Life and annuity marketing methods and practices

Correct answer: The career, or captive, agency system

The career, also called captive or exclusive, agency system uses agents who represent primarily one insurer and are recruited, trained, and supported through that insurer's branch or general agency offices.

Correct answer: The independent, or brokerage, system

Independent agents and brokers place business with several insurers and choose among their products for each client, which describes Dana exactly.

Correct answer: An experienced independent producer who contracts directly with an insurer and is paid mainly on personal sales

A personal-producing general agent is an experienced independent producer who contracts directly with an insurer and is compensated mainly on his or her own sales.

Correct answer: Direct response marketing

Direct response marketing sells through mail, print, broadcast, telephone, or internet with no agent meeting the buyer face to face.

Correct answer: They apply to both channels, because they reach any illustration, statement, advertisement, or comparison regardless of how the policy is sold

Florida's unfair practices law makes it deceptive for any person to knowingly circulate a misleading estimate, illustration, circular, statement, sales presentation, omission, or comparison. The distribution channel does not change the rule.

Correct answer: To require insurers to deliver information that helps buyers select an appropriate plan, understand its basic features, and compare the costs of similar plans

The solicitation law requires insurers to deliver information that improves the buyer's ability to select the most appropriate plan, understand the policy's basic features, and evaluate the relative costs of similar plans.

Correct answer: Annuities

The solicitation law lists annuities, credit life, group life, ERISA pension and welfare plan policies, and variable life as exempt unless specifically included.

Correct answer: Yes, the law expressly applies to any issuer of life insurance contracts, including a fraternal benefit society

The law applies to any solicitation, negotiation, or procurement of life insurance in Florida and to any issuer of life insurance contracts, including a fraternal benefit society.

Correct answer: Exempt from the law unless specifically included

Variable life insurance, under which death benefits and cash values vary with unit values of separate account investments, is one of the solicitation law's exemptions.

Correct answer: 5 percent compounded annually

The equivalent level annual dividend is calculated by accumulating annual cash dividends at 5 percent interest compounded annually to the end of the 10th and 20th policy years.

Correct answer: Permitted, as long as the additional material does not violate the insurance code or another statute or regulation

The solicitation law states that it does not prohibit an insurer from using additional material that is not in violation of the chapter or any other statute or regulation.

Correct answer: Exempt, because group life insurance is excluded unless specifically included

Group life insurance is one of the listed exemptions from Florida's life insurance solicitation law, along with annuities, credit life, ERISA plan policies, and variable life.

Correct answer: An unfair and deceptive practice, because it misrepresents the dividends to be received

Florida defines as unfair and deceptive any illustration or statement that misrepresents the dividends or share of the surplus to be received on any insurance policy.

Correct answer: Is an unfair practice, because it misrepresents the policy as shares of stock or an ownership interest in the company

It is an unfair and deceptive act to misrepresent any insurance policy as being shares of stock or to misrepresent ownership interest in the company.

Correct answer: Misrepresentation for the purpose of inducing the lapse, forfeiture, exchange, conversion, or surrender of a policy

Florida lists as unfair and deceptive any misrepresentation made for the purpose of inducing, or tending to induce, the lapse, forfeiture, exchange, conversion, or surrender of any insurance policy.

Correct answer: A deceptive advertisement, because it would lead a reasonable person to believe the state guarantees returns on an insurance product

It is unfair and deceptive to use any advertisement that would cause a reasonable person to believe that the state or federal government guarantees returns on insurance products or stands behind a person's credit.

Correct answer: Uses a policy name that misrepresents the policy's true nature, which is an unfair and deceptive practice

Florida prohibits using any name or title of an insurance policy or class of policies that misrepresents its true nature.

Correct answer: The legal reserve system upon which any life insurer operates

The misrepresentation rule covers statements that are misleading as to the financial condition of any person or as to the legal reserve system upon which any life insurer operates.

Correct answer: Yes, because the prohibition reaches any omission that misrepresents the benefits, advantages, conditions, or terms of a policy

Florida's misrepresentation rule covers any estimate, illustration, statement, sales presentation, omission, or comparison that misrepresents the benefits, advantages, conditions, or terms of a policy.

Correct answer: Deceptive use of name, an unfair or deceptive practice

Using a financial institution's name or logo in marketing without its written consent, in a way that would lead a reasonable person to believe the solicitation came from or was endorsed by the institution, is deceptive use of name.

Correct answer: The credit union's written consent

The deceptive-use-of-name prohibition applies when the name or logo is used without the written consent of the financial institution. Written consent removes the violation.

