Delaware Insurance Regulations Flashcard

Front

What does credit life insurance do?

Back

Pays off a borrower's loan if they die

Answer explanation

Credit life insurance pays off a borrower's loan if they die, ensuring that their debt does not burden their family. This is the primary function of such insurance, distinguishing it from other types of coverage.

Front

Which act sets rules for selling credit life and health insurance in Delaware?

Back

Consumer Credit Insurance Model Act

Answer explanation

The Consumer Credit Insurance Model Act establishes the regulations for selling credit life and health insurance in Delaware, making it the correct choice among the options provided.

Front

What is the role of the Life and Health Guaranty Association in Delaware?

Back

To protect policyholders if an insurer becomes insolvent

Answer explanation

The Life and Health Guaranty Association in Delaware protects policyholders by ensuring they receive benefits if their insurance company becomes insolvent, safeguarding their financial interests.

Front

What must life insurance policies in Delaware include according to state law?

Back

A grace period

Answer explanation

According to Delaware state law, life insurance policies must include a grace period, which allows policyholders extra time to pay premiums without losing coverage. This is essential for maintaining policy benefits.

Front

What happens if a policyholder stops paying premiums after a minimum period?

Back

The insurer must provide a guaranteed benefit

Answer explanation

If a policyholder stops paying premiums after a minimum period, the insurer must provide a guaranteed benefit, ensuring that the policyholder receives some value from their investment.

Front

Which life insurance plan is prohibited in Delaware? Options: Plans with a grace period, Plans offering survival benefits based on other policyholders’ deaths, Plans with reinstatement rights, Plans with incontestability clauses

Back

Plans offering survival benefits based on other policyholders’ deaths

Answer explanation

In Delaware, plans offering survival benefits based on other policyholders’ deaths are prohibited because they create a risk-sharing mechanism that can be deemed unfair and unsustainable.

Front

What must agents provide when replacing an existing life policy?

Back

A written comparison and notify the existing insurer

Answer explanation

When replacing an existing life policy, agents must provide a written comparison of the new and old policies and notify the existing insurer. This ensures transparency and compliance with regulations.

Front

What is required before or at the delivery of a life insurance policy?

Back

A NAIC Buyer’s Guide and policy summary

Answer explanation

Before or at the delivery of a life insurance policy, a NAIC Buyer’s Guide and policy summary are required to ensure the buyer understands the policy details and their rights.

Front

Who can group life insurance be issued to according to Delaware law?

Back

Employee groups, associations, and credit unions

Answer explanation

According to Delaware law, group life insurance can be issued to employee groups, associations, and credit unions, making this the correct choice. The other options are too restrictive.

Front

What is required for group life policies in Delaware?

Back

Grace period, incontestability, conversion rights, and certificates of coverage

Answer explanation

In Delaware, group life policies must include a grace period, incontestability clause, conversion rights, and certificates of coverage to ensure policyholder protections and rights.