IT'S NOT MY PLACE TO STEER THE SHIP,
OR EVEN RING THE BELL.
BUT LET THE DARN THING START TO SINK,
AND SEE WHO CATCHES H —!
Any insurance agent "worth his salt," is well aware that the insurance agent is, as far as the insured is concerned, "the insurance company." Agents have a tendency to forget that they, and they alone in many cases, are the only reference to the promises made by the agent and the insurance company. So if something goes wrong, the agent is usually the first to know and when the insured has a claim, whether they like it or not—the agent may be right in the middle. If the claims department does not fulfill its obligations, or even the obligations that the insured feels should be honored, then the wrath will usually be pointed toward the agent. After all, the agent "made the promises" and attempts to "push the blame to an adjuster or claims manager" tend not to satisfy the irate client.
Therefore, a professional agent will always make sure, in their own mind and regardless of any representation as to how superior the insurer is during times of claim, just how the insurance company fulfills its obligations. Keep in mind that an insurance company can abide by all the insurance laws and regulations and still exercise bad faith in the settlement of claims. The question then becomes—how does the insurance agent know how claims are being handled?
There is no easy answer to that question other than the obvious (but usually ignored) act of contacting the Department of Insurance and inquiring as to whether they are any problems reported in respect to claims practices. The Department can certainly tell you if there are financial problems of which they are aware, and if there are, they often will not discuss details, but will give an indication that perhaps all is not what it seems.
Run the company through Lexis-Nexis or some other database and see if it has received bad publicity in respect to paying claims. Newspaper records can help in this respect. Some agents keep their "ear to the ground" and if an agent leaves an insurer, they are quick to ask "why." There can be a lot of logical and legitimate reasons for an agent to leave an insurer, but once in a while an agent will report that they were fed up with lousy claims practices and they were tired of catching flack from clients.
What if the agent takes the position that it does not make any difference how claims are handled as that is the job of the insurance company and not the agent. This approach is also known as the "ostrich" approach (for apparent reasons). If an agent closes his eyes to claims of bad faith in respect to claims handling, this is an unethical approach as they are not ethically representing their clients.
A discussion of a situation where an otherwise reputable and reportedly financially strong insurance company was convicted (soundly) of insurance fraud because they did not pay the claims that they were obligated to pay, may shed some light on how these insurers operate. The good news is that very, very few insurers are so unethical.
The following is more-or-less a case study of an insurance company that violated a plethora of ethical (and many legal) rules.
Disability insurance is a rather common type of health insurance which arose from union member requirements in the 19th century that they no longer be treated as commodities, and since they spend most of their lives working hard at their chosen occupations, they wanted peace of mind. Thus, disability insurance which provides that if the insured can no longer work because of an injury or illness, then the insurer will pay.
Insurers loved this plan as all they had to do was to come up with a competitive benefits package, price premiums aggressively, pay high commissions to insurance agents, and watch the coffers fill. These plans were actually started in the 1980's, when interest rates were high – double-digit in fact, and in case one is not aware of this:
F Insurance companies rarely make any money on premiums—they make their real money on investments.
By 1983 there were dozens of disability insurers active, but only three major companies who, either through loose lips or business espionage, had nearly identical plans. The plans that they sold were basically "own occupation" policies. For the uninitiated, this means that benefits would be paid if they were unable to perform the duties of his/her "own occupation. Said policies were noncancellable, and generally, premiums could not be raised. Benefits were paid anywhere from age 65 to lifetime, along with various bells-and-whistles (such as cost-of-living adjustments).
Selling it was comparatively easy—every company played on fear. People (especially those in professional positions, (doctors, architects, lawyers, etc.) were warned that they must be protected against a situation where they could not perform their specific occupation. And they bought it and bought it and bought it.
Then came doomsday in the form of interest rates plunging to unexpected low levels. This meant that since the insurers made most of their money on interest on their investments, and since they were not receiving but a portion of profits that they had anticipated, therefore their claims ratio (the ratio of claims to income) climbed sky-high. The claims/investment profits formula dropped profits like a rock. Keep in mind that these figures were what had been used by the actuaries to determine the premiums that continued to be paid on the policy—and the policies were noncancellable!
In 1993 one company, in particular, took a loss of almost a half billion dollars that was caused by having to increase the company's reserves so that they were in the proper financial condition to pay their existing and projected claims. And what was even worse as far as the insurers were concerned, was the fact that if interest rates continued to stay low (which they did) losses would continue to grow, having a negative effect on profits—and, by extension, stock prices.
