Free Louisiana Life practice questions

Answer: B. One hundred thirty percent of the reserve mortality assumption

Louisiana's paid-up, extended insurance and cash value statute lets an insurer, when it sets net single premium rates for temporary insurance, use 130 percent of its reserve mortality assumption as the mortality rate. The 110 percent and 150 percent figures do not appear in that provision. The unloaded-assumption answer is wrong because the statute expressly permits the 130 percent figure, so a rate above the reserve assumption is allowed.

Answer: A. One year

R.S. 22:1554(E)(1) bars a licensee whose license was revoked from filing a new application for one year, counted from the effective date of the revocation or from the date of a final court order affirming it. Even after that year, the commissioner may deny the application unless the applicant shows good cause. Ninety days and two years are not the waiting period this paragraph sets. Five years is the outer limit of a revocation imposed for a second violation after a license has been reissued, which is a later paragraph of the same section and not the wait after a first revocation.

Answer: A. The 36-month period following the termination's effective date

Louisiana's expirations statute provides that when an agency contract ends and the insurer is required by law to keep the insured's coverage in force, the insurer must continue paying the producer commissions on the policies it is required to renew. The statute sets that period as the thirty-six months following the effective date of the termination, or three years, whichever is sooner, and the commission is paid at the insurer's prevailing rates for that class or line of business. Twelve months and sixty months are not the period the statute names. Stopping at the first renewal is wrong because the obligation runs to required renewals across the whole thirty-six month period.

Answer: A. $25,000

When the person knew or reasonably should have known of the violation, the commissioner may impose up to $25,000 for each act or violation, with an aggregate cap of $500,000 in any six-month period. $1,000 per act is the ceiling for a violation the person had no reason to know about. $100,000 is the aggregate cap in that same unknowing case, not a per-act figure. $5,000 is not a per-act limit in this penalty provision. The order may also suspend or revoke the license of a person who knew or should have known of the violation.

Answer: A. The calendar month ending two months before the rate is determined

Under an adjustable maximum, the loan rate may not exceed the higher of two measures: the published monthly average for the calendar month ending two months before the rate is determined, or the rate used to compute the policy's cash surrender values plus one percent per annum. The statute names one specific month with a two-month lag, so the month immediately before the determination date, the month of issue, and a twelve-month average are all wrong.

Answer: A. $500 for that first disclosure

Louisiana keeps criminal background information held by the office of insurance fraud confidential, releasing it outside that office only as needed to act on the applicant's application. An unlawful disclosure carries a fine of $500 for the first disclosure and $1,000 for each later disclosure by the same individual. The $1,000 figure applies to repeat disclosures, not to a first one. Neither $100 nor $5,000 is a figure this statute sets.

Answer: A. The home state grants nonresident licenses to Louisiana residents on the same basis

R.S. 22:1560(A) makes the waiver mandatory for a nonresident applicant with a valid home state license when that home state treats Louisiana residents the same way in granting nonresident licenses. Even then, the requirements of R.S. 22:1548 still apply. The subsection sets no minimum period of prior licensure, says nothing about examination vendors or outlines, and does not require the applicant to complete Louisiana continuing education first.

Answer: B. On the inception date of the renewal policy that follows the current term

Under R.S. 22:1564(B)(1)(c), a producer change the insured requests during a policy period normally requires the insurer to give the producer ten calendar days' written notice first. When the request arrives within the last ten calendar days of the policy period, as a request six days before the end does, the insurer still gives the ten-day notice, but the change takes effect on the inception date of the renewal policy. So the change is not effective on receipt of the request, and not ten days after the notice. The anniversary rating date is the point Subsection (B)(1)(d) uses for moving commissions on policies written for more than one year or continuous until canceled, not the effective date of a producer change.

Answer: D. The insurer itself, as the legal entity that issues the policies

R.S. 22:1544(A) provides that the producer licensing Subpart does not require an insurer to obtain a producer license, and it narrows the word insurer for that purpose: it does not include the insurer's officers, directors, employees, subsidiaries, or affiliates. The exception therefore reaches only the company itself. An affiliate, a director, or an employee cannot rely on Subsection (A) to avoid licensing.

Answer: D. $5,000

Under R.S. 22:1552(B), a producer who keeps using a nonapproved trade name for ten or more days after the commissioner's notice to stop is subject to an additional fine of up to $5,000. Three weeks is past that point. The $250 figure is the cap on the initial fine for using a nonapproved trade name, not the added fine for ignoring the notice. Neither $500 nor $1,000 is the limit this subsection sets for continued use.