California Life & Health Insurance Exam — All Questions
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As a result of Proposition 103 (1988), California is one of the few states where:
- a.Insurance may be sold only by the state
- b.Rebating a portion of commission or premium to a client is generally permitted✓
- c.No license is required to sell insurance
- d.Insurance rates are permanently frozen
Proposition 103 repealed California's statutory ban on rebating, making California one of the few states where rebating is generally permitted. Agents must still avoid unfair discrimination and other prohibited practices.
A California agent tells a client false information about her current insurer's financial condition to convince her to replace her policy with a new company. This conduct is:
- a.A lawful replacement
- b.Twisting, a prohibited unfair practice✓
- c.Churning of the same insurer's values
- d.A permitted rebate
Twisting is using misrepresentation or misleading comparisons to induce a policyholder to replace an existing policy, typically with a different insurer. It is prohibited under California's Unfair Practices Act and is distinct from lawful, properly disclosed replacement.