Changes had to be made, obviously, and the largest of the insurers in this field took the first step by appointing a new CEO, a well-educated banker who knew the worth of a dollar (but knew very little about insurance, it seems). He found a seemingly unsolvable dilemma. The company could do absolutely nothing about the low interest rates, but on the other hand, it continued to receive more and more and more long-term claims every day. (Short-term claims were not of concern, as they were payable and were of smaller amounts.)
What it seems the company (and the new CEO) forgot—or never knew—was that
F An insurance company must operate on the implied promise of good faith and fair dealing and the financial interest of the company must never be put above those of its policyholders.
An insurer must never conceal benefits, unreasonably delay the payment of claims or the termination of a claim and it must never reject a valid claim. Investigations must be full, fair and objective. The insurer must never conceal benefits (a fact of life: assume that nobody ever reads the policy as a miniscule amount of insureds actually do—and of those that do read the policy, another miniscule amount of them understand it). The company must always pay up honestly on legitimate claims.
One of the three largest writers of this insurance acquired through merger and/or acquisition, the other two. Therefore, the major determination, it seemed to the insurance company, in determining exactly what is "legitimate" and what is not, is the responsibility of the insurance company. And, if the claimant disagreed, the claimant always had the right to sue the multi-billion dollar company with a regiment of in-house lawyers plus brigades of high-priced outside legal counsels.
Still, having many lawyers is not a crime or even a "sin," as the insurance company is entrusted with the money of its policyholders so they are expected (and required) to have not only adequate legal counsel, but also outstanding legal counsels. What is a "crime," or is, to say the least, unethical is to fraudulently deny legitimate claims. How this was done makes the kind of story that appears on "Sixty Minutes" and in newspapers, new programs and books—and it did. This information was gleaned from various sources, but the name of the insurer and other participants is beyond the intent or scope of this text. In this case, "names are not provided so as to protect the guilty."
According to testimony in the trial, and verified by the courts, this company set up "roundtable' discussion groups whose purpose was to determine the percentage of claims that were to be denied so that the company could meet their profit expectations. It did not matter a whit if the claim was legitimate or not, whether the claimant was particularly needy, or any other reason to pay the claim—the claimant was just a statistic that needed to be "gotten rid of" so as not to affect the bottom line. And there were several severe cases, some represented by the same law firm, such as a doctor that was diagnosed with cancer but he attempted to continue working as long as he could, eventually succumbing to cancer before the case was settled in court and leaving a destitute widow and several children. Another case was a chiropractor whose health deteriorated and who even offered work with the insurer to get into another field but the company refused to pay for training—plainly offered in the policy.
Some claimants were covered by one of the three large insurers before they merged, and in some cases, the insurer was paying claims but when they merged, the new company cancelled payment of benefits. When the cancellation of benefits was questioned, the company hired doctors who specialized in reviewing disability benefits and resolving them in favor of the company. (Yes, indeed, there are those that find such practice more lucrative than taking care of the sick and needy.)
One may wonder how in the world such shenanigans can happen. Forgetting about State regulations for a moment, many wonder why the federal government does not step in. Well, believe it or not, they do and when they do they do nothing for the policyholder. The only federal regulation requires a very short discussion; otherwise there is no federal regulation as there are no federal insurance regulations. And, since many people feel that federal intrusion into the insurance business would just wind up protecting insurance companies instead of safeguarding policyholders.
States have "unfair insurance practices acts," known by various but similar names throughout the country. These laws make it illegal for insurance companies to:
In addition, states have various other regulations involving the enforcement of these provisions and other state insurance provisions.
So, what is the problem? — you may ask. The problem is that there is no insurance department in the entire country that has the authority to sue an insurer on behalf of a cheated claimant. All they can do is to investigate to see if the insurer is violating unfair practices law and it a rare situation where a company is fined for such violation.
Some states (in particular California) do actually have some good protection for policyholders. But even in these states, including California, these rights are taken from them by a creature of federal legislation called ERISA (Employee Retirement Income Security Act of 1974).
ERISA was originally intended to protect the retirement benefits of employees against mergers, acquisitions, and other such situations and activities that may endanger the retirement funds otherwise. Interestingly, originally ERISA had nothing to do with overriding state insurance regulations and it specifically approved state laws to regulate insurance.
