WEBCE Insurance Exam Questions with 100%
Correct Answers
1. Which of the following exempted insurance companies from federal antitrust legislation?
the McCarran-Ferguson Act
2. Which of the following has primary responsibility for regulating the insurance industry?
a. the states
Which statement about the NAIC is correct?
The NAIC prepares model laws, regulations, and guidelines for adoption by the states.
4. The NAIC issued a model law on long-term care insurance. Which statement about the model law's
effectiveness is correct?
The model law becomes effective in a state if approved by the state legislature.
Which statement about life insurance illustrations is correct?
Illustrations must include the company's name, the date the illustration was prepared, initial death
benefit, and the name, age, and gender of the proposed insured.
2. Which of the following provides general information about life insurance policies to potential
buyers?
the Buyer's Guide
3. Which of the following is the Gramm-Leach-Bliley Act primarily aimed at regulating?
the disclosure of personal financial information to third parties
4. What is the purpose of the Producer Database?
streamline producer licensing procedures
5. For how long must an organization maintain a record of a person's request to be placed on a do-
not-call list?
5 years
1. Which of the following must be considered in making a suitable fixed annuity recommendation to a
customer?
a. the customer's financial status
b. the customer's tax status
c. the customer's investment objectives
d. all of the above
Which of the following is not a prohibited practice?
giving a gift of nominal value to an insurance applicant
Which of the following terms refers to the unethical and illegal practice of making a misleading
statement about an insurance policy to induce a person to buy a policy with another insurer?
, twisting
When meeting with a prospect to discuss disability income insurance, Agent Tyler makes disparaging
comments about the financial stability and reputation of a competitor to dissuade the prospect from
purchasing its policies. Which unfair trade practice has Agent Tyler committed?
defamation
What type of authority exists when a reasonable consumer would infer from the circumstances that
the agent has authority to act on behalf of the principal?
implied authority
Which of the following is the most severe step a state insurance department can take in disciplining
an insurer?
liquidation
Which of the following is not an example of an unfair claims practice?
setting a time limit for submitting proof of loss
Sam was involved in a car accident. The other driver told Sam that the two of them should agree on a
settlement now because the longer Sam waited, the more it was going to cost him. What should Sam
do?
decline because of his policy's cooperation provisions
Norman is involved in filing a claim for a loss that is large and very complex. He feels that if he handles
it himself, there is a good chance he will end up with considerably less than the loss warrants. Which
of the following should Norman hire to help him with the claim?
public adjuster
Jamie has a liability policy with ABC insurance. He is being sued for damages by Margie, who is also an
ABC policyholder. Which statement best describes ABC's duties?
It has a higher duty to Jamie.
A minitrial is similar to arbitration in that the findings of the third party are always binding.
False
Which of the following statements regarding class actions is not true?
An injured party cannot become a member of the class without making a formal request to the court.
Which statement is true about arbitration?
The submission agreement is a binding contract.
How will a court interpret an ambiguous provision in an insurance policy?
A court will always interpret ambiguous provisions in favor of the insured.
Correct Answers
1. Which of the following exempted insurance companies from federal antitrust legislation?
the McCarran-Ferguson Act
2. Which of the following has primary responsibility for regulating the insurance industry?
a. the states
Which statement about the NAIC is correct?
The NAIC prepares model laws, regulations, and guidelines for adoption by the states.
4. The NAIC issued a model law on long-term care insurance. Which statement about the model law's
effectiveness is correct?
The model law becomes effective in a state if approved by the state legislature.
Which statement about life insurance illustrations is correct?
Illustrations must include the company's name, the date the illustration was prepared, initial death
benefit, and the name, age, and gender of the proposed insured.
2. Which of the following provides general information about life insurance policies to potential
buyers?
the Buyer's Guide
3. Which of the following is the Gramm-Leach-Bliley Act primarily aimed at regulating?
the disclosure of personal financial information to third parties
4. What is the purpose of the Producer Database?
streamline producer licensing procedures
5. For how long must an organization maintain a record of a person's request to be placed on a do-
not-call list?
5 years
1. Which of the following must be considered in making a suitable fixed annuity recommendation to a
customer?
a. the customer's financial status
b. the customer's tax status
c. the customer's investment objectives
d. all of the above
Which of the following is not a prohibited practice?
giving a gift of nominal value to an insurance applicant
Which of the following terms refers to the unethical and illegal practice of making a misleading
statement about an insurance policy to induce a person to buy a policy with another insurer?
, twisting
When meeting with a prospect to discuss disability income insurance, Agent Tyler makes disparaging
comments about the financial stability and reputation of a competitor to dissuade the prospect from
purchasing its policies. Which unfair trade practice has Agent Tyler committed?
defamation
What type of authority exists when a reasonable consumer would infer from the circumstances that
the agent has authority to act on behalf of the principal?
implied authority
Which of the following is the most severe step a state insurance department can take in disciplining
an insurer?
liquidation
Which of the following is not an example of an unfair claims practice?
setting a time limit for submitting proof of loss
Sam was involved in a car accident. The other driver told Sam that the two of them should agree on a
settlement now because the longer Sam waited, the more it was going to cost him. What should Sam
do?
decline because of his policy's cooperation provisions
Norman is involved in filing a claim for a loss that is large and very complex. He feels that if he handles
it himself, there is a good chance he will end up with considerably less than the loss warrants. Which
of the following should Norman hire to help him with the claim?
public adjuster
Jamie has a liability policy with ABC insurance. He is being sued for damages by Margie, who is also an
ABC policyholder. Which statement best describes ABC's duties?
It has a higher duty to Jamie.
A minitrial is similar to arbitration in that the findings of the third party are always binding.
False
Which of the following statements regarding class actions is not true?
An injured party cannot become a member of the class without making a formal request to the court.
Which statement is true about arbitration?
The submission agreement is a binding contract.
How will a court interpret an ambiguous provision in an insurance policy?
A court will always interpret ambiguous provisions in favor of the insured.
