Free Rhode Island Life practice questions

Answer: C. Telling the applicant to answer no on the replacement question so the old insurer is not told

The rule treats any failure to comply with it as a violation of R.I. Gen. Laws Chapter 27-29, and one of its listed examples is advising an applicant to answer a replacement question negatively in order to keep the existing insurer from receiving notice. Another listed example is failing to ask the applicant about financing or replacement, so asking whether existing values will finance the purchase is compliance rather than a violation. Reading the replacement notice to the applicant and giving the insurer copies of individualized illustrations used in the sale are steps the rule requires of producers.

Answer: B. The life insurance company and any of its officers or agents

The penalty section reaches any life insurance company and any officer or agent of the company that violates the rate-discrimination or dues-collection provisions, with the penalties set under Sec. 42-14-16. Limiting liability to the company alone, to the individual producer alone, or to an officer who approved the conduct each leaves out persons the statute names.

Answer: A. Net assets above all liabilities of $3,000,000 or more and a certificate of compliance

A domestic insurer may not commence business or write, issue or effect policies until it meets the statute's financial minimum and has obtained from the commissioner a certificate of compliance with its charter and the section. For a mutual company the minimum is net assets above all liabilities of at least $3,000,000. Capital stock of $1,000,000 with $2,000,000 of paid-in and contributed surplus is the test for a stock company, and $2,000,000 of combined capital and surplus applies to a mono line company. Under the section, a company commences business on the date the commissioner issues the certificate, so no version of the requirement dispenses with it.

Answer: B. The company replaced its president and secretary during the year

Under Sec. 27-1-14, if the court concludes after the examination that the company's charter is forfeited at law, that it is being managed so that the public, those whose funds it holds, or its policyholders are at risk of fraud, that continuing its business would be hazardous to the public or its policyholders, or that it is insolvent, the court must enjoin the president, secretary, treasurer and other officers from carrying on the company's business and appoint a receiver of its property. Insolvency, hazardous continued operation and a danger of fraud are each listed grounds. A change in the company's officers is not among the listed grounds, so it is the exception. The court may also require the receiver to post a bond with surety.

Answer: B. Before the producer begins using the trade name

A producer doing business under any name other than the producer's legal name must notify the insurance commissioner prior to using that assumed name. Notice within 30 days after first use or at the next renewal comes after the name is already in use, and notice only when someone asks may never be given at all. The obligation is triggered before the name is used.

Answer: D. The deposit is permitted if the funds stay reasonably ascertainable from the records

Under Rhode Island's fiduciary statute, premiums a producer collects that are owed to an insurer are held in a fiduciary capacity and may not be misappropriated, converted to the producer's own use or illegally withheld, and a producer who converts or misappropriates them is guilty of theft. The statute does not require separate bank accounts or deposits for these funds so long as they are reasonably ascertainable from the producer's books and records. Depositing the premium in a general account with clear records is therefore permitted. Using a general account is not by itself theft under this section, the premium does not become the producer's own to use, and the producer holds it as a fiduciary rather than as an ordinary debtor.

Answer: B. On April 15, when the written approval is given

The previously approved plan of operation stays in effect, and the association may amend it when that is needed for fair and equitable administration. An amendment becomes effective upon the commissioner's written approval, so it takes effect on April 15. Board adoption alone does not make it effective, the statute sets no 30-day waiting period, and it does not call for ratification by the member insurers.

Answer: D. The rule leaves the obligation intact and is not read to limit or supersede it

Rhode Island's insurance privacy regulation states that nothing in it is to be construed to modify, limit or supersede the Workers' Compensation Act or a health care provider's duty to furnish information directly related to a workers' compensation claim. The physician's obligation therefore stands as the Act sets it. The privacy rule does not suspend that duty pending an opt-out, does not cut it back to what the worker authorizes under the privacy rule, and does not override it for health information.

Answer: C. Both resident and nonresident licensees

The continuing education chapter applies to resident and nonresident persons licensed to sell all lines of life and health insurance. Limiting it to residents, or to nonresidents, adds a restriction the section does not contain. Life and health lines are listed on their own, so a property and casualty license is not a condition of coverage.

Answer: A. At least the minimum nonforfeiture amount determined as of that same date

Section 27-4.4-5 requires that the present value of a paid-up annuity benefit, measured when annuity payments are scheduled to begin, be no less than the minimum nonforfeiture amount on that date. The present value is computed with the mortality table, if any, and the interest rate the contract specifies for its minimum paid-up annuity benefits. The statute measures the benefit against the minimum nonforfeiture amount, not against gross considerations, an earlier cash surrender benefit, or net considerations accumulated without interest.