However, enter the well-intentioned US Supreme Court which in 1987 "tore everything up," as a result of the intention to encourage the formation of employee benefit plans. What happened in this Chinese fire drill was that insurance companies were afraid that their customers could sue them. Horrors. So they approached the Supreme Court and asked for their help. If the Supreme Court would take away the rights of policyholders to sue them under state laws (or more specifically, insurance purchased at the workplace) and if the Court would say that state law protection is to be preempted by federal law, the insurance companies would be immunized from fraud–primarily because there are no federal protections anyway. And if the Supreme Court did this, the insurers could lower premiums in the workplace policies and the insurers could lower the premiums and the insurance would be affordable so more people would buy it and the world will be a better place…♫
Of course, there were those who opposed such a blatant attempt of the insurers to escape responsibility for their acts, saying that they were allowing insurance companies to cheat their own policyowners. Besides, even if the costs were lower, there was no guarantee that the insurers would lower their premiums by any amount. They also made the argument that people can lose their homes as there is no federal regulation, ergo, no federal deterrent.
The Supreme Court effectively thumbed their nose at these arguments and they ruled that henceforth, ERISA shall be the law of the land and will eliminate all state insurance protection on policies purchased at work as all consumer rights under state laws are preempted by ERISA.
Hard to believe in retrospect, but even to this day, policyholders have no rights to recover for losses caused by such practices, and a targeted policyholder has no leverage, no right, and no strength to get his insurer what is due him under its policy. So what does this actually do, one may rightfully ask? Some insurers simply do not pay claims.
If this is hard to believe, there was a highly confidential memorandum admitted to court from the largest long-term disability writer that stated"
"A task force has recently been established to promote the identification of policies covered by ERISA and to initiate active measures to get new and existing policies covered by ERISA. The advantages of ERISA coverage in litigious situations are enormous: state law is preempted by federal law, there are no jury trials, there are no compensatory or punitive damages, relief is usually a limited to the amount of benefit in question, and claims administrators may receive a deferential standard of review. The economic impact on [the insurance company] from having policies covered by ERISA could be significant. As an example, [a company officer] identified 12 claim situations where we settled for $7.8 million in the aggregate. If these 12 cases had been covered by ERISA, our liability would have been between zero and 5.5 million." (From an internal memorandum, labeled "PRIVILEGED" to an internal management group, on October 2, 1996. Presented in the Court as Exhibit 225.)
Can you see what will happen and what has happened, and probably is still happening today? To deny a claim an insurer could first identify the policy as an ERISA policy, therefore effectively eliminating this claim as the policyholder now cannot sue and insurer. Of course, if the claimant has a smart attorney, they can have the court determine whether the policy was, in fact, an ERISA policy. Courts have generally bent over backwards to protect the policyholder.
Don't even ask how come an ERISA preemption can even exist, since it is inconsistent with the McCarran-Ferguson Act that barred the federal government from regulating insurance. One should not ask as there really is no logical answer.
In this one particular trial, the claimant was asked at court if the insurer ever told her that her claim was preempted by ERISA. The insurer's attorney objected loudly and vociferously about the question, but it was ruled proper. The claimant testified that she had been told that it was an ERISA case. Fortunately, she did not do like so many would have done—walk away with nothing under the impression there was nothing she could do.
One other thing about ERISA that those in the health insurance business know well. There are health insurance companies who cannot become licensed in your state, usually because they do not have sufficient capital and surplus, or their reserves are inadequate, or for some other reason. But they want to sell health insurance in the state nonetheless, so they enter as an ERISA company. For years small insurers sneaked into various states and wrote business, but in recent years the Insurance Departments have become more vigilant and in some cases have taken the insurance license away from those who represent these "ERISA" companies. These companies invariably offer lower premiums than those offered by other companies, but more importantly, they accept medical risks that other insurers decline or do not accept at the usual premium.
As an example, the Florida Department of Insurance issued a statement to the press and to agents in the state, in respect to these companies:
By Vicki Lankarge (insure.com )
Florida Treasurer and Insurance Commissioner Tom Gallagher has ordered N.A.P.T. — a Pennsylvania-based association with more than a dozen "identities" — to stop selling health insurance in Florida because it is not licensed to do business in the state. Regulators say they believe "tens of thousands" of Florida residents may have purchased policies with N.A.P.T. or its affiliated organizations. Gallagher has also demanded that N.A.P.T. immediately turn over its claims-handling process to a licensed third-party administrator.
