Life & Health Insurance Exam (National Portion)Federal RegulationsMedium
A life insurance agent is explaining to a client that their personal financial information, such as income and assets, collected during the application process is protected. The agent assures the client that the company has policies in place to safeguard this data from unauthorized access or disclosure. Which federal regulation primarily governs this aspect of consumer financial privacy?
- AHealth Insurance Portability and Accountability Act (HIPAA)
- BEmployee Retirement Income Security Act (ERISA)
- CGramm-Leach-Bliley Act (GLBA)
- DConsolidated Omnibus Budget Reconciliation Act (COBRA)
Show answer & explanationAnswer & explanation
Correct answer: C. Gramm-Leach-Bliley Act (GLBA)
The Gramm-Leach-Bliley Act (GLBA) requires financial institutions, including insurance companies, to protect the privacy of consumer financial information. It mandates safeguards to ensure the security and confidentiality of such data.
Why the other options are wrong
- A. HIPAA deals with health information, not general financial privacy.
- B. ERISA regulates employee benefit plans, not consumer financial data privacy.
- D. COBRA provides for continuation of health coverage, not financial data privacy.
GLBA Financial Privacy
The Gramm-Leach-Bliley Act (GLBA) requires financial institutions to explain their information-sharing practices to customers and to safeguard sensitive data.
- Applies to financial institutions, including insurance companies.
- Mandates Privacy Notices detailing information sharing.
- Requires a Safeguards Rule to protect customer data.
Memory trick: GLBA guards your money data, HIPAA hides your health data.