8 - Florida Laws and Rules Pertinent to Insurance
What do families pay that are covered by the Florida Healthy Kids Corporation?
A portion of the premium
What is Florida's definition of Life insurance replacement?
A transaction in which a new policy is bought and an old policy is terminated
What type of insurance company is domiciled in England, but conducts business in Florida?
Alien
J owns a business and has a Group Life policy covering her employees. J decides to cancel the policy by letting it lapse on the renewal date. What action must be taken?
All of the employees must be notified of the cancellation either by the insurance company or through J An insurer must notify each certificate holder (employee) when the master policy has expired or is being cancelled. The insurer may take such action through the policyholder (employer).
Which of the following situations does NOT apply to the Florida Replacement Rule? *An existing policy is reissued with a reduction in cash value *A new policy is issued while an existing one is surrendered *An existing policy is subject to extensive borrowing * An existing policyholder purchases an additional policy from the same insurer
An existing policyholder purchases an additional policy from the same insurer Florida's Replacement Rule applies to all of these situations EXCEPT "An existing policyholder purchases an additional policy from the same insurer".
When is a Group Health policy required to provide coverage for a newborn child?
At the moment of birth
According to Florida law, when must an agent deliver the Outline of Coverage to a Medicare Supplement applicant?
At the time of application
All of the following are Nonforfeiture Options EXCEPT
Automatic Premium Loan Option
A license may be denied, suspended, or revoked if the licensee
Being found guilty of misrepresentation may result in the Department of Financial Services denying, suspending, revoking, or not renewing any license.
The insurer must provide a prospective buyer with a(n)
Buyer's Guide and Policy Summary
Which of the following can an agent provide to help a prospective client understand and purchase the most appropriate product?
Buyer's guide
The Bureau of Unclaimed Property is overseen by the
Chief Financial Officer
As a condition for a loan, a bank requires the borrower to purchase credit insurance from a specific company. What is the bank guilty of?
Coercion
J is an agent who recently told a claimant that his rights might be impaired if he does not complete a release form within a specified time. What could this agent be found guilty of?
Coercion
Which of the following unfair trade practices involves an agent who makes malicious statements about another person's financial condition?
Defamation
S takes out a health insurance policy which contains a provision that states that the agent does not have the authority to change the policy or waive any of its provisions. Which health policy provision is this?
Entire Contract
In Florida, when agents recommend changes be made for existing coverage, the agent must follow established procedures. The name of this rule is called the
Florida Replacement Rule
Nonprofit life insurance providers that are covered by a special section in the Florida insurance code are called
Fraternal life insurance organizations
All of these are a prerequisite for becoming a licensed agent EXCEPT
Graduate from high school
What would be an accurate definition of "controlled business"?
Insurance business that is written on the agent's own life, property, or interests
Which of the following situations are NOT subject to Florida life insurance laws? Insurance companies' day-to-day operations Insurance companies' life policy replacement requirements Insurance companies' setting of life insurance policy rates Insurance companies' guidelines for paying a life insurance claim
Insurance companies' day-to-day operations Florida life insurance laws apply to all of these situations EXCEPT "Insurance companies' day-to-day operations".
Who is a mutual insurance company owned by?
Its policyholders
Who owns a stock company?
Its stockholders
Under Florida law, which of the following provisions is NOT required in a Medicare Supplement policy?
Limitation on pre-existing conditions for up to 12 months There is only a 6-month limitation on pre-existing conditions for Medicare Supplements.
What is the main reason for regulating the insurance industry?
Maintain the solvency of insurance companies
According to Florida law, which of the following information does NOT need to be obtained by an agent recommending an annuity purchase?
Marital status
Under an Individual Disability policy in Florida, what is the minimum schedule of time in which claims must be made to an insured?
Monthly Claims on an individual disability policies must be paid out at monthly intervals, at minimum.
What are adjustable rates for life policy loans in Florida based on?
Moody's corporate bond index
Which type of insurance company allows their policyowners to elect a governing body?
Mutual
Which of the following professional organizations has its code of ethics incorporated into Florida law?
National Association of Insurance and Financial Advisors (NAIFA) The professional organization whose code of ethics is incorporated into Florida law, and whose responsibility is to establish the activities of agents is the National Association of Insurance and Financial Advisors.
According to Florida law, a Group Life insurance policy requires a minimum of how many insureds?
No minimum
Which of the following documents must an agent submit to the replacing insurance company during the replacement of an existing life insurance policy?
Notice to existing and replacing insurers of intention to replace
How can an agent-in-charge have more than one location?
Only if the agent-in-charge is present when insurance activity occurs Multiple locations are allowed as long as the agent-in-charge is present when insurance activity occurs.