The association primarily sells policies under the initials N.A.P.T. but it has also sold insurance under numerous other names, including the National Association of Professionals & Technicians and the National Association of Professional Truckers, according to Tami Torres, a spokesperson for the Florida Department of Insurance. Torres says department regulators believe that these associations have been selling unauthorized health insurance policies since 1999 to the self-employed and employers that range from small groups all the way up to large groups with more than 100 employees.
None of the affiliated associations or the plan administrator, David Weinstein, has ever been licensed as an insurer in Florida, according to Torres. In addition, Torres says the department does not currently know how many policyholders have purchased the illegal policies in Florida because N.A.P.T. is not cooperating with regulators.
"An unlicensed entity like N.A.P.T. is luring in employers with low rates for health insurance coverage, often through slick TV advertising, but what they are really offering is a false sense of security," Gallagher says. "Unlicensed entities are not regulated, may not be actuarially sound, and are not required to guarantee payment of claims if their company goes bankrupt."
Florida insurance regulators claim that N.A.P.T. is falsely marketing to insurance agents and consumers that they are a qualified Employee Retirement Income Security Act (ERISA) plan, which under federal law is generally exempt from state regulation. An ERISA plan allows an individual employer to establish and self-fund a health plan (and assume the financial risk) for its own employees. However, any plan that sells insurance policies to more than one employer does not meet the federal exemption requirement and must be licensed and regulated by the state.[emphasis ours] Gallagher issued the final cease and desist order to N.A.P.T. on March 30, 2001. It required the organization to:
According to Torres, N.A.P.T. and Weinstein had five days to request a hearing to appeal the order. "Under the order, the association remains responsible for honoring the policies it has issued," says Gallagher. "Nevertheless, I believe it is in the policyholders' best interests to look for new coverage. This insurer has no license and therefore it has not undergone the regulatory scrutiny that licensed companies do."
Florida insurance department regulators were made aware of the unlicensed entity through consumer and insurance agent complaints of policy cancellations for no reason and without proper notice, as well as slow — and sometimes no — payment of claims. According to Torres, insurance agents also called to complain that their legitimate business was being siphoned away from them by N.A.P.T. and its affiliated organizations, which were offering group health insurance policies at extremely low rates.
Although N.A.P.T. and its affiliated associations was not under criminal investigation at this time, the Florida Department of Insurance has not ruled out filing criminal charges once the appeal period is over.
From the viewpoint of an agent who is not familiar with this scam, there are certain warning signs that can help an unknowing agent from the pitfalls of ERISA scams.
There have been instances where a well-meaning agent has notified one of his clients—often owners of small businesses—of a health insurance plan he has "run across" that seems low in cost and has great benefits, and suggests that maybe his client might want to look into it.
If the agent really doing his client a favor? If the attitude of the agent is that he will notify the client that such a plan exists, and everything else is up to the client, there can be BIG trouble for the agent.
RULE: NEVER RECOMMEND, OR EVEN MENTION CASUALLY, TO A CLIENT THE AVAILABILITY OF OTHER INSURANCE COVERAGE WITHOUT FIRST INVESTIGATING THE COVERAGE COMPLETELY.
If an agent just says "This is just a suggestion, I really don't know much about this company…" or use some other "blame-eliminating" phrase, then, like it or not, this coverage is not a suggestion, but since the agent is the "expert" it is automatically now a recommendation. If the plan is not legitimate, the very least that could happen is the loss of a good client. The worse thing that could happen is the agent losing his license and being fined.
Remember – there is no "caveat emptor" in the insurance business.
In one of the more troublesome cases, the head of the insurer's "Customer Care" Center who had the responsibility to establish the company's claims-handling procedures and philosophy consistently stated in discovery that it was his practice to employ the "highest ethical standards" in all aspects of his work.
As an example as to what a plaintiff may face if he sues an insurer, in one case where there was an internal document admitted as plaintiff's exhibit 34, entitled "Individual Disability Claims Performance Objectives," the plaintiff's attorney asked, "Is it acceptable in the processing of individual disability claims to have 'objectives' for how many claims should be terminated?" The answer was that it was not acceptable, and that the document states that for every new dollar in claims, the claims department should terminate eighty-four cents worth of existing claims and the company developed a formula (net terminations ratio) to track this activity and to set goals for the termination of ongoing claims. (This is SCARY…)
In the same vein, it was stated in court that each claims adjuster was directed to provide a top ten list of claims that "with intensive effort" could be terminated.
