South Carolina Life & Health Insurance License, Practice Exams

An employee gets married, a HIPAA 'special enrollment' event. The employee may:

1. Enroll in the group plan outside the normal open enrollment ✓
2. Only enroll at the next annual open enrollment period
3. Never add a new spouse to an existing plan
4. Enroll only after a 12-month waiting period

Why: HIPAA special enrollment lets employees enroll after qualifying life events (marriage, birth, loss of other coverage) without waiting for open enrollment.

Under section 38-57-130, an insurer without sufficient evidence but with a good faith belief that a value-added product qualifies may run it as a pilot or testing program for no more than one year, having notified the department, unless the department objects within:

1. Thirty days of the notice
2. Fourteen days of the notice
3. Sixty days of the notice
4. Twenty-one days of the notice ✓

Why: S.C. Code § 38-57-130(5)(g) sets both halves of one rule: notice to the department BEFORE launching, the programme may proceed unless the department objects within twenty-one days, and it may run for no more than one year. The programme must still be offered in a manner that is not unfairly discriminatory - the good faith belief excuses the evidence, not the fairness.

An example of an unfair claims settlement practice is:

1. Failing to act promptly and in good faith to settle a clear claim ✓
2. Requesting a properly completed proof of loss before paying a claim
3. Investigating a suspicious claim before issuing any payment on it
4. Paying a valid claim immediately upon receiving acceptable proof

Why: Unfair claims practices include not acting promptly, failing to attempt good-faith settlement of clear claims, and compelling litigation by underpaying.

Which is NOT among the practices section 38-57-140 excludes from the definitions of discrimination and rebates?

1. Paying a client's premium out of the producer's commission to close a sale ✓
2. Making an allowance to debit-plan policyholders who have paid directly to an office of the insurer
3. Issuing policies on a payroll deduction plan at a reduced rate reasonably related to the saving
4. Readjusting a group rate at the end of a policy year on the experience under it

Why: S.C. Code § 38-57-140 lists four permitted practices: bonuses or premium abatement out of nonparticipating surplus, debit-plan allowances that fairly represent the saving in collection expense, group experience readjustment retroactive only for the policy year, and reduced rates on salary savings, bank draft, preauthorized check or payroll deduction plans reasonably related to the saving. Paying the client's premium is the classic rebate barred by § 38-57-130(3), and subsection (5) of this section adds that nothing in it permits an unfair method of competition or an unfair or deceptive act.

A domestic member insurer is placed in liquidation in South Carolina. Under section 38-29-190 the court must fix a last day for filing claims with the association, and that date may be no less than:

1. 30 days from the date of the order
2. 4 months from the date of the order ✓
3. 6 months from the date of the order
4. 12 months from the date of the order

Why: S.C. Code § 38-29-190 sets a floor rather than a deadline: the court may fix any date at least four months out, and may extend the time for filing at any point BEFORE the date it fixed - but not, on the face of the section, afterwards. The court also prescribes the notice that must be given to insureds and claimants. The section applies to DOMESTIC insolvencies; a foreign insurer's liquidation runs on its own domiciliary court's timetable.

Section 38-29-200 requires the association to prepare a summary document describing the general purposes and current limitations of the chapter. Once the director has approved that document, a member insurer may not deliver a policy unless the summary document is:

1. Mailed to the owner within 30 days of delivery
2. Read aloud to the owner by the producing agent
3. Signed by the owner and returned to the insurer
4. Delivered at the time the policy is delivered ✓

Why: S.C. Code § 38-29-200(2) attaches the duty to POLICY DELIVERY, and it bites from the sixtieth day after the director approves the document. The document must also be made available on request, and the member insurer must retain evidence of compliance for as long as the policy stays in force. Two limits are worth noting: delivering the document guarantees nothing about whether the policy is actually covered, and failing to receive it gives the owner no greater rights than the chapter already provides.

A life insurer abates part of its policyholders' premiums out of surplus accumulated from nonparticipating insurance. Under section 38-57-140 this is not a rebate provided the abatement is:

1. Fair and equitable to policyholders ✓
2. Approved in advance by the director
3. Applied uniformly across every policy the insurer has issued
4. Limited to the first policy year

Why: S.C. Code § 38-57-140(1) carves paying bonuses to policyholders, or otherwise abating their premiums in whole or in part out of surplus accumulated from NONPARTICIPATING insurance, out of the definitions of discrimination and rebate in §§ 38-57-120 and 38-57-130 - but only where the bonus or abatement is fair and equitable to policyholders and for the best interests of the insurer and its policyholders. The source of the surplus matters as much as the fairness.

A flexible-premium deferred annuity allows the owner to:

1. Make varying contributions over time before payouts begin ✓
2. Pay only one single premium at purchase
3. Begin income immediately upon the first deposit
4. Invest only in guaranteed bank deposits

Why: An FPDA accepts ongoing, variable contributions during accumulation, with income deferred to a later date.

An agent collecting a weekly industrial debit for sick, accident and death benefits leaves the insurer. Under section 38-55-180 he may not transfer any part of the debit or the policies to another person or insurer, without the insurer's written consent, within:

1. Ninety days after his employment ends ✓
2. Thirty days after his employment ends
3. Six months after his employment ends
4. One year after his employment ends

Why: S.C. Code § 38-55-180 starts from ownership: no agent, collector, solicitor or other representative of an insurer operating on the weekly or monthly industrial plan owns any part of the debit under his care - it is wholly the property of the insurer in whose name the policies were written or assumed. The ninety-day restraint on a FORMER agent follows from that, and the director SHALL revoke the licence of anyone who violates the section.

