Wyoming Life & Health Insurance Exam — All Questions

A Wyoming 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.Prohibited as unlawful rebating✓
• c.Allowed if disclosed verbally
• d.Allowed if the amount is small

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 Wyoming's Unfair Trade Practices Act. It is barred because it can create unfair discrimination between policyholders who are otherwise in the same class.

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

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

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 Wyoming because it can leave the consumer worse off — for example with new contestable and suicide periods and fresh acquisition costs.

A Wyoming 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. Wyoming 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.