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Life and Health Insurance Producer Exam

Ethics and unfair practices: practice questions

Our Life & Health Insurance bank has 12 questions on this topic. Here are 4 of them with answers; the full mock exam draws from every topic, like the real one.

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Question 1

What is misrepresentation by a producer?

  1. Making false or misleading statements about a policy to induce a sale
  2. Giving the client a brochure printed by the insurer that describes the policy accurately
  3. Recommending a policy that suits the client's needs
  4. Explaining the policy's exclusions to the client
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A. Making false or misleading statements about a policy to induce a sale — It is an unfair trade practice.

Question 2

What is unfair discrimination?

  1. Declining an applicant who has a terminal illness
  2. Treating people of the same risk class differently in rates or benefits
  3. Charging smokers more than non-smokers for the same amount of life insurance coverage
  4. Charging older applicants more than younger ones
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B. Treating people of the same risk class differently in rates or benefits — Rating by actual risk is fair; by race or religion is not.

Question 3

What is churning?

  1. Reviewing a client's coverage every year
  2. Offering the same policy to several different clients in the same week or month
  3. Moving a client from one insurer to a better one
  4. Replacing policies within the same insurer mainly to generate commissions
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D. Replacing policies within the same insurer mainly to generate commissions — It harms clients through new surrender charges and contestable periods.

Question 4

What is a producer's duty if they suspect a client is committing insurance fraud?

  1. Warn the client privately so they can withdraw the claim or hide the evidence
  2. Report it according to state law and the insurer's procedures
  3. Pay the claim personally to avoid trouble
  4. Ignore it to keep the client's business
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B. Report it according to state law and the insurer's procedures — Many states give immunity for good-faith fraud reports.

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