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Ethical Insurance Practice



Multiple Choice

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 1. 

Fully one-third of all Errors & Omissions (E&O) claims by property/casualty agents relate to:
a.
twisting and churning of coverage
b.
making unsuitable recommendations
c.
renewal (or non-renewal) of coverage
d.
none of the above
 

 2. 

What is potentially the most serious ethical issue in the approach step of the sales process?
a.
The agent’s failure to provide a complete comparison
b.
The agent’s discussion of a product over the telephone
c.
The agent’s failure to provide full disclosure of all facts
d.
The agent’s stating or implying that he or she has skills, experience or credentials that are not possessed
 

 3. 

What is generally the first substantive interview in the insurance sales process?
a.
the fact finding interview
b.
the approach
c.
the closing interview
d.
the opening interview
 

 4. 

What are the areas that may be ethical concerns in the use of personal brochures?
a.
Misstating personal or professional accomplishments
b.
Claiming expertise or education not possessed
c.
Failure to include material information
d.
All of the above
 

 5. 

An agent has an ethical duty to disclose which of the following to his or her clients:
a.
the terms of his or her contract of agency
b.
all material facts concerning a recommended product
c.
all facts concerning a recommended product
d.
all of the above
 

 6. 

Which step of the selling process is the least appropriate venue for discussing the details of insurance products?
a.
the approach
b.
presentation of recommendations
c.
delivery of policy documents
d.
the fact-finding interview
 

 7. 

Which of the following federal laws mandates the privacy of client information gathered by an insurance agent?
a.
Health Insurance Portability and Accountability Act
b.
Financial Services Modernization Act
c.
McCarran-Ferguson Act
d.
ERISA
 

 8. 

For misrepresentation to be unethical, it must be:
a.
unintentional
b.
intentional
c.
either a or b
d.
neither a nor b
 

 9. 

Under what circumstances may an insurance agent claim affiliation with a government agency as a means of suggesting governmental approval?
a.
Upon application to the SEC
b.
If the agent has a Series 6 or Series 7 registration with FINRA
c.
If the agent is a registered investment adviser
d.
never
 

 10. 

What is/are the principal ethical concern(s) in the presentation step of the sales process?
a.
Communication about the recommended product
b.
Selection of the appropriate product
c.
Both a and b
d.
Neither a nor b
 



 
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