Free Alabama Life & Health practice questions

Answer: A. The insurer's state of domicile has revoked its authority to transact insurance

Ala. Code Sec. 27-3-20(a) lists the grounds on which the Commissioner shall suspend or revoke a certificate of authority: when another provision of the Insurance Code requires it, when the insurer no longer meets the requirements for its original authority because of deficient assets or otherwise, and when the insurer's state of domicile (or, for an alien insurer, its state of entry into the United States) suspends or revokes its authority. Consumer complaints, a home office move, and a change of officers and directors are not among those listed grounds.

Answer: B. It is confidential and privileged, though the Commissioner may use it in regulatory or legal action

Information in the department's possession that an insurer furnished, or that the Commissioner obtained in an investigation under the appointment and termination section, is confidential by law and privileged. It falls outside open records and freedom of information laws, is not subject to subpoena, and cannot be discovered or admitted in evidence in a private civil action. The Commissioner may still use it to further regulatory or legal action brought as part of the Commissioner's duties. Filing with the department does not make it a public record, and the section contains no exception for producer consent.

Answer: A. Neither prelicensing education nor the examination

An applicant previously licensed in another state for the same lines of authority is excused from Alabama prelicensing education and the examination. The exemption applies if the applicant is still licensed in that state, or if the application arrives within 90 days after the prior license was canceled and the prior state certifies good standing at cancellation (or NAIC producer database records show good standing for the line requested). Dana applied on day 75 with Georgia's certification, so she qualifies, and the exemption covers prelicensing education and the examination together. Her prior license need not be current, because the 90-day route applies.

Answer: D. The chapter does not require the insurer itself to obtain a producer license

Alabama's producer licensing chapter states that nothing in it requires an insurer to obtain an insurance producer license. The same subsection narrows the word 'insurer' for this purpose so that it excludes the insurer's officers, directors, employees, subsidiaries, and affiliates, so the insurer's exemption does not carry over to its people; they need their own basis for exemption, such as the conditions listed elsewhere in the same section. Because the insurer itself needs no producer license, it is wrong to say it must hold one for each line it writes or obtain one before appointing a producer.

Answer: A. The policy is in force, and the insurer may deduct the unpaid premium from the death proceeds

Alabama requires a life policy to allow a grace period of 30 days, or at the insurer's option one month of at least 30 days, for paying any premium after the first, and the policy stays in full force during that period. A death on March 20 falls inside a grace period that began March 1, so the policy has not lapsed and the claim is payable. The same provision lets the insurer deduct the premium due or overdue from the policy proceeds when a claim arises during the grace period, so the insurer is not obliged to pay the full face amount with no deduction. Nothing in the provision makes the benefit depend on the beneficiary first paying the premium.

Answer: C. 24 hours each biennium, with 3 of them on producer ethics

An Alabama producer who is subject to continuing education must complete at least 24 classroom hours of approved courses, with 3 of those hours on insurance producer ethics, reported biennially with the license renewal cycle. A producer licensed for more than one line of authority does not owe more hours than a single-line producer, so holding both lines does not double the requirement to 48. The requirement is measured every two years, not every year. The 12-hour figure with 2 ethics hours is a reduced requirement the same section reserves for certain producers who work only in an employer's office, which does not describe a producer subject to the full requirement.

Answer: A. One month, but not less than 30 days

Section 27-16-4 sets a four-week grace period for premiums after the first, except that where premiums are payable monthly the grace period is one month, but not less than 30 days. The policy continues in full force during the grace period, and if a claim arises then, any overdue and unpaid premiums may be deducted from the settlement. Four weeks is the general period that the monthly-premium exception replaces, and neither 31 days nor ten days is a period this provision uses.

Answer: C. The producer has violated it, whether or not she ever surrenders the policy

Alabama's twisting section bars any person from making a written or oral statement that misrepresents, or draws misleading incomplete comparisons about, the terms, conditions or benefits of any policy in order to induce, or attempt or tend to induce, a policyholder to lapse, forfeit, surrender, retain, exchange or convert a policy. A false spoken statement meant to get her to surrender is covered. Because attempting to induce is enough, the violation does not depend on whether she surrenders or loses money, and the section reaches statements about any policy, including the one she already owns.

Answer: B. It can apply, since the laws it covers include certificate of authority requirements

The crime is committed by a person who knowingly transacts the business of insurance in violation of laws requiring a license, a certificate of authority, or other legal authority for that business. Because the definition names a certificate of authority alongside a license, it is not confined to individuals who lack a producer license, and knowingly doing business without required authority falls within it. The definition contains no element of policyholder loss or of an unpaid claim.

Answer: B. The Commissioner of Insurance, as a duty of the office

Ala. Code Sec. 27-2-7 lists the duties of the Commissioner of Insurance, and among them is the duty to organize, supervise, and administer the Department of Insurance so the department performs its lawful functions efficiently and effectively. The statute places that duty on the Commissioner. It does not assign it to the Governor, the Secretary of State, or a board chosen by insurers.