Free Practice Questions for Insurance Licensing Ok-Life-Accident-and-Health-or-Sickness-Producer Exam

Aninducementin insurance involves offering something of value to persuade someone to purchase a policy, which is consideredrebatingand prohibited in Oklahoma unless allowed under specific exceptions (Title 36 O.S. § 1204). Oklahoma allows gifts valued at $100 or less as non-rebating promotional items, so a gift under $100 is not an inducement. Other actions, like promising employment, offering premium payment favors, or giving high-value merchandise, are considered inducements.

Option A: Incorrect (is an inducement). Promising employment to secure a policy sale is rebating.

Option B: Correct (is not an inducement). A gift valued less than $100 is permitted and not considered rebating.

Option C: Incorrect (is an inducement). Special favors in premium payments are rebating.

Option D: Incorrect (is an inducement). Giving merchandise worth $250 exceeds the $100 limit and is rebating.

Rebatingis the practice of offering or returning part of a commission, premium, or anything of value to an insured as an inducement to purchase an insurance policy. It is prohibited in Oklahoma under the Unfair Trade Practices Act (Title 36 O.S. § 1204) to ensure fair competition and prevent undue influence.

Option A: Incorrect. Coercion involves forcing someone to buy insurance, not offering inducements.

Option B: Incorrect. Defamation is making false statements harming reputation, not related to inducements.

Option C: Correct. Rebating involves giving value to induce a policy purchase.

Option D: Incorrect. Controlled business refers to writing insurance primarily for oneself or close associates, not inducements.

This question falls under the Prometric content outline section on “State Insurance Statutes, Rules, and Regulations,” which covers unfair trade practices.

Under Oklahoma’s Insurance Code (Title 36 O.S. § 1435.13), a producer who knowingly and willfully makes a fraudulent statement on an insurance application faces disciplinary actions, includingsuspension,revocation, orcensureof their license, as well as potential fines or criminal penalties.Discriminationis not a disciplinary action; it refers to unfair treatment and is unrelated to fraud penalties.

Option A: Incorrect (is a penalty). Suspension of the license is a possible consequence.

Option B: Incorrect (is a penalty). Revocation of the license is a possible consequence.

Option C: Correct (is not a penalty). Discrimination is not a disciplinary action for fraud.

Option D: Incorrect (is a penalty). Censure is a formal reprimand and a possible consequence.

TheOklahoma Life and Health Insurance Guaranty Association, established under Title 36 O.S. § 2025 et seq., protects policyowners of admitted insurers in Oklahoma if the insurer becomesfinancially insolvent. The association provides coverage up to statutory limits (e.g., $300,000 for life insurance death benefits, $100,000 for cash value) to ensure policyholders receive benefits despite the insurer’s insolvency.

Option A: Incorrect. A merger with a foreign insurer does not trigger Guaranty Association protection unless it leads to insolvency.

Option B: Correct. The Guaranty Association protects policyowners when an admitted insurer becomes financially insolvent.

Option C: Incorrect. Failure to meet capital surplus requirements may lead to regulatory action but does not directly trigger Guaranty Association coverage.

Option D: Incorrect. Depleting loss reserves is a financial issue but not the specific condition for Guaranty Association intervention, which requires insolvency.

This question falls under the Prometric content outline section on “State Insurance Statutes, Rules, and Regulations,” which includes knowledge of the Guaranty Association.

Analien insurer, as defined in Oklahoma’s Insurance Code (Title 36 O.S. § 105), is an insurance company formed under the laws of a country other than the United States. This distinguishes it from domestic insurers (formed in Oklahoma) and foreign insurers (formed in another U.S. state).

Option A: Incorrect. An insurer formed in Oklahoma is a domestic insurer.

Option B: Incorrect. An insurer formed in another U.S. state is a foreign insurer.

Option C: Correct. An alien insurer is formed under the laws of a foreign country.

Option D: Incorrect. Geographic proximity is irrelevant; the distinction is based on legal formation.