Under section 38-43-106, the maximum continuing education credit hours a producer may carry forward to the next biennial period is:

1. Eighteen ✓
2. Twelve
3. Twenty-four
4. Six

Why: S.C. Code § 38-43-106(A)(2) caps the carry-forward at eighteen credit hours, and only hours in EXCESS of the minimum required for the period being reported may be carried. A producer cannot bank a full second period's worth and then sit out two years entirely.

A producer born in an odd-numbered year must provide evidence of continuing education status:

1. By 31 December of every odd-numbered year
2. By the last day of his month of birth, every odd-numbered year ✓
3. By the last day of his month of birth, every year
4. Within thirty days of completing the required hours

Why: S.C. Code § 38-43-106(B)(1) sets the deadline by BIRTH MONTH and the cycle by BIRTH YEAR - odd-year births comply in odd years, even-year births in even years. The same birth-month anchor governs licence renewal under § 38-43-110(A)(1), so the two clocks move together for any given producer.

A South Carolina long term care policy conditions its post-confinement benefits on the insured having previously received institutional care. Under section 38-72-60 the prior institutional stay the policy requires may not exceed:

1. 3 days
2. 14 days
3. 30 days ✓
4. 60 days

Why: S.C. Code § 38-72-60(D)(2)(b) caps the required prior stay at thirty days. The very next subitem uses the same number the other way round: where a policy pays only following institutionalisation, it may not condition those benefits on readmission within a period of LESS than thirty days after discharge - a floor protecting the insured, where (b) is a ceiling. Any such limitation must also be set out in a separately headed paragraph called 'Limitations or Conditions on Eligibility for Benefits', stating the required number of days.

The director levies a fine after a chapter 57 hearing. Under section 38-57-240 the person must be notified in writing by certified mail, and the notice must state that collection action and licence revocation follow if the fine is not paid within:

1. Thirty days from the date of the order
2. Sixty days from the date of receipt of the notice
3. Thirty days from the date of receipt of the notice ✓
4. Ten days from the date of receipt of the notice

Why: S.C. Code § 38-57-240 runs its thirty days from RECEIPT of the notice, not from the order or the hearing, and requires certified mail. The notice must also warn of both consequences together - further action to effect collection under the chapter, and revocation of the person's licence or certificate of authority.

An employee's group life cover ends because his employment terminates. Under section 38-65-210 the individual policy he may obtain without evidence of insurability may be on any form then customarily issued by the insurer except:

1. Whole life insurance
2. Term insurance ✓
3. Endowment insurance
4. Universal life insurance

Why: S.C. Code § 38-65-210(8)(a) lets the individual choose any form EXCEPT TERM, at the age and for the amount applied for. The other two conditions matter as much: (b) caps the amount at the insurance that ceased, less any group life for which he is or becomes eligible within thirty-one days under another group policy, and (c) sets the premium at the insurer's customary rate for that form, amount, class of risk and his attained age. Application and the first premium must reach the insurer within thirty-one days of termination.

The optional 'intoxicants and narcotics' provision states that the insurer is not liable for a loss resulting from the insured:

1. Being intoxicated or under the influence of a non-prescribed narcotic ✓
2. Traveling outside of the United States for any business reason
3. Participating in a non-hazardous recreational sporting activity
4. Failing to disclose a minor childhood illness on the application

Why: This optional provision excludes losses sustained while the insured is intoxicated or under the influence of narcotics not taken on a physician's advice.

A provider submits a claim one hundred fifty business days after the services were performed. Under section 38-59-210 the claim:

1. Is a clean claim if it is otherwise complete
2. Is a clean claim, the limit applying only to electronic claims
3. Is not a clean claim, having missed the one hundred twenty business day limit ✓
4. Is a clean claim, but interest does not accrue on it

Why: S.C. Code § 38-59-210(8)(a) makes timely receipt the first of nine cumulative conditions - the claim must reach the insurer within one hundred twenty BUSINESS days of the date the services were performed. The other eight cover the required form or standard code sets, coverage and provider eligibility, any required referral, the insurer's status as primary payor, freedom from material defect, substantiating documentation, the absence of a circumstance reasonably preventing accurate or timely payment, and premiums having been timely paid. Miss any one and the payment clocks in § 38-59-230 never start.

Under section 38-57-160, a licensed agent may give an article of merchandise for advertising purposes having a value of not more than:

1. Ten dollars
2. Fifty dollars
3. One hundred dollars
4. Twenty-five dollars ✓

Why: S.C. Code § 38-57-160 permits the article only where it carries an advertisement for the insurer or agent printed on it, and the section holds a SECOND, smaller figure that is easily confused with the first: refreshments during a sales presentation are permitted up to ten dollars a person. Twenty-five for the article, ten a head for the refreshments.

A health insurer denies a service on the ground that the plan contract excludes it. Under section 38-59-25 that coverage decision:

1. Is the practice of medicine unless made by a physician
2. Is not the practice of medicine ✓
3. Is the practice of medicine in every case
4. Is not a coverage decision at all

Why: S.C. Code § 38-59-25 takes three kinds of decision outside the practice of medicine: a denial based on a finding that the service is included or excluded as a covered benefit under the plan contract, an approval of a covered benefit, and a denial of a covered benefit for diagnosis, treatment, cure or relief - the third only where a licensed physician issued it without wilfully or recklessly ignoring nationally recognised protocols. A good faith request for records or further information is not a delay for the section's purposes.

Section 38-29-40 caps what the association may become obligated to cover at the lesser of the statutory dollar limits and one other measure. That other measure is:

1. The contractual obligations the member insurer would have had ✓
2. The premiums the policy owner actually paid the insurer
3. The reserves the insurer had established for the policy
4. The amount recoverable from the insurer's remaining assets

Why: S.C. Code § 38-29-40(3) begins 'the lesser of', and the first limb is the contractual obligation the member insurer is liable for, or would have been liable for had it not become impaired or insolvent. The association steps into the policy; it does not improve on it. Subitem (b)(iv) then makes clear that these limits are measured BEFORE the association's subrogation and assignment rights and before any assets of the insolvent insurer attributable to covered policies are brought in - those assets fund the obligation, they do not enlarge it.

