South Dakota Life & Health Insurance Exam — Study Guide

This chapter covers the South Dakota portion of the Life and Health producer examination. The national chapters — contract law, policy types, underwriting, riders, group insurance, Medicare, taxation — still apply. Read this as the layer South Dakota adds.

How to read the "verify" flags. Rules are stable; numbers move. Wherever a figure appears below, a flag tells you to confirm it with the South Dakota Division of Insurance. The existence of a rule — that South Dakota has a guaranty association, a replacement regulation, an unfair trade practices act, a free-look requirement — is stated affirmatively and is not in doubt. Only the digits are moving targets.

Sources. South Dakota Codified Laws (SDCL) Title 58; the Administrative Rules of South Dakota (ARSD) Article 20:06; and the bulletins and licensing pages of the South Dakota Division of Insurance, Department of Labor and Regulation (dlr.sd.gov/insurance).

1. The Division of Insurance and the Director

South Dakota regulates insurance through the Division of Insurance, housed in the Department of Labor and Regulation (DLR) and headquartered in Pierre.

The title trap. Most states call the chief regulator the Commissioner. South Dakota's statutes call the officer the Director of Insurance — throughout SDCL Title 58 the operative phrase is "the director." If a question asks who issues a license, orders an examination, or signs a cease and desist order in South Dakota, the answer is the Director.

The Director's powers include:

• Rulemaking — all of ARSD Article 20:06 (advertising, replacement, Medicare supplement, long-term care, privacy) exists under delegated authority; SDCL 58-33A-7 is a typical grant.
• Licensing — issuing, renewing, denying, suspending, and revoking producer licenses, and imposing monetary penalties (SDCL 58-30-167, 58-30-170).
• Examination — under SDCL chapter 58-3 the Director examines the affairs, transactions, accounts, records, and assets of insurers, subsidiaries, and rating organizations as often as the Director considers advisable, and must examine each domestic insurer at least once every five years (verify the current interval with the South Dakota Division of Insurance). Chapter 58-3 reaches producers as well as insurers.
• Investigation and enforcement — complaint handling, hearings, and cease and desist orders under the Unfair Trade Practices chapter (SDCL 58-33-40).
• Form, rate, and advertising oversight — including power to require prior approval of an insurer's advertising (SDCL 58-33A-12).
• Service of process — the Director is attorney for service on nonresident producers (SDCL 58-30-95 to 58-30-99).
• Guaranty association oversight (SDCL 58-29C-54, 58-29C-58).

The Division also runs consumer services; complaint patterns feed market-conduct exams and are evidence under the "incompetence, untrustworthiness, or financial irresponsibility" ground for discipline.

2. Producer Licensing

2.1 License required

South Dakota requires a license to sell, solicit, or negotiate insurance. The producer statutes are SDCL chapter 58-30. Licenses issue by line of authority — Life and Accident and Health for this exam — plus limited lines (travel, credit, rental car) and a separate insurance consultant license for fee-based advice (SDCL 58-30-144.1). Licenses are not issued in a trade name, with a limited firm/corporation exception (SDCL 58-30-29). Address and firm-personnel changes must be reported (SDCL 58-30-151 et seq., 58-30-33).

2.2 Resident license requirements

1. Residency and the statutory minimum age — verify the current minimum age with the Division.
2. Pass the written examination for each line sought (SDCL 58-30-145). South Dakota contracts exam delivery to a national vendor (Pearson VUE since January 1, 2018). Verify the current vendor, exam fee, question count, time limit, and passing score.
3. Apply through NIPR or SBS and pay the fee. The Division has published a resident producer fee of $25 plus a service fee — verify the current fee with the South Dakota Division of Insurance.
4. Background review — South Dakota provides for criminal-history file checks in licensing (SDCL 58-30-23.6, 58-30-23.7). Verify current fingerprint requirements.

Pre-licensing education: South Dakota does not require it. The Division states that no pre-licensing education is required for a resident or nonresident producer license. This is a genuine state distinctive and a favorite exam item — neighboring states often mandate 20 or 40 hours; South Dakota mandates none and puts the whole burden on the exam. (The product-specific training in 2.6 is a different thing: it gates products, not the license.)

Certain applicants are exempt from examination (SDCL 58-30-52); applicants must be told the subjects covered (58-30-54); a failing candidate must wait before retaking (58-30-58 — verify the current waiting period); an incomplete application is deemed withdrawn (58-30-150.1).

2.3 Appointment by insurers

A license lets you sell; an appointment lets you sell for a particular insurer. Under SDCL 58-30-6 and 58-30-176 an appointing insurer must file notice of appointment with the Director and pay the appointment fee (58-30-178, 58-30-179) — verify current appointment and renewal fees. When the relationship ends the insurer must file a termination notice with the Director (58-30-180 et seq.), with the reason where applicable; confidentiality and qualified immunity attach to information furnished about the reason, which is why for-cause terminations get reported candidly. Separate rules cover fire and casualty lines (58-30-8.1, 58-30-8.2), and 58-30-9 preserves certain producer rights after termination.