Is this proper? The question was asked of a reputable and well-known insurance expert, who earlier had stated that "Claims evaluations must be fair and thorough. A company cannot avoid obtaining, or ignoring, information that supports payment of the claim. It cannot misinterpret or misrepresent or misstate the policy benefits. It cannot put its own financial interests above those of the insured. It cannot force a policyholder to sue in order to collect benefits owed." This expert testified that it would certainly be improper.
The expert also testified that the memos that were presented in court revealed business attitudes and practices that violated even minimum insurance industry requirements and standards.
Also, from the voluminous material presented in court by the plaintiff's attorney, the expert stated that he had drawn other conclusions—such as using untrained people to deny claims, people who did not even know the required standards of disability. Further, the company relied upon a medical examination doctor who gave a biased report (totally demolished by medical experts in the trial). They also misrepresented the requirements of the residual disability coverage and told the claimant that she was not qualified for that coverage (actually she was qualified and had asked the company if they could help her financially so that she could learn another trade). They concealed her rights under the 36-month rehabilitation coverage (the insurance company just did not want to pay anything!).
In testimony, it was revealed that the primary manager of the claims department testified in a deposition that he did not know whether insurance companies were required to handle claims fairly, didn't know whether they were required to investigate them thoroughly, and did not know whether their assessment of a claim even had to be objective. This from a man who had been promoted several times, had the authority to cut off claims, and who was in charge of training other claims handlers. Really, this happened.
Okay, now that it has been established that the claims adjusters and mangers were incompetent, what did that have to do with the agent? The claimant was asked about what the agent had told her, and it was quickly apparent that the agent evaded talking about the "important duties of her occupation" (upon which the insurer was hanging its case). The insured testified that the agent was very adamant in the beginning that even if the insured did paperwork, it certainly wasn't her occupation. (The insurer was attempting to say that because the claimant, who was a successful chiropractor, was not able to work as a chiropractor any longer; she could still do "important duties" such as bookkeeping. How she could do that with a now-defunct chiropractic office, one might rightfully ask?)
The agent had told the claimant that the (claimant) was a chiropractor, and "your important duties are chiropractic; it doesn’t matter if you do paper work, it doesn't matter–you are a chiropractor; that is why you are getting this policy." Misrepresentation? Oh, yes. Even though she may not have been aware of the claims policy of the company she represented, she was interpreting a part of the policy wording that she did not understand—and as it eventually was known, no one in the claims department understood that provision either. The saving grace in this particular case was that the attorneys for the plaintiff did not want to waste time going after the "small fry" and it may be hard to prove that the agent was deficient in this respect. It would be difficult to state that the agent was unethical in this case if she had no knowledge of claims problems and she had been informed in writing as to what consisted of a definition of "own occupation." Yet there seemed to be either a misunderstanding or lack information from the agent on policy definitions. Is an agent's lack of education/information on how the insurer pays its claims, unethical?
As expected, the definition of "total disability" under the policy also arose as the policy pays when the policyholder is "totally disabled." Under deposition, one of the expert witnesses stated that the correct definition of "total disability" was the inability to perform one's duties in the usual and customary manner and with reasonable continuity." What was interesting was that the top claims examiner for the insurance company being sued neither knew the correct definition of "disability" nor did he know that insurance companies were required to handle claims fairly, objectively, or thoroughly.
In another claim, the claimant had been approved for Social Security Disability payments, but the insurer denied benefits under its policy. SSI defines "disability" as where the individual is disabled from performing any disability. No surprise, but this claim was originally declined as the insurer attempted to convince the claimant that his policy was governed by ERISA rules. Didn't work, even though the company requested an IME (independent medical examination) they finally settled for an undisclosed sum.
As a general rule, plaintiff's attorneys are on the other side of the fence in many insurance cases. However, in one disability lawsuit, the plaintiff's attorney put into words exactly what is expected of an insurer.
"This company should interpret its policy fairly and honestly. It should treat people with decency. It should not willingly destroy people's lives for their own profit. "That's what the implied covenant of good faith and fair dealing is all about. It is why our courts read that promise into every insurance policy—just as if it were written right there on the front page with a big felt-tipped pen. Insurance companies have a 'continuing duty' to review all aspects of a claim, to review any "new information" that it might say that it was previously unaware of." (Ray Bourhis, Insult to Injury," p.157)
It would not be fair to discuss the mishandling and fraud initiated by this insurance company without discussing what happened to the lawsuit.
