Mississippi 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 Mississippi?

• a.Mississippi Department of Commerce and Insurance
• b.Mississippi Department of Financial Services
• c.Mississippi Insurance Department (MID)✓
• d.Mississippi Division of Insurance

Mississippi regulates insurance through the Mississippi Insurance Department (MID). Unlike states where the regulator is appointed, Mississippi's Commissioner of Insurance is elected statewide by voters, and that official also serves as the State Fire Marshal. Knowing the Commissioner is elected (not appointed) is a distinctive Mississippi point. This agency issues producer licenses and enforces the state's insurance laws.

In Mississippi, what authorizes a person to sell both life and health insurance products?

• a.A property and casualty producer license
• b.A separate license issued by a different agency for each product line
• c.A resident insurance producer license carrying the life and the accident/health lines of authority✓
• d.A surplus lines broker license

Mississippi issues a resident producer license, and the producer requests the lines of authority they qualify for. Adding both the life line and the accident and health line lets one license cover life and health products. Property/casualty and surplus lines are different lines for different products.

Before a licensed Mississippi producer may transact business on behalf of a specific insurer, what generally must happen?

• a.The producer must post a surety bond with the state treasurer
• b.Nothing beyond holding a valid producer license
• c.The producer must first sell property and casualty insurance
• d.The insurer must appoint the producer, filing the appointment with the Mississippi Insurance Department✓

A license lets a person act as a producer, but to represent a particular company the insurer must appoint the producer and file that appointment with the regulator. A producer may hold appointments from more than one insurer, and appointments are how the insurer accepts responsibility for the producer's sales.

Which statement about keeping a Mississippi resident producer license active is correct?

• a.Continuing education is required only during the first year and never again
• b.The license must be renewed periodically and the producer must complete continuing education, including an ethics component, each renewal period✓
• c.The license renews automatically with no action or education by the producer
• d.Once issued, the license never expires and no continuing education is ever required

Mississippi, like other states, issues producer licenses for a set term and requires continuing education, including ethics hours, to renew. Letting CE or the renewal lapse can cause the license to expire, after which reinstatement rules and penalties may apply. Always confirm the current hour totals and deadlines with the regulator.

Mississippi requires individual life insurance policies to include a "free look" (right to examine) provision. What right does it give the policyowner?

• a.The right to change the insured at any time during the first year
• b.The right to a partial refund only, minus a cancellation fee
• c.No refund once the policy has been delivered
• d.The right to return the policy within the stated free-look period after delivery for a full premium refund✓

A free-look provision lets the policyowner return a newly delivered policy within the period stated in the contract and receive a full premium refund, so they can review the actual policy before committing. Many states set this at 10 days or more, with longer periods common for replacements and policies sold to seniors; confirm the exact Mississippi period in the current statute.

Regarding the Mississippi life and health insurance guaranty association, what may a producer do when selling a policy?

• a.Promise the buyer that all losses will always be fully paid
• b.Not use the existence of the guaranty association as an inducement to buy or in advertising✓
• c.Advertise the association's protection as a reason to buy
• d.Substitute the association's coverage limits for the policy's own terms

Every state has a life and health insurance guaranty association that pays certain covered claims when a member insurer becomes insolvent, subject to statutory dollar limits. State law prohibits producers and insurers from using the association's existence to induce a sale or in advertising. It is a backstop for insolvencies, not a selling point.

Mississippi's Unfair Trade Practices provisions in its insurance law primarily do what?

• a.Set the commission rates producers may earn
• b.Govern federal Medicare enrollment periods
• c.Establish the minimum wage for insurance office staff
• d.Define and prohibit unfair methods of competition and unfair or deceptive acts in the business of insurance, such as misrepresentation and false advertising✓

Like other states, Mississippi has adopted an Unfair Trade Practices law (based on the NAIC model) that defines and bans practices such as misrepresentation, false or misleading advertising, unfair discrimination between similar risks, and improper claim settlement. Violations can bring fines and license suspension or revocation.

A Mississippi producer is replacing a client's existing life insurance with a new policy. What does the state's replacement regulation generally require?

• a.Replacement is prohibited entirely in the state
• b.The producer may proceed with no disclosure as long as the new policy is cheaper
• c.The producer must follow replacement rules, give the client the required replacement notices, and let the existing insurer be notified so it can try to conserve the coverage✓
• d.The producer must cancel the old policy before the new one is even applied for

Replacement rules protect consumers from losing value when switching policies. The producer must identify the transaction as a replacement, provide the required notices and comparisons, and the existing insurer is given notice and an opportunity to conserve the business. Skipping these steps is a violation even if the new policy seems better.

A Mississippi producer offers a prospect part of the producer's commission as cash back to induce the purchase of a life policy. Under state law this is:

• a.Required to be reported but otherwise legal
• b.Prohibited as unlawful rebating✓
• c.Permitted for term policies only
• d.Permitted if disclosed in writing

Rebating, giving away part of the premium or commission or other valuable consideration to induce a purchase, is prohibited in Mississippi. It is an unfair practice because it leads to unfair discrimination between policyholders who are charged different net prices for the same coverage.

Under Mississippi market-conduct rules, what is "twisting"?

• a.Using misrepresentation or incomplete comparisons to persuade a policyholder to drop an existing policy and buy a new one✓
• b.Submitting an application electronically instead of on paper
• c.Selling policies to two members of the same household
• d.Holding appointments with more than one insurer

Twisting is inducing a policyholder to lapse, surrender, or replace a policy through misrepresentation or misleading comparisons. It is a prohibited unfair practice. A related abuse, churning, involves replacing coverage within the same insurer's book, often using the policy's own values, to generate new commissions.