2.4 Renewal and continuing education

Term. Resident producer licenses run on a two-year cycle keyed to the licensee's birth month, expiring the last day of the birth month. A first-time licensee gets an extended initial term (the Division has described roughly 24 to 35 months) so there is a full cycle in which to earn CE. Verify the current term, renewal window, and expiration convention with the Division.

CE is required for renewal (SDCL 58-30-114 through 58-30-123). Published figures:

• Life/Health only or Property/Casualty only: 10 hours per two-year term.
• Both L&H and P&C: 20 hours per term, with per-line minimums.
• Crop only: 4 hours.
• A CE hour is 50 minutes of instruction — 60 minutes for long-term care courses.
• CE is due by the last day of the birth month.

Verify every hour figure, the per-line minimums, and any ethics-hour requirement with the South Dakota Division of Insurance. CE tables are the most frequently amended item in state insurance law. As published, South Dakota does not carve out a separate ethics-hour subset — confirm current status.

Exemptions. Producers licensed only for credit life and health, travel accident, bail bonds, or surety are exempt; other waivers (military, disability, South Dakota-licensed attorneys, licensees abroad) may be granted on application. Courses and providers require the Director's approval (58-30-121, 58-30-123).

2.5 Temporary and nonresident licenses

Temporary license (SDCL 58-30-165, 58-30-166). South Dakota authorizes a temporary producer license issued without examination for a period not to exceed 180 days (verify the current maximum). Its purpose is continuity, not entry. The Director may issue one to: the surviving spouse or court-appointed personal representative of a deceased or disabled producer; a member or employee of a licensed business entity on the death or disability of its designated individual; the designee of a producer entering active military service; or any person where the Director finds the public interest will best be served. The Director may limit the authority granted and revoke the temporary license if policyholders or the public are endangered.

Nonresident license (SDCL 58-30-159 to 58-30-164). Issued reciprocally: hold an equivalent license in good standing in your home state, file the uniform application, pay the fee. No South Dakota exam and no pre-licensing education. The nonresident consents to the Director as attorney for service of process. Verify current fees.

2.6 Training you must have before selling certain products

• Annuities. South Dakota adopted the NAIC 2020 annuity model effective January 1, 2023 (2022 Senate Bill 148; SDCL 58-33A-13 to 58-33A-27). A producer must complete a one-time 4-hour Annuity Best Interest course before selling, soliciting, or negotiating annuities; producers who had completed the older suitability training took a 1-hour update by the transition deadline. Reciprocity applies to substantially similar training taken elsewhere under the 2020 model. Verify current hours and deadlines.
• Long-term care. A one-time 8-hour initial LTC course before selling LTC, plus ongoing LTC training (published as 4 hours) each two-year renewal period. Verify current hours and due dates.
• Flood. NFIP training for producers selling NFIP policies (published as a course approvable for 3 CE hours). Verify.

2.7 Grounds for denial, suspension, revocation, and penalties

SDCL 58-30-167 allows the Director to suspend, revoke, or refuse to issue or renew a license — and under 58-30-170 to impose a monetary penalty or other remedy — for causes including:

1. incorrect, misleading, incomplete, or materially untrue information in a license application;
2. violating any insurance law, rule, subpoena, or order of the Director or another state's regulator;
3. obtaining or attempting to obtain a license by misrepresentation or fraud;
4. withholding, misappropriating, or converting monies or property received in insurance business (the commingling / premium-theft ground);
5. intentionally misrepresenting the terms of an actual or proposed contract or application;
6. conviction of a felony;
7. having admitted or been found to have committed an insurance unfair trade practice or insurance fraud;
8. fraudulent, coercive, or dishonest practices, or incompetence, untrustworthiness, or financial irresponsibility;
9. license denial, suspension, or revocation in any other jurisdiction;
10. forging another's name on an application or insurance document;
11. using notes or reference material to complete a license examination;
12. knowingly accepting business from an unlicensed person; and
13. failing to comply with a child support order.

A suspension, revocation, or refusal to renew affects all licenses held (58-30-108); notice is given as the statute directs (58-30-110); a waiting period applies before a revoked licensee may reapply (58-30-111). Influencing a witness in a Division examination or investigation is separately prohibited (58-30-196).

Reporting duties. A producer must report administrative actions taken by another jurisdiction or agency (SDCL 58-30-193) and any criminal prosecution brought against the producer (SDCL 58-30-194), with documents. The deadline is a fixed number of days — verify the current deadline with the Division. The duty attaches to the action and the prosecution, not to a final conviction.

