Life & Health Insurance Exam (National Portion)Federal RegulationsHard
An insurance agent is assisting a client with a complex estate plan involving multiple trusts and beneficiaries. The client is concerned about the privacy of their financial information, especially regarding the transfer of large sums of money and assets. The agent reassures the client that the financial institutions involved are required to protect this non-public personal information. Which specific part of the Gramm-Leach-Bliley Act (GLBA) obliges these institutions to have a written information security plan?
- AThe Opt-Out Clause
- BThe Pretexting Rule
- CThe Safeguards Rule
- DThe Financial Privacy Rule
Show answer & explanationAnswer & explanation
Correct answer: C. The Safeguards Rule
The GLBA Safeguards Rule requires financial institutions, which include many entities involved in estate planning and asset transfer, to develop, implement, and maintain a comprehensive written information security plan designed to protect customer nonpublic personal information.
Why the other options are wrong
- A. The Opt-Out Clause is a component of the Financial Privacy Rule, allowing customers to opt out of certain information sharing.
- B. The Pretexting Rule prohibits obtaining customer information under false pretenses.
- D. The Financial Privacy Rule mandates privacy notices and opt-out rights, not security plans.
GLBA Safeguards Rule
The GLBA Safeguards Rule requires financial institutions to develop a written information security plan to protect customers' nonpublic personal information.
- Mandates administrative, technical, and physical safeguards.
- Applies to financial institutions, including insurance companies.
- Aims to ensure confidentiality and integrity of customer data.
Memory trick: Safeguards stand, a security plan in hand.