An employee of an insurer handles underwriting and claims investigation and receives no commission. Under section 38-43-20 that employee:

1. Requires a licence for each line the insurer writes
2. Requires a licence unless directly supervised by one
3. Requires a limited lines licence only
4. Does not require a producer licence ✓

Why: S.C. Code § 38-43-20(D)(1)(b) exempts an officer, director or employee whose function relates to underwriting, loss control, inspection, or the processing, adjusting, investigating or settling of a claim. The exemption is conditional on receiving NO COMMISSION on policies written or sold to insure South Carolina risks - that condition governs every branch of paragraph (1).

The federal Gramm-Leach-Bliley Act requires financial institutions, including insurers, to:

1. Protect the privacy of customers' nonpublic personal information ✓
2. Sell insurance only through federally chartered national banks
3. Charge identical premiums to every applicant in the country
4. Report all claims directly to the Internal Revenue Service

Why: Gramm-Leach-Bliley requires privacy notices and limits on sharing nonpublic personal financial information, with an opt-out for consumers.

After due notice and hearing the director finds an insurer has engaged in improper claim practices and imposes a penalty. Under section 38-59-30 that penalty:

1. Must be passed through to policyholders as a rate surcharge
2. Is deductible from the insurer's premium tax
3. Is not a cost for rate-adjustment purposes ✓
4. Is held in suspense pending appeal

Why: S.C. Code § 38-59-30 requires a cease and desist order and permits a penalty as provided in § 38-2-10, then adds the rule that gives the penalty its bite: it may not be considered a cost of the insurer for the purpose of determining whether its rates warrant adjustment. Without that, the insurer could recover its own fine from its policyholders through the rate filing.

A producer takes the same approved course twice within one biennial compliance period. Under section 38-43-106 credit is given:

1. Twice, the course being approved
2. Twice, if taken with different providers
3. Not at all for a repeated course
4. Once only ✓

Why: S.C. Code § 38-43-106(A)(4) permits repeating a course but forbids giving credit more than once for a course repeated during a biennial compliance period. Repetition across DIFFERENT periods is untouched, so a course taken again two years later counts again.

A deferred annuity provides cash surrender benefits. Under section 38-69-260 the death benefit under such a contract must be:

1. At least equal to the cash surrender benefit ✓
2. At least equal to the gross considerations paid
3. At least equal to the paid-up annuity benefit at maturity
4. Whatever the contract specifies, no minimum applying

Why: S.C. Code § 38-69-260 closes with that one-sentence rule, and it does real work: without it a contract could pay more on surrender than on death. The section's main body sets the cash surrender floor - the present value of the maturity value of the paid-up annuity benefit arising from considerations paid, reduced for prior withdrawals and partial surrenders, computed at an interest rate not more than ONE PERCENT higher than the contract's accumulation rate, decreased by indebtedness and increased by additional amounts credited - and in no event may it be less than the minimum nonforfeiture amount at that time.

An annuitant dies eighteen months after an annuity contract is issued and the insurer wishes to contest it for a misstatement in the application. Under section 38-69-120 the contract's incontestability period runs:

1. Two years in force during the lifetime of the insured
2. Two years from the date of issue ✓
3. Two years from the insurer's discovery of the misstatement
4. Two years from the commencement of annuity payments

Why: S.C. Code § 38-69-120(4) runs its two years FROM THE DATE OF ISSUE with no lifetime qualifier - and that is the difference from § 38-63-220(d), which requires a life policy to have been in force two years DURING THE LIFETIME OF THE INSURED. The distinction only shows itself when the insured dies inside the period, which is exactly when it matters. A rider or supplemental benefit attached subsequently gets its own two years from its own date of issue, and any proceedings to vacate the contract must commence within the period.

An insurer wishes to offer a mass-marketed group life policy to South Carolina residents under a policy issued in another state. Under section 38-65-60 the policy and certificates:

1. Need only be made available to the director on request
2. Are exempt, the policy having been issued outside this State
3. Require approval only if more than one hundred residents are covered
4. Must have the director's approval before they are offered for sale here ✓

Why: S.C. Code § 38-65-60(3) draws a sharp line. Ordinary out-of-state group life policies and certificates covering residents need only be made available to the director ON AN INFORMATIONAL BASIS on request - but mass-marketed policies and certificates need prior approval under § 38-61-20. Subsections (1) and (2) add that the coverage must provide in substance the provisions of § 38-65-210 unless the director determines some are inappropriate, and that the insurer must comply with this State's advertising and claims settlement requirements.

Under section 38-43-130, the director may place a producer's licence on probation, revoke or suspend it after notice of:

1. Thirty days
2. Ten days ✓
3. Twenty days
4. Sixty days

Why: S.C. Code § 38-43-130(A) requires ten days' notice for probation, revocation or suspension, on grounds of conviction of a crime involving moral turpitude, violation of the title or a departmental regulation, or having wilfully deceived or dealt unjustly with the citizens of this State. Note this is a shorter notice than the thirty days § 38-3-170 requires for a hearing generally.

A mortgagee insists that the insurer covering the mortgaged property be of a particular type. Under section 38-57-110 that is not a reasonable financial requirement if the insurer:

1. Issues nonassessable policies and otherwise qualifies ✓
2. Is licensed in at least one other state
3. Has been licensed in this State for more than five years
4. Is represented by a resident producer

Why: S.C. Code § 38-57-110(2) preserves the mortgagee's legitimate interest - it may designate reasonable financial requirements of the insurer and the adequacy of the terms and provisions of the coverage for the property pledged or mortgaged. What it may not do is convert that into a requirement about the TYPE of insurer, where the insurer issues nonassessable policies and otherwise meets those reasonable financial requirements. The distinction is between an insurer's strength and its corporate form.

