West Virginia Life & Health Insurance Exam — All Questions
3 questions
A West Virginia producer offers a prospect part of the first-year commission as cash back if the prospect buys a policy. This practice is:
- a.Required to be reported but otherwise legal
- b.Allowed if disclosed verbally
- c.Allowed if the amount is small
- d.Prohibited as unlawful rebating✓
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 West Virginia's Unfair Trade Practices Act. It is barred because it can create unfair discrimination between policyholders who are otherwise in the same class.
Under West Virginia insurance law, which conduct best describes 'twisting'?
- a.Submitting an application electronically
- b.Charging different premiums based on the insured's actual age
- c.Using misrepresentation or incomplete comparisons to persuade a policyholder to drop one policy and buy another✓
- d.Selling policies to two members of the same family
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 West Virginia because it can leave the consumer worse off — for example with new contestable and suicide periods and fresh acquisition costs.
A West Virginia producer collects a premium from a client. Ethically and legally, how must the producer treat that money?
- a.As money that may be loaned to other clients
- b.As the producer's own income to spend immediately
- c.As funds held in a fiduciary capacity that must be remitted to the insurer and not commingled or used personally✓
- d.As a gift the producer may keep if the policy is not issued
Premiums a producer collects belong to the insurer or the client, not the producer. West Virginia 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.