Nebraska Life & Health Insurance Exam — All Questions

Nebraska 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 return the policy within the stated free-look period after delivery for a full premium refund✓
• c.The right to a partial refund only, minus a cancellation fee
• d.No refund once the policy has been delivered

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 Nebraska period in the current statute.

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

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

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

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

Like other states, Nebraska 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 Nebraska producer is replacing a client's existing life insurance with a new policy. What does the state's replacement regulation generally require?

• a.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✓
• b.The producer may proceed with no disclosure as long as the new policy is cheaper
• c.The producer must cancel the old policy before the new one is even applied for
• d.Replacement is prohibited entirely in the state

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.