A South Carolina long term care policy defines preexisting conditions. Under section 38-72-60 the definition may be no more restrictive than a condition for which medical advice or treatment was recommended or received from a health care provider within how long before the effective date of coverage?

1. 6 months ✓
2. 12 months
3. 18 months
4. 24 months

Why: S.C. Code § 38-72-60(C)(1) caps the LOOKBACK at six months, and subsection (C)(2) caps the exclusion window at six months as well - but they measure in opposite directions from the effective date of coverage, one backwards to find the condition and one forwards to catch the loss. The director may extend both for specific age groups in specific policy forms on a finding that it is in the best interest of the public. Neither cap applies to a policy issued to an employer or labour organisation group under § 38-72-40(5)(a).

A final expense (burial) policy is typically:

1. A small whole life policy meant to cover funeral and final costs ✓
2. A large term policy intended to replace decades of lost income
3. A variable policy whose death benefit fluctuates with the market
4. A group policy issued automatically to all employees at hire

Why: Final expense is a modest permanent (whole life) policy designed to cover burial and end-of-life expenses, often with simplified underwriting.

An employee first becomes eligible for coverage under a South Carolina group accident and health policy. Under section 38-71-730 no evidence of individual insurability may be required at that time or within:

1. 30 days thereafter
2. 31 days thereafter ✓
3. 60 days thereafter
4. 90 days thereafter

Why: S.C. Code § 38-71-730(3) applies to ALL groups, and note precisely what it does and does not forbid: it does not stop the insurer obtaining medical information about the members of the group for use in deciding whether to insure the GROUP, it stops that information being used to exclude an INDIVIDUAL from coverage. For group health insurance coverage as defined in § 38-71-840 the prohibition in § 38-71-860 on discriminating against individual participants on health status-related factors applies on top of this.

A rider is attached to a life policy three years after the policy was issued. Under section 38-63-220 the rider becomes incontestable:

1. Immediately, the policy already being incontestable
2. Two years from the policy's date of issue
3. Two years from the rider's own date of issue ✓
4. Only if the insurer requires no new application for it

Why: S.C. Code § 38-63-220(d) gives a SUBSEQUENTLY attached rider or supplemental benefit its own two years, running from its own date of issue and measured against the truth of the application for that rider. So a mature policy can carry a rider that is still contestable. The subsection also requires that any proceedings to vacate the policy, or a MUTUAL RESCISSION initiated by the insurer, commence within the same period.

A group life insurer prices a certificate higher because the applicant has donated a kidney, with no additional actuarial risk shown. Under section 38-65-130 this is:

1. Permitted, group underwriting being on a plan basis
2. Prohibited discrimination ✓
3. Permitted if the same loading applies to all donors
4. Prohibited only where coverage is declined outright

Why: S.C. Code § 38-65-130(A)(3) is the group counterpart of § 38-63-110 and bars discrimination in offering, issuance, cancellation, amount of coverage, price or any other condition based SOLELY AND WITHOUT ANY ADDITIONAL ACTUARIAL RISKS on living organ donor status - so price is caught as squarely as refusal. Paragraphs (1) and (2) are absolute: no declining or limiting coverage solely for donor status, and no precluding donation as a condition of continuing to receive a policy. The 2024 act that added both sections is cited as the Living Donor Protection Act.

The key difference between a defined benefit and a defined contribution plan is that a defined benefit plan:

1. Promises a specific retirement benefit, with the employer bearing the funding risk ✓
2. Specifies only the contributions going in, leaving the participant's final retirement benefit uncertain
3. Is always funded entirely by employee salary deferrals alone
4. Can never be offered by a private for-profit employer

Why: A defined benefit plan guarantees a stated benefit (employer bears investment risk); a defined contribution plan defines inputs, and the benefit depends on account performance.

A vendor includes the cost of insurance in the financed purchase price of merchandise. Under section 38-57-180 the vendor must:

1. Obtain the purchaser's separate written consent to the insurance
2. Separately state and identify the insurance charge ✓
3. Remit the insurance charge to the insurer within thirty days
4. Offer the purchaser the option of buying the insurance elsewhere

Why: S.C. Code § 38-57-180 makes the insurance charge visible inside a bundled price - the amount charged and to be paid for the insurance, and the classifications, if any, on which it is based. It adds a second rule that is easy to miss: whether the cost of insurance is included in or excluded from the purchase price or financing may not increase, reduce or otherwise affect any other factor in the cost of the merchandise, property or financing to the purchaser or borrower. Bundling may not be used to move money between the two prices.

Key person disability insurance provides benefits to:

1. The business, to offset the loss when a key employee is disabled ✓
2. The disabled employee's family, to replace their lost personal income
3. Every employee of the firm equally, regardless of their role
4. A lender, to pay off the company's outstanding commercial loans

Why: Key person disability is owned by and paid to the business to cover losses and the cost of replacing an essential employee who becomes disabled.

Section 38-72-40 both defines long term care insurance and lists the coverages the term does not include. Which of the following IS long term care insurance under that section?

1. A policy offered primarily to provide Medicare supplement coverage
2. A hospital confinement indemnity policy
3. A specified disease policy
4. A life insurance rider that supplements long term care coverage ✓

Why: S.C. Code § 38-72-40(1)(a) reaches group and individual annuities and life insurance policies or riders that provide long term care coverage directly OR that supplement it, and it reaches qualified long term care contracts. The excluded list is the mirror image: basic Medicare supplement, basic hospital expense, basic medical-surgical expense, hospital confinement indemnity, major medical, disability income and asset protection, accident-only, specified disease or accident, and limited benefit health coverage. Subsection (1)(b) then says that whatever the product is, if it is marketed AS long term care insurance the chapter applies to it.