This question is part of the Prometric content outline under “State Insurance Statutes, Rules, and Regulations,” which covers insurer classifications.

Whole life insurance policies accumulate cash value over time, which policyowners can borrow against. Typically, cash value begins to accrue immediately, but sufficient value for a loan is often available after1 year, depending on the policy’s terms and premium payments. Oklahoma law (Title 36 O.S. § 4029) requires nonforfeiture benefits, including access to cash value, but does not specify a minimum time; insurer practices generally allow loans after 1 year when cash value is meaningful.

Option A: Incorrect. Policyowners can borrow against cash value once it accumulates.

Option B: Correct. Loans are typically available after 1 year, as cash value is sufficient.

Option C: Incorrect. 2 years is not a standard requirement; loans are often available sooner.

Option D: Incorrect. 3 years is excessive; most policies allow loans earlier.

This question falls under the Prometric content outline section on “Provisions, Options, Exclusions, Riders, Clauses, and Rights,” which covers cash value loans.

Medicare supplement (Medigap) plans in Oklahoma, as regulated by federal law (42 CFR § 422.74) and state law (Title 36 O.S. § 6217), are guaranteed renewable, meaning insurers cannot cancel them except for specific reasons, such asnonpayment of premiums. Cancellation requires notice to the policyholder, and nonpayment is the primary valid cause.

Option A: Incorrect. Medigap plans cannot be canceled at any time; they are guaranteed renewable.

Option B: Incorrect. The enrollment period is for purchasing, not canceling, Medigap plans.

Option C: Incorrect. Cancellation is not tied to a date specified in the policy unless related to nonpayment.

Option D: Correct. Insurers can cancel a Medigap plan after nonpayment of premiums.

This question aligns with the Prometric content outline under “Medicare,” which covers Medigap policy regulations.

Oklahoma insurance law requires licensed insurance producers to maintain records of insurance transactions for a minimum of5 years, as specified in Title 36 O.S. § 1435.13. This ensures compliance with regulatory oversight and allows for audits or investigations by the Oklahoma Insurance Department.

Option A: Incorrect. 3 years is insufficient per Oklahoma law.

Option B: Correct. Licensees must keep records for 5 years.

Option C: Incorrect. 7 years exceeds the requirement.

Option D: Incorrect. 10 years is not mandated by Oklahoma insurance regulations.

This question falls under the Prometric content outline section on “State Insurance Statutes, Rules, and Regulations,” which includes recordkeeping requirements.

The primary purpose of life insurance is to provide adeath benefit, which is a financial payout to beneficiaries upon the insured’s death, ensuring financial protection for dependents or obligations (Title 36 O.S. § 4002). While some policies offer cash value or tax advantages, these are secondary to the death benefit.

Option A: Incorrect. Tax deductions are not the primary reason; they may apply to specific scenarios but are secondary.

Option B: Correct. Death benefits are the primary reason for purchasing life insurance.

Option C: Incorrect. Retirement income is a goal of annuities or cash value policies, not the primary purpose.

Option D: Incorrect. Safety of principal relates to investments, not the core purpose of life insurance.

Replacing an older health insurance policy involves terminating an existing policy and purchasing a new one, which can have disadvantages such as proving insurability (new underwriting), a new contestability period (typically 2 years for misstatements), and potential exclusions for preexisting conditions under the new policy, as regulated in Oklahoma (O.A.C. 365:10-3-16). However, if the old policy no longer meets the policyowner’s needs, replacing it is an advantage, not a disadvantage.

Option A: Incorrect (is a disadvantage). Proving insurability may result in higher premiums or denial.

Option B: Incorrect (is a disadvantage). A new contestability period restarts the insurer’s ability to contest claims.

Option C: Incorrect (is a disadvantage). Preexisting conditions may face new exclusions or waiting periods.

Option D: Correct (is not a disadvantage). Replacing a policy that doesn’t meet needs is a benefit of replacement.

This question aligns with the Prometric content outline under “Considerations in Replacing Insurance,” which covers the implications of policy replacement.