3. Marketing and Sales Conduct

3.1 The Unfair Trade Practices Act

South Dakota has an Unfair Trade Practices Act for insurance: SDCL chapter 58-33. Its purpose is to regulate trade practices by defining and prohibiting unfair methods of competition and unfair or deceptive acts. No person may engage in a defined practice — it binds producers, not just insurers. Violations are commonly Class 2 misdemeanors, on top of license discipline and penalties, and SDCL 58-33-46.1 gives a damaged person a private civil action with attorney's fees.

3.2 The named practices

• Misrepresentation (58-33-5) — no statement misrepresenting policy terms, benefits, or advantages; dividends; an insurer's financial condition; or the legal reserve system; and no policy name or title that misrepresents its true nature.
• False advertising (58-33-6) — no untrue, deceptive, or misleading statement about the insurance business or those in it.
• Defamation (58-33-7) — no false statement, maliciously critical of an insurer's financial condition, calculated to injure a person in the insurance business.
• Twisting (58-33-8) — no statement misrepresenting a policy's terms, conditions, or benefits to induce a policyholder to lapse, forfeit, surrender, or convert insurance. Twisting is a misrepresentation offense; the wrong is the false comparison, not the replacement.
• Churning — the same conduct aimed at the customer's existing coverage with the same insurer, milking its values for new commissions. Prosecuted under the misrepresentation, twisting, and replacement provisions.
• Boycott, coercion, and intimidation (58-33-32) — agreements or acts producing unreasonable restraint of or monopoly in the insurance business. Classic pattern: a lender conditions a loan on buying insurance through a chosen producer.
• Unfair discrimination (58-33-12 life and annuities; 58-33-13 health) — no unfair discrimination between individuals of the same class and equal expectation of life in rates, dividends, benefits, or terms. Sound actuarial classes are fine; discrimination within a class is not.
• Rebating (58-33-14 for life, disability, and annuity; 58-33-24 for P&C) — no rebate of premium and no special favor, advantage, valuable consideration, or inducement not specified in the policy. Sharing your commission is a rebate; paying the client's first premium is a rebate. See Division Bulletin 09-01 on rebating. Chapter 58-33 has since been amended to address value-added products and services on stated conditions. Because value-added and de minimis-gift limits are dollar figures, verify current rebating thresholds with the South Dakota Division of Insurance before running any giveaway or referral-reward program.
• False statements, false claims, and fraudulent applications — prohibited, with aggregation of multiple false claims or applications arising from one course of conduct (58-33-37.1).
• Unfair or deceptive insurance practices (58-33-66) — the catch-all standard.

3.3 Unfair claims settlement practices

South Dakota has an unfair claim settlement practices statute — SDCL 58-33-67, applied with the general standard in 58-33-66. Prohibited conduct includes misrepresenting facts or policy provisions relating to coverage; failing to acknowledge and act reasonably promptly on claim communications (the published standard is measured in days — verify the current period with the Division); failing to adopt reasonable standards for prompt investigation; refusing to pay without a reasonable investigation; failing to give a prompt and reasonable explanation for a denial or compromise settlement; not attempting in good faith to effectuate prompt, fair, equitable settlement where liability is reasonably clear; unreasonably low offers; and compelling insureds to litigate for amounts substantially less than ultimately recovered. In enforcing 58-33-66 and 58-33-67 the Division weighs all pertinent facts and circumstances in setting the severity of action.

For producers the exposure is at the front end: what you told the client the policy would do is the yardstick the Division uses against the denial.

3.4 Advertising and required disclosure

SDCL chapter 58-33A — Standards for Advertisement, Solicitation, and Sale of Life and Health Insurance is the state advertising statute. Advertisement is broadly defined (58-33A-3) with carve-outs (58-33A-4); advertisements may not be deceptive or misleading (58-33A-10); disclosures must be clear and conspicuous (58-33A-8, 58-33A-8.1). Life sales require delivery of a Buyer's Guide and policy summary (58-33A-9) — verify current delivery timing. Health policies require an outline of coverage in the prescribed format (58-33A-5, 58-33A-6). Insurers must maintain an advertisement file open to the Director (58-33A-11). Practical rule: anything you create — flyer, social post, seminar deck, web page — is an advertisement and generally needs insurer approval before use.

3.5 Commissions and sharing

SDCL 58-30-171 prohibits paying commissions to an unlicensed producer; 58-30-172 prohibits accepting them; 58-30-174 governs payment, assignment, and sharing of commissions. Workable rule: commissions may be shared only among producers licensed and appointed for the line involved, with renewal commissions payable to a formerly licensed producer or an estate as the statute permits. A referral fee to an unlicensed person is permissible only where that person does not sell, solicit, or negotiate and the fee is not contingent on a sale — verify current conditions. Premiums are held in a fiduciary capacity (58-30-88 to 58-30-90), and 58-30-140 bars agents from taking loans from clients except as stated.