Utah Life & Health Insurance Exam — All Questions

A Utah producer offers a prospect part of the first-year commission as cash back if the prospect buys a policy. This practice is:

• a.Allowed if the amount is small
• b.Allowed if disclosed verbally
• c.Prohibited as unlawful rebating✓
• d.Required to be reported but otherwise legal

Rebating — giving a portion of the premium or commission, or any valuable consideration not stated in the policy, as an inducement to buy — is prohibited under Utah's Unfair Trade Practices Act. It is barred because it can create unfair discrimination between policyholders who are otherwise in the same class.

Under Utah insurance law, which conduct best describes 'twisting'?

• a.Selling policies to two members of the same family
• b.Using misrepresentation or incomplete comparisons to persuade a policyholder to drop one policy and buy another✓
• c.Submitting an application electronically
• d.Charging different premiums based on the insured's actual age

Twisting is inducing a policyholder to lapse, surrender, or replace an existing policy through misrepresentation or misleading comparisons. It is a prohibited unfair trade practice in Utah because it can leave the consumer worse off — for example with new contestable and suicide periods and fresh acquisition costs.

A Utah producer collects a premium from a client. Ethically and legally, how must the producer treat that money?

• a.As funds held in a fiduciary capacity that must be remitted to the insurer and not commingled or used personally✓
• b.As the producer's own income to spend immediately
• c.As a gift the producer may keep if the policy is not issued
• d.As money that may be loaned to other clients

Premiums a producer collects belong to the insurer or the client, not the producer. Utah treats this as a fiduciary duty: the funds must be accounted for and remitted properly, and must not be commingled with personal funds or converted. Misappropriating premiums is grounds for license discipline and can be a crime.