K is an agent who made an improper sale of an annuity to a client. Which of the following corrective actions would the Department of Financial Services likely order K to take?
Pay monetary restitution to the client The Department of Financial Services may order the agent to pay monetary restitution to the client.
Which action could result in a hearing being ordered by the Department of Financial Services?
Performing insurance transactions without a license
A mutual insurance company and a stock insurance company have one main difference between them. What is this major contrast?
Stock company is owned by its shareholders. Mutual company is owned by its policyholders.
Which of the following factors is NOT considered when the Department of Financial Services determines if an agent's home is an insurance agency?
The amount of premium collected at this location
What is the required minimum percentage of employee participation for a noncontributory group health insurance plan according to Florida Law?
The correct answer is "0%". Most noncontributory group health plans require 100% participation by eligible members. Under Florida law, there is no specific minimum percentage participation for employees covered by employee group health insurance.
The waiting period for a pre-existing condition under a Medicare Supplement policy may NOT go beyond
The correct answer is "6 months". Under a Medicare Supplement policy, the waiting period for pre-existing conditions may not exceed 6 months.
Which of the following is NOT a consequence for placing business with an unauthorized insurer? *Third degree felony *First degree misdemeanor * Insurance license revoked *Responsible for unpaid claims
The correct answer is "First degree misdemeanor". All of these are possible consequences for placing business with an unauthorized insurer EXCEPT the conviction of a first degree misdemeanor.
Which of the following is a standard provision of the conversion privileges in a Group Life policy?
The correct answer is "Group Life coverage can be converted to an individual policy at regular rates on an attained-age basis". Conversion at regular rates on an attained-age basis without a medical exam is a standard provision for conversion privileges in Group Life policies.
Which Unfair Trade Practice involves an agent telling a prospective client that a policy's dividends are guaranteed?
The correct answer is "Misrepresentation". An agent who tells a client that dividends are guaranteed may be guilty of misrepresentation.
In order for a domestic, foreign, or alien insurance company to conduct business, it must be authorized by whom?
The correct answer is "The state where they are conducting business". Domestic, foreign, or alien companies must be authorized by each state where they conduct business.
A stock life insurance company that issues both participating and nonparticipating policies is doing business on
The correct answer is "a mixed plan". When a stock life insurance company issues both participating and nonparticipating policies, the company is doing business on a mixed plan.
The Life and Health Insurance Guaranty Association is
The correct answer is "funded by admitted insurance companies through assessments". The Life and Health Insurance Guaranty Association is funded by insurance companies through assessments and will pay claims if an insurance company becomes insolvent.
In Florida, an element of an insurance transaction would be
The correct answer is "issuing an insurance contract". The issuance of an insurance contract is considered to be an element of an insurance transaction.
According to Florida law, group life insurance conversion privileges must NOT
The correct answer is "require evidence of insurability". Florida's insurance law that governs group life insurance conversion privileges provides that the individual policies do not require evidence of insurability.
According to Florida Law, in which of the following situations would a dependent handicapped child NOT be covered under a Family Health policy? *The handicapped child has reached the limiting age *The premiums for the handicapped child are not paid *The handicapped child becomes a full-time student *The family moves outside the provider network
The premiums for the handicapped child are not paid Under a Family Health policy issued in Florida, a handicapped child must continue to be covered in all of these situations EXCEPT when premium payments cease to be paid.
A person insured under a health policy is required to give the insurance company a Notice of Claim within how many days after a covered loss?
Twenty Written notice of a claim must be given to the insurer within 20 days.
All of the following will result in the suspension of an agent's license EXCEPT
acting with fiduciary responsibility
The coordination of benefits (COB) provision exists in order to
avoid duplication of benefit payments The purpose of the coordination of benefits (COB) provision, found only in group health plans, is to avoid duplication of benefit payments.
An individual covered under a Group Life insurance policy is considered to be a(n)
certificate holder
An example of sliding would be
charging for an additional product without the applicant's consent Sliding involves selling additional coverage to an insurance applicant who doesn't want or need it. An agent will often "slide" this additional coverage in without the customer's knowledge or consent.
One definition of replacement is "the act of replacing an existing insurance policy with another". Replacement is
closely regulated and requires full disclosure
An applicant who pays the initial premium at the time of application is typically given a(n)
conditional receipt A conditional receipt is normally given to an applicant who pays the initial premium at the time of application.