'Defamation' in insurance regulation refers to:

1. Making false or maligning statements about an insurer's financial condition ✓
2. Refusing to renew a policy after a single claim is filed
3. Sharing part of a commission with another licensed producer
4. Filing a consumer complaint with the state insurance department

Why: Defamation is making, publishing, or circulating false statements that are maligning, especially about the financial condition of an insurer.

In an indexed universal life policy, the interest credited to cash value is:

1. Guaranteed at a fixed rate set for the life of the contract
2. Tied to a stated market index, subject to a cap and a guaranteed floor ✓
3. Based entirely on separate-account mutual fund performance and risk
4. Determined each year solely by the policyowner's own elections

Why: Indexed UL credits interest linked to an external index (e.g., S&P 500) with a cap/participation rate and a guaranteed minimum floor.

Section 38-57-100 prohibits an act of boycott, coercion or intimidation where it results in or tends to result in:

1. Any loss of business to a competing insurer
2. A complaint being filed with the department
3. Unreasonable restraint of, or monopoly in, the business of insurance ✓
4. A reduction in the premium charged to any insured

Why: S.C. Code § 38-57-100 borrows the language of competition law: it catches entering into an AGREEMENT to commit such an act, and equally committing one by any CONCERTED ACTION. The threshold is unreasonable restraint or monopoly, so ordinary competitive loss - a rival simply winning the business - is not within it.

A policy loan taken against a life policy's cash value:

1. Must be repaid in full within thirty days or it lapses
2. Reduces the death benefit by any unpaid loan and interest ✓
3. Is treated as taxable income in the year the loan is taken
4. Requires the owner to submit new evidence of insurability

Why: Unpaid loan balance and interest are subtracted from the death benefit; loans are not taxable while the policy stays in force.

A nonhandicapped dependent child reaches the limiting age under an individual South Carolina hospital, medical or surgical expense policy. Under section 38-71-360 the child may obtain an individual policy without evidence of insurability by applying within:

1. 30 days of attaining that age ✓
2. 31 days of attaining that age
3. 60 days of attaining that age
4. 90 days of attaining that age

Why: S.C. Code § 38-71-360 gives thirty days - one day fewer than the thirty-one that § 38-71-350 allows for proof in the handicapped-child case, a difference with no policy logic behind it and therefore exactly the kind an exam tests. The policy issued is the coverage the insurer is then writing that is CLOSEST TO, but not greater than, the terminated coverage, and waiting periods count as met to the extent cover was in force. Limited classification policies - accident-only, limited accident, travel accident and specified disease - are outside the section.

An insurer asks whether it must itself hold a producer licence. Under section 38-43-20:

1. It need not; nothing in the chapter requires an insurer to hold one ✓
2. It must, if it sells directly to the public
3. It must, unless it sells only through appointed producers
4. It must, if it is a foreign or alien insurer

Why: S.C. Code § 38-43-20(C) is explicit that the chapter may not be construed to require an insurer to obtain a producer licence - and then narrows what "insurer" means for that purpose, EXCLUDING the insurer's officers, directors, employees, subsidiaries and affiliates. The company is exempt; the people who work for it are judged on their own activities under subsection (D).

An individual accident and health policy reserves the insurer's right to increase the premium. Under section 38-71-620 the policy must also provide that written notice of a rate increase be given to the insured at least:

1. 10 days before it takes effect
2. 30 days before it takes effect
3. 31 days before it takes effect ✓
4. 45 days before it takes effect

Why: S.C. Code § 38-71-620 requires thirty-one days, matching the nonrenewal notice at § 38-71-335(C) rather than the ten-day premium-due notice at § 38-71-610. Thirty is the near miss to watch, and it belongs to a different transaction entirely: § 38-71-315 requires thirty days' notice where an insurer voluntarily DECREASES a premium charge, and that notice goes to the director and the consumer advocate rather than to the insured.

A producer offers to give a prospect part of the first-year commission if they buy the policy. This is:

1. Rebating ✓
2. Twisting
3. Defamation
4. Coercion

Why: Offering an inducement not stated in the policy (such as sharing commission) to persuade a purchase is rebating, illegal in most states.

Section 38-72-20 preserves the other insurance laws that apply to a long term care insurer, so far as they do not conflict with chapter 72. It makes one express exception, for laws and regulations designed and intended to apply to:

1. Group accident and health policies
2. Life insurance policies with accelerated benefits
3. Individual disability income policies
4. Medicare supplement insurance policies ✓

Why: S.C. Code § 38-72-20 says Medicare supplement law must NOT be applied to long term care insurance, and the reason is practical rather than technical: the two products are sold to the same buyers, at the same ages, often in the same conversation, and applying the Medicare supplement standards to a long term care policy would distort it. This is the statutory root of the mis-selling that chapter 72 exists to stop - a long term care policy is not, and may not be regulated as, a Medicare supplement.

An employee's accident and health premium is collected by payroll deduction and the employer fails to remit it. Under section 38-71-110 the insurer may not declare the policy lapsed until written notice of that failure has been mailed to the insured at least:

1. 10 days before the policy is terminated
2. 15 days before the policy is terminated ✓
3. 31 days before the policy is terminated
4. 45 days before the policy is terminated

Why: S.C. Code § 38-71-110 protects an insured whose money never reached the insurer through no fault of his own, so the notice must state the amount due and to whom it must be paid, and it must be mailed at least fifteen days before termination. The protection lasts only while the insured remains employed by the authorised employer. Ten days is the general premium-due notice under § 38-71-610 and thirty-one days is the nonrenewal notice under § 38-71-335(C); this is neither.