Correct answer: An unlawful inducement, because it offers securities or anything of value not specified in the insurance contract

Florida prohibits giving, selling, or offering as an inducement to an insurance contract any stocks, bonds, or other securities, or anything of value not specified in the contract.

Correct answer: Issuing life insurance at a reduced rate on a payroll deduction plan, reasonably related to the savings from using the plan

Florida's list of practices that are not unlawful rebates includes issuing life or disability policies on a salary savings, bank draft, preauthorized check, payroll deduction, or similar plan at a reduced rate reasonably related to the savings.

Correct answer: The bonuses are paid to all policyholders and are fair and equitable to all and in the best interests of the company and its policyholders

Bonuses or premium abatements from surplus on nonparticipating life insurance or annuities are not an unlawful rebate if paid to all policyholders and fair and equitable to all, in the best interests of the company and its policyholders.

Correct answer: Not an unlawful rebate, because Florida expressly permits it

For life policies issued on the industrial debit plan, an allowance to policyholders who have continuously paid directly to an insurer's office, fairly representing the savings in collection expense, is not an unlawful rebate.

Correct answer: It must be reasonable in comparison to the customer's premiums or coverage for the policy class

The cost to the life insurer or agent of offering a value-added product or service must be reasonable in comparison to the customer's premiums or insurance coverage for the policy class.

Correct answer: Up to 1 year

A life or health insurer or agent with a good faith belief but insufficient evidence may provide the product or service, in a manner that is not unfairly discriminatory, as part of a pilot or testing program for up to 1 year.

Correct answer: 21 days

The insurer or agent must notify the office or department before commencing the pilot and may commence it unless the regulator objects within 21 days after receiving the notice.

Correct answer: Base availability on documented objective evidence, keep that evidence, and produce it to the regulator on request

The availability of a value-added product or service must be based on documented objective evidence, offered in a manner that is not unfairly discriminatory, and the evidence must be maintained and produced upon request by the office or department.

Correct answer: The agent must act in the best interest of the consumer

The purpose of Florida's annuity suitability law is to require agents to act in the best interest of the consumer when recommending an annuity, and to require insurers to supervise so consumers' needs and objectives are addressed.

Correct answer: Any sale or recommendation of an annuity

The scope section of Florida's annuity suitability law states that it applies to any sale or recommendation of an annuity.

Correct answer: Liquidity needs and tax status

Consumer profile information includes age, annual income, financial situation and needs, financial experience, insurance needs, financial objectives, intended use, time horizon, existing assets, liquidity needs, liquid net worth, risk tolerance, funding sources, and tax status.

Correct answer: A consumer-signed statement acknowledging that the annuity transaction is not recommended

When a consumer decides to enter into an annuity transaction not based on the agent's recommendation, the agent obtains a consumer-signed statement, on a form substantially similar to the one posted by the office, acknowledging the transaction is not recommended.

Correct answer: No, providing marketing or education materials and wholesaling do not, in and of themselves, constitute material control or influence

The requirements apply to every agent who exercised material control or influence in making the recommendation and received direct compensation, but providing marketing or education materials, product wholesaling, back office support, and general supervision do not, by themselves, constitute material control or influence.

Correct answer: The insurer

The law requires insurers to establish and maintain a system to supervise so that consumers' insurance needs and financial objectives are effectively addressed, including informing agents of the requirements.

Correct answer: Prohibited, because a life agent may not place coverage on a non-family member naming the agent's family member as beneficiary without an insurable interest

A life agent may not place or modify coverage on a person who is not a family member of the agent when the agent or the agent's family member is named beneficiary, unless the agent or family member has an insurable interest in the insured's life.

Correct answer: First cousin

Family member means a relative such as a parent, child, sibling, grandparent, uncle, aunt, first cousin, nephew, niece, spouse, in-law, step-relative, or half sibling of the life agent.

Correct answer: When the agent is acting as a fiduciary, is a licensed CPA, and is a registered investment adviser or registered securities dealer or associated person

A life agent may not serve as trustee, guardian, or attorney-in-fact for a person he or she does insurance business with unless a family member of that person, or acting as a fiduciary while also a licensed CPA and a registered investment adviser or dealer.

Correct answer: An actual, lawful, and substantial economic interest in the insured's life, or a reasonable expectation of benefit from the insured's continued life

Insurable interest means the agent or family member has an actual, lawful, and substantial economic interest in the safety and preservation of the insured's life, or a reasonable expectation of benefit or advantage from the insured's continued life.

Correct answer: No, an insurer may not refuse or limit life insurance based solely on past lawful foreign travel

An insurer may not refuse life insurance, refuse to continue it, or limit the amount, extent, or kind of coverage based solely on the individual's past lawful foreign travel experiences.