Wisconsin Life Insurance Chapter 2
Questions and Answers
Coercion - CORRECT ANSWER forceful act or threat aimed to influence a person to act
against
... [Show More] his or her will
*to require, as a condition to a loan, that the applicant purchase insurance from a
specific insurer
Commssioner - CORRECT ANSWER the head of the State Department of Insurance
Exempt - CORRECT ANSWER not subject to an obligation
Forfeit - CORRECT ANSWER penalty; something surrendered as punishment
Immunity - CORRECT ANSWER exemption from a duty or legal obligation, or protection
against a liability
Inducement - CORRECT ANSWER an offer that attempts to influence the other party
Insolvent - CORRECT ANSWER unable to meet financial obligations
Lapse - CORRECT ANSWER policy termination due to nonpayment of premium
NAIC - CORRECT ANSWER National Association of Insurance Commissioners, an
organization composed of insurance commissioners from all 50 states, the District of
Columbia and the 4 U.S territories, formed to resolve insurance regulatory issues
Promulgate - CORRECT ANSWER to make public, to put into action (e.g. laws, court
decrees, and similar)
Restitution - CORRECT ANSWER restoration to the original condition or repayment
Statute - CORRECT ANSWER a written law passed by a legislative body
Wisconsin Insurance Law - CORRECT ANSWER 1. The licensing of insurance
intermediaries
2. Regulation of insurance marketing practices
3. Compensation of insurance intermediaries
Purpose of Regulations for Intermediary Licensing - CORRECT ANSWER 1.
Encouraging improvement in the professional competence of insurance intermediaries
2. Providing maximum freedom of marketing methods for insurance, consistent with the
interest of the public
3. Preserving and encouraging competition at the consumer level
4. Limit the adverse effects of imperfect competition on the cost of insurance
5. Regulate insurance marketing practices
Intermediary - CORRECT ANSWER a person who assists another with:
1. Placing insurance or annuities
2. Advising about insurance needs and coverages
3. Negotiating insurance or annuities; or
4. Soliciting insurance or annuities on the behalf of another person
PANS - CORRECT ANSWER Place, advise, negotiate, solicit
Exemptions for Intermediary License - CORRECT ANSWER 1. The functions they
perform do not require social competence or trustworthiness; or
2. Other existing safeguards make regulation unnecessary
*an insurance contract is still valid even if sold or serviced by an unlicensed
intermediary
Insurance Agent - CORRECT ANSWER intermediaries who act on behalf of the insurer
they represent
Insurance Broker - CORRECT ANSWER one who places business with more than one
company and has no exclusive contract requiring that his or her business first be offered
to a single company
(an intermediary who procures insurance on behalf of an applicant for insurance or an
insured)
*a broker does not act on behalf of the insurer, except to collect premiums
Intermediary Corporation/Partnership - CORRECT ANSWER at least one executive
must have an insurance license for a corporation to get a license
*no exam is required in this case
Reinsurance Broker - CORRECT ANSWER a person, other than an officer or employee
of the ceding insurer (the insurer who purchases reinsurance), who solicits, negotiates,
or places reinsurance on behalf of an insurance company
Reinsurance Manager - CORRECT ANSWER any person who has authority to bind, or
manages all or part of the assumed reinsurance business of a reinsurer and acts as an
agent for the reinsurer
Surplus Lines Agent or Broker - CORRECT ANSWER licensee able to place insurance
with unauthorized insurers
*The Commissioner may issue a surplus lines license to an agent or broker if the
applicant shows he/she has the competence necessary to deal with the problems of
surplus lines insurance The Commissioner may require the agent or broker to supply a
bond of up to $100,000. The surplus lines agent is also responsible for collecting the 3%
tax paid by policyholders and keeping these funds in a separate account and not
commingled with other funds [Show Less]