A not-for-profit charitable corporation wishes to accept property in return for an annuity without becoming subject to the insurance laws. Under section 38-5-20 it must have been in active operation for at least:

1. Five years ✓
2. Three years
3. Ten years
4. One year

Why: S.C. Code § 38-5-20 requires a charitable, religious, benevolent or educational corporation NOT OPERATING FOR PROFIT and in active operation at least five years. The subsection then closes the obvious loophole: no corporation operating for profit, nursing homes expressly included, may issue charitable or gift annuities without the Director's approval.

Which is NOT required in an annuity contract by section 38-69-230?

1. A projection of the account value at the contract's maturity date ✓
2. A statement of the mortality table, if any, and interest rates used
3. A statement that available benefits are not less than the statutory minimum
4. An explanation of how indebtedness and prior withdrawals alter the benefits

Why: S.C. Code § 38-69-230(c) requires the mortality table and interest rates used in calculating any guaranteed minimum paid-up annuity, cash surrender or death benefits, together with enough information to determine the amounts. Item (d) requires the statement that available benefits are not less than the minimum required by the statute of the state where the contract is delivered, and an explanation of how they are altered by additional amounts credited, indebtedness to the insurer, or prior withdrawals and partial surrenders. A forward projection is not among the requirements.

After a claim is reported under a South Carolina accident and health policy, the insurer acknowledges the notice, supplies proof of loss forms, accepts the proofs and investigates. Under section 38-71-60 those acts:

1. Do not waive any of the insurer's rights in defending the claim ✓
2. Waive any defense the insurer has based on late notice of claim
3. Waive the insurer's right to require an autopsy after death
4. Waive the insurer's defenses unless it reserves them in writing

Why: S.C. Code § 38-71-60 lets an insurer do the ordinary work of handling a claim without being taken to have surrendered its defenses. Notice what the section does NOT say: it says nothing about a reservation of rights, which is what makes the last option tempting to anyone who has met that practice elsewhere. Under this section the protection attaches automatically to the four listed acts, and no reservation is required.

Section 38-72-40 defines long term care insurance by the coverage it is advertised, marketed, offered or designed to provide. That coverage must run for not less than how long for each covered person?

1. 12 consecutive months ✓
2. 18 consecutive months
3. 24 consecutive months
4. 36 consecutive months

Why: S.C. Code § 38-72-40(1)(a) turns on twelve consecutive months, and on WHERE the care is given: the services must be provided in a setting other than an acute care unit of a hospital. The services themselves may be diagnostic, preventive, therapeutic, rehabilitative, maintenance or personal care, and the definition expressly reaches a policy or rider paying benefits on cognitive impairment or loss of functional capacity, which is how a policy that never mentions a nursing home is still long term care insurance.

An adjuster offers below the reasonable value of a claim, reasoning that the claimant will accept rather than pay a lawyer to recover the balance. Under section 38-59-20 this is:

1. An improper claim practice in its own right ✓
2. Permissible, the claimant being free to refuse
3. Permissible if the offer is made in writing
4. An improper practice only if the claimant sues

Why: S.C. Code § 38-59-20(6) names the tactic exactly: offering to settle for less than the amount otherwise reasonably due BASED UPON the possibility or probability that the policyholder or claimant would be required to incur attorneys' fees to recover it. Whether the claimant accepts, refuses or sues is beside the point - the offer itself, made with that reasoning and with the frequency the section requires, is the practice.

A tax-qualified long-term care policy that meets federal standards generally offers:

1. Tax-free benefits and premiums that may be deductible within limits ✓
2. Benefits that are always fully taxable as ordinary income
3. Coverage only for care delivered in a skilled nursing facility
4. A guaranteed cash refund of all premiums at the insured's death

Why: Tax-qualified LTC policies (under HIPAA standards) pay benefits income-tax-free (within per-diem limits) and allow a limited premium deduction.

A life policy issued in 2020 provides for policy loans at a fixed rate. Under section 38-63-240 that rate may not exceed:

1. Six percent per annum
2. Eight percent per annum ✓
3. Ten percent per annum
4. Twelve percent per annum

Why: S.C. Code § 38-63-240 applies to policies issued after 1 May 1985 and caps a fixed policy loan rate at eight percent per annum, subject to the alternative in § 38-63-250 - the adjustable maximum rate tied to the Published Monthly Average or to the policy's own cash value interest rate plus one percent. Eight percent recurs in this chapter: it is also the ceiling on reinstatement interest under § 38-63-220(j) and the small-policy fixed rate under § 38-63-260.

An annuity contract lapses for non-payment and the cash surrender value has not been paid. Under section 38-69-120 it may be reinstated on written application at any time within:

1. Three years from the date of default ✓
2. Five years from the date of default
3. Two years from the date of default
4. One year from the date of default

Why: S.C. Code § 38-69-120(9) bars reinstatement once the cash surrender value has been PAID, and otherwise requires written application, payment or reinstatement of all overdue stipulated payments and any indebtedness with interest at a rate specified in the contract but not exceeding eight percent a year compounded annually. Evidence of insurability satisfactory to the insurer may also be required WHEN APPLICABLE - which is permissive here, where § 38-63-220(j) makes it a condition of every life reinstatement.

A retiree with limited income and assets needs nursing-home care Medicare won't cover long term. The program that may help is:

1. Medicaid (after meeting its means test) ✓
2. Medicare Part B
3. A Medicare Supplement policy
4. Social Security disability

Why: Medicaid covers long-term custodial care for those who meet its income/asset limits, sometimes after a spend-down.

