Georgia Life & Health Insurance Exam — All Questions

In an executive bonus (Section 162) plan, the employer:

• a.Owns the life insurance policy outright and names itself as the beneficiary, while the executive simply agrees to be the insured person
• b.Pays a bonus, deductible to the employer and taxable to the executive, that the executive uses to pay premiums on a policy they own✓
• c.Provides no real benefit to the executive
• d.Cannot deduct any part of the arrangement

In a Section 162 executive bonus plan, the employer pays a deductible bonus (taxable to the executive) and the executive owns the policy and pays its premiums. The employer does not own the policy.

A split-dollar life insurance arrangement is:

• a.An agreement in which an employer and employee share the costs and benefits of a life policy, such as premiums, cash value, and death benefit✓
• b.A type of deferred annuity
• c.A term insurance rider that an employer attaches to the executive's personal life insurance policy in order to provide extra temporary death benefit at a low cost
• d.A government insurance program

Split-dollar is an arrangement between an employer and employee (or two parties) to split the premium costs and policy benefits of a life policy. It is not a government program, annuity, or rider.

Which agency issues resident life and health insurance producer licenses in Georgia?

• a.Georgia Office of Insurance and Safety Fire Commissioner✓
• b.Georgia Department of Financial Services
• c.Georgia Insurance Commission
• d.Georgia Board of Insurance Agents

Georgia's insurance regulator is the Office of Insurance and Safety Fire Commissioner, led by an elected Commissioner who also serves as the state's Safety Fire Commissioner (Fire Marshal). It issues producer licenses and enforces the state insurance code.

After a producer is licensed in Georgia, what must happen before he or she can transact business for a particular insurer?

• a.Nothing further is required once the license is issued
• b.The insurer must appoint the producer and file that appointment with the Georgia Office of Insurance and Safety Fire Commissioner✓
• c.The producer must post a personal surety bond with the state treasurer
• d.The producer must become a resident of the insurer's home state

A license lets a person act as a producer, but to represent a specific company the insurer must appoint the producer and file the appointment with the department. A producer may hold appointments from more than one insurer at the same time.

Which statement best describes Georgia's continuing education (CE) requirement for resident life and health producers?

• a.No continuing education is required to renew the license
• b.CE is required only in the first year of licensure and never again
• c.Producers must complete state-approved CE each renewal period, including an ethics component, to keep the license active✓
• d.CE may be satisfied only by re-taking the state licensing examination

Like other states following the NAIC model, Georgia requires resident producers to complete approved continuing education each renewal cycle, including a required ethics portion, and to pay the renewal fee. The exact hour totals are set by the department; the tested concept is that ongoing, ethics-inclusive CE is mandatory to renew. Always confirm current hour requirements with the department before renewal.

A producer already licensed and residing in another state wants to sell life and health insurance in Georgia. Under standard producer-licensing rules, that producer would generally apply for:

• a.A second resident license, which requires moving to Georgia
• b.A nonresident producer license in Georgia, typically issued on a reciprocal basis without retaking prelicensing exams✓
• c.No license at all, because an out-of-state license is automatically valid everywhere
• d.A temporary permit that can never be renewed

Under the NAIC Producer Licensing Model Act, states issue nonresident licenses on a reciprocal basis: a producer who holds a license in good standing in a home state can usually obtain a Georgia nonresident license without repeating prelicensing coursework or exams, subject to the application and fee.

The Georgia Life and Health Insurance Guaranty Association protects certain policyholders if a member insurer becomes insolvent. How may a producer use the association in a sales presentation?

• a.As a headline selling point in advertising
• b.As a guarantee that every claim will be paid in full
• c.It may not be used as an inducement to buy insurance or in advertising✓
• d.Only when selling annuities, not life insurance

Like other states, Georgia prohibits producers and insurers from using the existence of the guaranty association to induce a sale or in advertising. The association is a limited safety net for insolvencies, subject to statutory dollar caps, not a marketing tool.

Individual life insurance policies delivered in Georgia must include a 'free look' (right to examine) provision. What right does it give the policyowner?

• a.To return the policy within a set period (commonly at least 10 days) after delivery for a full premium refund✓
• b.To cancel only within 3 days of signing the application
• c.To cancel the policy anytime in the first year with no financial effect
• d.No refund once the policy has been delivered

A free-look provision lets the policyowner examine the delivered policy and return it within the stated window for a full refund of premium. Ten days is a common minimum for individual life; replacement transactions and policies sold to seniors often carry longer periods. Confirm the current statutory period with the department.

When a producer in Georgia replaces an existing life insurance policy with a new one, replacement regulations generally require the producer to:

• a.Say nothing to the existing insurer, to avoid interference
• b.Give the applicant required replacement disclosures and notify the companies involved so the existing insurer can respond✓
• c.Guarantee in writing that the new policy is always a better deal
• d.Wait five years before the replacement is permitted

Replacement rules protect consumers from unnecessary policy churning. The producer must provide the applicant with the required replacement notice and comparison information and see that the companies are notified, giving the existing insurer a chance to respond before the old policy is dropped.

A Georgia producer offers a prospect a cash payment out of the producer's own commission if the prospect buys a life policy. This practice is:

• a.Allowed if disclosed to the insurer in writing
• b.Allowed for term life only
• c.Prohibited as unlawful rebating✓
• d.Required to be reported but otherwise lawful

Rebating — giving any part of the premium or commission, or other valuable consideration, as an inducement to buy — is prohibited in Georgia under its unfair trade practices law. It is barred because it can lead to unfair discrimination between similarly situated policyholders.

Under a state's unfair trade practices law, 'twisting' is best defined as:

• a.Selling policies to two members of the same family
• b.Using misrepresentation or incomplete comparisons to induce a policyholder to drop an existing policy and buy a new one✓
• c.Failing to send collected premiums to the insurer on time
• d.Backdating an application to secure a lower issue-age rate

Twisting is the use of misrepresentation or misleading comparisons to persuade a policyholder to lapse, surrender, or replace an existing policy in favor of a new one. Georgia treats it as a prohibited unfair practice, along with related abuses such as churning and misrepresentation.