An insurance company incorporated under the laws of the state in which its home office is located is called a(n) ____ company.
domestic
In Florida, an insurer domiciled and incorporated in this state is called a(n)
domestic company
An example of an unfair claims practice would be
failing to effectuate prompt, fair, and equitable settlements of a claim
The act of an insurance company publishing misleading information about its policy's provisions is called
false advertising
The Financial Services Commission may hold hearings
for any reason deemed necessary
A foreign insurance company doing business in Florida
is a company that was formed under the laws of another state
A stock insurance company
is owned exclusively by its shareholders
Defamation occurs when an agent makes a false statement intended to
malign another insurer Defamation is an unfair trade practice involving false, maliciously critical, or derogatory statements intended to injure a person or company engaged in the insurance business.
During the course of an insurance transaction, if an agent makes a false or incomplete statement, he/she could be found guilty of
misrepresentation
In Florida, agents are allowed to engage in rebating if
offered to all insureds in the same actuarial class
An example of unfair discrimination would be
offering different terms of coverage for different policyowners having the same risk classification
Under Florida law, a variable annuity policyowner must be notified of the accumulated value of the contract
once each year A variable annuity policyholder must be informed at least once each year of the accumulated value of the contract during the premium payment period.
Upon reaching the limiting age, a handicapped child can extend their health insurance coverage as a dependent
only if the child is incapable of employment and chiefly dependent on the policyowner
A long-term care lapse notice must be delivered to both the applicant and
secondary addressee
According to Florida's life insurance replacement laws, a policyowner must be provided with a written Comparison and Summary Statement when it's requested by
the policyowner
When replacing or exchanging an annuity, the agent must disclose to the annuitant
the possible tax ramifications as a result of the transaction An agent must disclose the possible tax consequences of replacing or exchanging an existing annuity or life insurance policy.
Association Plans that are designed to provide health benefits to their members are regulated by the state because
they are insured by an authorized insurer Association Plans must be fully insured by an authorized insurer. The insurer is subject to state regulation.
Group Life policies in Florida are required to contain a conversion privilege that allows for conversion
to an individual policy for a stated period of time
An example of an unfair claims settlement practice is
turning down a claim without providing the basis of denial
Florida requires that coverage for newborns begins "from the moment of birth" and continues for
18 months
In Florida, most life insurance policies have a contestability period of
2 years
An insurance company can contest a life insurance contract due to application fraud within
2 years There is a 2 year time limit for an insurer to contest a life insurance contract due to application fraud.
Employers with less than __ employees are affected by Florida's Health Insurance Coverage Continuation Act (Mini COBRA).
20
Agents that have been licensed for less than six years must complete __ hours of continuing education every two years.
24
Within how many days must a licensee notify the Department of Financial Services of a change in address?
30
In Florida, a health policy that is paid on a quarterly basis requires a grace period of
31 days
A licensed agent must be appointed by an insurance company to solicit insurance in Florida. The agent's license will terminate if a certain period of time elapses without being appointed. How long is this period of time?
48 months
In Florida, what is the maximum percentage of controlled business an agent may produce?
50%
Which of the following employer tasks does a Professional Employer Organization normally handle?
A Professional Employer Organization typically handles administration functions.
Which two entities regulate variable annuities?
Variable annuities are regulated by both the Department of Financial Services and the Securities Exchange Commission.
Which of the following activities will NOT result in the suspension of an agent's license?
Working for a foreign insurer
According to Florida's rules on disclosure, a life insurance applicant is expected to be provided with
a Buyer's Guide and Policy Summary
An example of an unfair trade practice is
an agent making a material misrepresentation to the insured
What is the purpose of the Life and Health Insurance Guaranty Association?
Protects policyowners against insolvent insurance companies
Which of these is NOT a legal entity for selling life insurance in Florida?
Risk management advisers
Which of the following is NOT considered rebating? * Sharing commissions with an agent licensed in the same line of business * Returning premium to a client as an inducement for purchasing a policy * Giving something of value to an insured in exchange for their business * Offering special dividends
Sharing commissions with an agent licensed in the same line of business
What is required in the Florida Employee Health Care Access Act?
Small group benefit plans are to be issued on a "guarantee-issue" basis
J is an agent who has induced an insured through misrepresentation to surrender an existing insurance policy. What is J guilty of?
Twisting
A life policy loan in Florida cannot charge a fixed rate of interest higher than
10%
The minimum age at which a person can sign a life insurance application is
15 years
Advertising gifts not to exceed ___ are allowed to be given by an agent to a prospective client.
$25
How many hours of continuing education must a newly licensed agent complete every two years?
24
An agent who makes misleading statements that lead to the termination of an existing insurance policy so that a new policy with another insurer can be taken out has committed
twisting Twisting is knowingly making misleading statements that would cause an insured to lapse, assign, or terminate an insurance policy in order to switch companies.
A life insurance policyowner may sell their policy to a(n) _____ in order to receive a percentage of the policy's face value.
viatical settlement provider
An agent's license can be suspended or revoked by
writing primarily controlled business