Under section 38-5-180, which status does NOT permit an insurer to operate from a location within South Carolina?

1. Being licensed as an insurer under section 38-5-10
2. Being permitted to operate as an approved reinsurer under section 38-5-60
3. Registration as a foreign corporation with the Secretary of State ✓
4. Being qualified as an eligible surplus lines insurer under section 38-45-90

Why: S.C. Code § 38-5-180 names exactly three routes - licensed insurer, approved reinsurer, or eligible surplus lines insurer. Corporate registration is a company-law step that says nothing about authority to transact insurance, and treating it as sufficient is the mistake the section exists to foreclose.

An insurer discovers an overpayment made to a provider two years ago. Under section 38-59-250 recovery efforts may not be initiated more than eighteen months after the initial payment unless the recovery is:

1. Based on a reasonable belief of fraud or other intentional misconduct ✓
2. For an amount exceeding ten thousand dollars
3. Approved in advance by the Department of Insurance
4. Sought from a participating rather than a nonparticipating provider

Why: S.C. Code § 38-59-250(B) sets an eighteen-month long-stop with three exceptions - a reasonable belief of fraud or other intentional misconduct, recovery required by a self-insured plan, and recovery required by a state or federal government program. The size of the overpayment is irrelevant to the long-stop.

A group of forty employees is offered basic group life cover. Under section 38-65-40 no evidence of individual insurability may be required when a person first becomes eligible or within:

1. Thirty days thereafter
2. Sixty days thereafter
3. Ninety days thereafter
4. Thirty-one days thereafter ✓

Why: S.C. Code § 38-65-40(3) applies the rule to groups of TWENTY-FIVE OR MORE persons, and excepts insurance supplemental to the basic coverage, for which evidence of individual insurability may still be required. For trusteed groups the twenty-five is applied on a PARTICIPATING UNIT basis. Do not read the twenty-five as an age - the twenty-five in § 38-65-70 is the age limit for a dependent full-time student, a different number doing different work.

Federal law (IRC 101(j)) generally requires that, for employer-owned life insurance death proceeds to remain tax-free, the employer must:

1. Notify the employee and obtain consent before issue ✓
2. Pay the employee a cash bonus equal to the death benefit
3. Limit the coverage to highly compensated executives only
4. Surrender the policy if the employee ever changes jobs

Why: For employer-owned (COLI/BOLI) policies, the insured employee must be notified and consent in writing before issue, or the death benefit above basis becomes taxable.

A modern whole life policy 'matures' (endows) when the:

1. Insured reaches the maturity age and the cash value equals the face amount ✓
2. The policy has been continuously in force for a period of exactly twenty full years
3. Insured makes the final scheduled premium payment
4. Policyowner first takes a loan against the cash value

Why: At the maturity age (commonly 121, formerly 100), the cash value equals the face amount and the policy endows, paying the face to a living insured.

A structured settlement annuity is typically used to:

1. Pay periodic settlement amounts from a legal claim over time ✓
2. Provide an employer's executives with deferred bonuses
3. Fund a child's college education through a trust
4. Replace a key employee who has died

Why: A structured settlement funds court/insurance settlement payments as periodic income; amounts for physical-injury claims are generally tax-free.

A policy is sold to an unrelated investor for valuable consideration. Under the transfer-for-value rule, the death benefit is:

1. Partly taxable (the amount above the buyer's basis), with exceptions ✓
2. Always fully income-tax-free to the buyer
3. Always fully taxable as a capital gain
4. Exempt only if the policy is term insurance in that particular circumstance

Why: Transfer for value makes the death benefit above the buyer's cost taxable, unless an exception (e.g., transfer to the insured, a partner, or the insured's corporation) applies.

A serving Director becomes a candidate for public office. Under section 38-3-100 his office as Director:

1. Continues until the election is decided
2. Continues if the Governor consents in writing
3. Is suspended for the duration of the campaign
4. Must be immediately vacated ✓

Why: S.C. Code § 38-3-100 vacates the office at once, and applies the same rule to becoming a member of a political committee during tenure. The section also requires the Director to devote all of his working time to the office, and puts him outside the State Employee Grievance Committee and any internal departmental grievance procedure.

An investor with no relationship to the insured arranges and funds a policy intending to profit from the death benefit. This is:

1. Stranger-originated life insurance (STOLI), which is illegal ✓
2. A permissible viatical settlement in that particular circumstance
3. A standard key person arrangement
4. An ordinary collateral assignment

Why: STOLI lacks insurable interest and is illegal; policies must be founded on a genuine insurable interest at inception.

A group of neighbours forms an association so that they can buy life insurance together. Under section 38-65-40 a group life policy may not be issued to them because the group must be:

1. Formed for purposes other than obtaining insurance ✓
2. Made up of at least twenty-five persons
3. Registered with the Department of Insurance
4. Composed of employees of a common or affiliated employer

Why: S.C. Code § 38-65-40(1) allows a group life policy to be issued to a TRUST, or to cover two or more persons associated in a common group formed for purposes other than obtaining the insurance - the anti-selection rule that stops a group being assembled out of people who want cover. Employment is one such common group but not the only one, which is why the last option states a sufficient case as though it were the necessary one. The single carve-out is credit life: group certificates of credit life insurance may be issued to persons other than those in a common group.

A Medicare Supplement (Medigap) policy must provide a free-look period of at least:

1. 30 days ✓
2. 10 days
3. 24 hours
4. 6 months

Why: Medicare Supplement policies carry a 30-day free-look, longer than the typical 10-day individual health free-look.