The insurer lost the lawsuit and was hit with a large punitive damage award. Of course this was all appealed, and Dateline had another expose on the company and the way that it treated another, different, claimant. The appeals judge on Nov. 12, 2002, rendered a "Findings of Fact, Conclusions of Law and Order" which was characterized by the legal press as a "62 page hand grenade."
The judge found that the company had targeted claims for termination when they met a certain profile, that claims were discussed at the "roundtable" where it was determined as to the methods that would terminate the case successfully, and further, the insurer made the insured take a "biased medical examination."
The judge found that before the relatively new CEO came to the insurer, claims were handled in a fair and aboveboard way, but after their arrival, standards slid to those that were not ethical for an insurance company. He acknowledged that the insurer's own witnesses did not know the proper definition of "disability," had admitted to destroying medical reports from examining doctors, failed to document claims, failed to advise insureds of covered benefits, failed to settle claims when liability was clear, and forced insured to litigate in order to obtain benefits.
The insurance company dragged on and on, appealing everything, etc., meanwhile, the poor plaintiff/insured had to borrow money at exorbitant rates to survive. After months of more legal wrangling, but usually nothing more than stony silence from the insurer, and after the insurer had finally exhausted all avenues, it paid the judgment, including the multi-million dollar punitive damage claim. (Interesting note in regards to the punitive damages. The plaintiff's attorneys were concerned in the trial when the jury walked to the jury room after all arguments had been heard, and none of them even looked at the plaintiff. The immediate concern was that they just did not like the plaintiff for whatever reason–can happen. But when they gave the plaintiff everything they had asked for, and awarded a multi-million dollar punitive damage award, they told the plaintiff and attorneys after the trial that they all knew what the decision was going to be, but they had to argue as to the amount of the punitive damage. They felt that they should not give 50 or 60 million in punitive damages as the plaintiff probably could not handle that much sudden wealth!)
RULE: NEVER MARKET A DISABILITY POLICY OR DISABILITY PROGRAM UNTIL YOU ARE ABSOLUTELY SURE THAT (1) YOU KNOW THE DEFINITION OF DISABILITY AS IT IS REPRESENTED IN THE POLICY, AND (2) THERE IS NO INDICATION THAT THE INSURER CONTESTS CLAIMS ON THE BASIS THAT THE DEFINITION OF DISABILITY IS DIFFERENT THAN STATED IN THE POLICY.
KNOW THE CLAIMS PHILOSOPHY OF THE COMPANY.
STUDY QUESTIONS
1. Insurance companies make most of their money
A. by playing the stock market and issuing junk bonds.
B. by not paying claims.
C. on investments.
D. from patents.
2. An insurance company must operate
A. on the implied promise of good faith and fair dealing.
B. by paying the minimum amount of claims.
C. as mutual companies even though they may be stock companies.
D. on a legal, but unethical, basis, or otherwise they would not be profitable.
3. When an insured has a problem in collecting from an insurer, the Department of Insurance in that state
A. can sue the insurer on behalf of the insured.
B. can hire attorneys to represent insureds in court.
C. files suit under federal law.
D. investigates to see if they are violating unfair practices law, and if they are, they can fine
the insurer.
4. If a disability policy is determined to be an ERISA regulated policy,
A. the policyowner can sue the federal government for non-performance.
B. all that really happens is that the agent cannot collect commission.
C. state law is preempted by federal law, there are no jury trials and there are no compensatory or punitive damages.
D. the policyowner is automatically awarded damages.
5. An ERISA organization that issues health coverage must, according to federal law,
A. must sell coverage to only one employer.
B. may sell insurance of any kind to any person or organization.
C. represent themselves as insurance companies and sell by insurance agents.
D. must be licensed by the state.
6. When marketing a disability income insurance policy, the agent
A. if forbidden by law to go into details as to what "disability" under the policy entails.
B. must understand "total disability," "partial disability," and "disability" thoroughly and be able to explain it correctly to the applicant/client.
C. must hold a federal agent's license.
D. need not fully understand policy provisions, as "caveat emptor."
ANSWERS TO STUDY QUESTIONS
1C 2A 3D 4C 5A 6B