Chapter 11 Laws & Rules

A temporary license may be issued in cases where a producer has become disabled or dies, requiring a replacement (a surviving spouse or a court appointed personal representative) to service the producer’s business. It also can be issued when the producer is actively serving in the military.

The violator of any cease and desist order is subject to suspension or revocation of any insurance license or Certificate of Authority issued under the laws of Arizona. The Director may suspend, revoke, refuse to issue or refuse to renew an insurance producer license for any one or more of the following causes:


 1). Intentionally providing materially incorrect, misleading, incomplete or untrue information in the license application

2). Violating any insurance laws, or violating any regulation, subpoena or order of the Director or of another insurance Director in any other state

3). Obtaining or attempting to obtain a license through material misrepresentation or fraud

4).Improperly withholding, misappropriating or converting any moneys or properties received in the course of doing insurance business

All insurance producers must successfully complete 48 credit hours of continuing education every 4 years, prior to license renewal. Six of those hours must be in ethics.

The Director or a designated examiner may conduct an examination of any domestic insurance company at the discretion of the Director. Every person or firm being examined must produce and make freely available to the Director all material relating to the subject of the examination.

If the applicant is a business entity operating as an insurance producer, the Director also will require the name and address of a licensed producer responsible for the business entity’s compliance with Arizona’s insurance laws.

A nonresident producer licensed in another state who becomes a resident of Arizona and continues to act as an insurance producer must, within 90 days, apply for and obtain a resident producer’s license.

A fraternal insurer is an organization operating under a lodge system that provides social and insurance benefits to members and family dependents.

Only a licensed insurance producer who is authorized by the Director may solicit applications for and issue policies by means of mechanical vending machines.

Whenever it appears that any person is violating an insurance law of Arizona or any rule or regulation made by the Director, the Director may issue a cease and desist order- which prohibits that specific practice.

Negotiate means the act of conferring directly to a prospective purchaser of insurance concerning any of the contract’s benefits, terms, or conditions.

Sell means to exchange a contract of insurance by any means, for money or its equivalent, on behalf of an insurer.

Solicit means attempting to sell insurance for a particular kind of insurance from a particular company.

A provision that the policy and the application shall constitute the entire contract between the parties.

No life policy can exclude or restrict liability for paying a death benefit caused in a specified manner. The exceptions to this include:



1). Suicide within two years of policy issue

2). Result of war

3). Aviation restrictions as outlined in the policy

An insurance company may delay the payment of the cash value of a surrendered whole life insurance policy for up to 6 months.

An insured may pay premiums in advance either at the insurer’s home office or to the insurer’s appointed producer. If requested, the insured may have the policy signed by one or more of the insurer’s officers and countersigned by the producer, and the policy itself can be a receipt for the first premium payment.

A tax cost typically associated with death is the Federal estate tax.

Variable insurance contracts contain both insurance and securities elements. Regulation for variable insurance contracts are set by groups such as Securities and Exchange Commission, FINRA, the Department of Insurance, and state securities authorities.