A. Incorrect. Director approval of each policy is not required by this subsection.
• B. Correct. Subsection (B)(3) allows a hazardous sports exclusion, and under (C) the insurer must have a separate form acknowledging the exclusions signed by the owner of the policy.
• C. Incorrect. The owner, not the beneficiary, signs.
• D. Incorrect. No extra review period is required.

(B) An individual life insurance policy or rider to such a policy delivered or issued for delivery in this State may exclude or restrict liability in the event of death occurring while the insured is a resident in a specified foreign country or countries, but except as provided in subsection (A) may not contain any provision excluding or restricting liability in the event of death caused in a certain specified manner, except as a result of: [...] (3) death as a result of hazardous occupations or hazardous sports specified in the policy or rider. [...] (C) If an individual life insurance policy or rider contains any exclusions or restrictions of liability as allowed in subsection (B), the policy or rider must have a prominent stamp of notice of these exclusions or restrictions on the face of it and the insurer is required to have a separate form acknowledging the exclusions of liability signed by the owner of the policy.

Correct answer: A. Unpaid premium or material misrepresentation

• A. Correct. Section 8.A(5)(b) limits cancellation or nonrenewal to nonpayment of premium or material misrepresentation.
• B. Incorrect. The issuer may not cancel or nonrenew solely on the ground of health status.
• C. Incorrect. Age is not a permitted ground; only nonpayment or material misrepresentation are.
• D. Incorrect. A guaranteed renewable policy cannot be cancelled for any reason with notice.

A. General Standards. The following standards apply to Medicare Supplement policies and certificates and are in addition to all other requirements of this regulation. [...] (5) Each Medicare Supplement policy shall be guaranteed renewable. (a) The issuer shall not cancel or nonrenew the policy solely on the ground of health status of the individual. (b) The issuer shall not cancel or nonrenew the policy for any reason other than nonpayment of premium or material misrepresentation.

Correct answer: C. 6 months

• A. Incorrect. The threshold is six months, not three.
• B. Incorrect. The threshold is six months, not twelve.
• C. Correct. Section 23.B bars any such periods when the replaced policy has been in effect for at least six months.
• D. Incorrect. The threshold is six months, not twenty-four.

B. If a Medicare Supplement policy or certificate replaces another Medicare Supplement policy or certificate which has been in effect for at least six (6) months, the replacing policy shall not provide any time period applicable to preexisting conditions, waiting periods, elimination periods and probationary periods.

Correct answer: A. 5 years

• A. Correct. Section 14.B(2) requires listing policies sold in the past five years that are no longer in force.
• B. Incorrect. The look-back is five years, not two.
• C. Incorrect. The look-back is five years, not three.
• D. Incorrect. The look-back is five years, not ten.

B. Agents shall list any other health insurance policies they have sold to the applicant. (1) List policies sold that are still in force. (2) List policies sold in the past five (5) years that are no longer in force.

Correct answer: C. 31 days

• A. Incorrect. 38-71-350 allows thirty-one days, not thirty.
• B. Incorrect. 38-71-350 allows thirty-one days.
• C. Correct. 38-71-350 requires proof of incapacity and dependency within thirty-one days of the child's attainment of the limiting age.
• D. Incorrect. 38-71-350 allows thirty-one days.

An individual hospital or medical expense insurance policy, hospital service plan contract, or medical service plan contract delivered or issued for delivery in this State which provides that coverage of a dependent child terminates upon attainment of the limiting age for dependent children specified in the policy or contract shall also provide in substance that attainment of the limiting age does not operate to terminate the coverage of the child while the child is and continues to be both (a) incapable of self-sustaining employment by reason of intellectual disability or physical handicap and (b) chiefly dependent upon the policyholder or subscriber for support and maintenance, so long as proof of the incapacity and dependency is furnished to the insurer by the policyholder or subscriber within thirty-one days of the child's attainment of the limiting age and subsequently as may be required by the insurer but not more frequently than annually after the two-year period following the child's attainment of the limiting age.

Correct answer: A. Send the insured a second notice

• A. Correct. 38-71-610(1): if the premium is not paid upon first notice at least ten days prior to lapsing, a second notice must be forwarded to the insured.
• B. Incorrect. 38-71-610(1) requires a second notice to the insured, not a report to the Director.
• C. Incorrect. The statute requires a second notice before lapse.
• D. Incorrect. The statute requires a second notice forwarded to the insured.

(1) All insurers issuing accident or health policies, or combinations thereof, in this State, where the premiums on the policies are collected directly by mail on a quarterly, semiannual, or annual basis, shall give a written notice to the policyholders of any premium due on the policies at least ten days prior to the due date. [...] In the event the premium is not paid upon first notice at least ten days prior to lapsing of the policy a second notice must be forwarded to the insured.