The director has exempted a class of policy from the filing requirement. Under section 38-61-20 the insurer must still, at least annually:

1. File a specimen of each exempted form for the department's records
2. Obtain the department's written renewal of the exemption
3. List the types and form numbers and have an officer certify compliance ✓
4. Publish the exempted form numbers in the State Register

Why: S.C. Code § 38-61-20(D) lets the director exempt any policy, contract or certificate he considers it impractical to apply subsection (A) to, or whose filing is not needed to protect the public - but it buys accountability back with the annual list and an officer's certificate that the policies comply fully with South Carolina law. If a certified form is later found to violate the law, the director may disqualify that insurer from certifying at all.

In group underwriting, a 'guaranteed issue' limit is the amount of coverage that:

1. Members can obtain without providing individual evidence of insurability ✓
2. The employer must purchase for every employee regardless of cost
3. Is automatically doubled for any employee who has dependents
4. Each member must pay for entirely out of their own pocket

Why: Up to the guaranteed issue limit, members are covered without individual medical evidence; amounts above it require proof of insurability.

Workers' compensation insurance covers:

1. Job-related injuries and occupational illnesses ✓
2. Any injury an employee suffers, whether on or off the job
3. Only injuries that occur during an employee's commute home
4. Medical costs of an employee's dependents and family members

Why: Workers' compensation is a no-fault, state-mandated coverage for work-related injuries and occupational diseases; off-the-job losses are not covered.

The agent's report attached to a life insurance application is:

1. The agent's confidential observations, which are not part of the contract ✓
2. A legally binding warranty made by the proposed insured
3. The medical history section the applicant completes personally
4. A required disclosure that must be given to the applicant at delivery

Why: The agent's report conveys the producer's observations to the underwriter; it is not part of the entire contract and is not shown to the applicant.

Under section 38-3-10, the Director of the Department of Insurance is appointed by:

1. The General Assembly by joint resolution
2. The Insurance Commission from among its members
3. The Governor, with the advice and consent of the Senate ✓
4. Statewide election on a partisan ballot

Why: S.C. Code § 38-3-10 makes the Director a gubernatorial appointment confirmed by the Senate, removable by the Governor under § 1-3-240(B). South Carolina is therefore an APPOINTED-regulator state. A number of states elect their insurance commissioner, and the difference matters for how the office answers for its decisions.

A policy carries an adjustable maximum policy loan interest rate. Under section 38-63-250 the rate being charged may be increased only where the increase would be at least one-half percent per annum, and not more than:

1. Twice in any calendar year ✓
2. Once in any calendar year
3. Four times in any calendar year
4. Once in any twelve-month period

Why: S.C. Code § 38-63-250(d) is asymmetrical, and that is the point. An increase of half a percent or more MAY be made, no more than twice a calendar year; a reduction of half a percent or more MUST be made. The maximum rate itself is determined at regular intervals but only once each twelve months, and the insurer must give at least thirty days' advance notice of any increase, notifying decreases in due course.

Which is NOT excepted from the Standard Nonforfeiture Law for Individual Deferred Annuities by section 38-69-220?

1. A variable annuity
2. An immediate annuity
3. An individual retirement annuity ✓
4. A deferred annuity contract after annuity payments have commenced

Why: S.C. Code § 38-69-220 excepts group annuities purchased under an employer's or employee organization's retirement or deferred compensation plan - but carves that exception back for plans providing individual retirement accounts or INDIVIDUAL RETIREMENT ANNUITIES under section 408 of the Internal Revenue Code, which therefore remain inside the article. The full exception list also covers reinsurance, premium deposit funds, variable annuities, investment annuities, immediate annuities, deferred annuities after payments have commenced, reversionary annuities, and contracts delivered outside this State through the issuing company's agent or representative.

An act listed in section 38-59-20 constitutes an improper claim practice only where it is committed without just cause and performed:

1. With such frequency as to indicate a general business practice ✓
2. On more than one claim in any twelve-month period
3. By an officer or director of the insurer
4. After the department has issued a warning

Why: S.C. Code § 38-59-20 sets TWO conditions and both must hold - without just cause, AND with such frequency as to indicate a general business practice. A single mishandled claim, however badly handled, is not an improper claim practice under this section; it may still be a breach of contract or bad faith at common law, and § 38-59-40 is where the statute deals with the one-off refusal to pay.

Section 38-29-80 provides for two classes of assessment. A Class A assessment is made for the purpose of meeting:

1. Administrative costs and general expenses ✓
2. The obligations of one impaired or insolvent insurer
3. Claims that exceed the association's annual assessment cap
4. Refunds due to member insurers that assessed in error

Why: S.C. Code § 38-29-80(2) makes Class A the running-cost assessment - administrative costs and other general expenses NOT related to a particular impaired insurer - and Class B the assessment for carrying out the association's duties with regard to a specific insolvent or impaired insurer. The distinction has consequences elsewhere: a Class A assessment may be called on a pro rata or non pro rata basis and may be credited against future Class B assessments, and under subsection (8) a certificate of contribution is issued for every assessment EXCEPT a Class A one.

An insurer asks whether the Standard Nonforfeiture Law for Life Insurance governs its variable life policies. Under section 38-67-50:

1. It applies in full to variable life insurance policies
2. It does not apply to variable life insurance policies ✓
3. It applies except to the extent the director exempts a policy
4. It applies only to variable policies with guaranteed minimum benefits

Why: S.C. Code § 38-67-50 disapplies Article 5 of chapter 63 - the Standard Nonforfeiture Law for Life Insurance - to variable life, and then requires something in its place: an individual variable life contract delivered or issued for delivery here must contain grace, reinstatement and nonforfeiture provisions APPROPRIATE TO SUCH A CONTRACT. Reserve liability must be established by actuarial procedures recognising both the variable nature of the benefits and any mortality guarantees. Otherwise all pertinent provisions of this State's insurance laws apply to separate accounts and their contracts.