Final exam
Florida law states that an agent must report any changes in his or her residence to the Department of Financial Services within how many days?
30 days
Authority not expressly granted, but which the agent is assumed to have in order to transact the business of the principal, is called
Implied authority
Regarding replacement, which of the following statements is NOT correct?
Replacement of an older policy is always in the best interest of the client
With health insurance, all of the following are premium factors EXCEPT
Reserves
Accepting the risk and confronting it if and when it occurs is called
Risk retention
An individual tendency that arises from an attitude or state of mind that causes indifference to loss is a
morale hazard
If the coinsurance feature in a major medical insurance policy is 75/25 with a $100 deductible, how much of a $2,100 bill would the insured pay?
$600
Bill is self-employed. The FICA tax rate for Bill is
15.3%
According to the notice of claims provision in a health insurance policy, a claimant normally must notify the insurance company of loss within how many days after the loss occurs?
20
How many days does the insured have to notify the insurance company about a claim?
20 days
Which of the following is the usual grace period for a semiannual premium policy?
31 days
Which of the following defines the authority of a life insurance agent?
A contract of agency
Which of the following may NOT sell HMO contracts?
A registered Representative
The primary purpose of the Health Insurance Guaranty Fund is to do which of the following?
Avoid financial loss to claimants or policyowners
Which of the following is NOT characteristic of a mutual insurance company?
Controls itself through a board of stockholders
Dan is a participant in his company's group health plan. One of the plan's provisions specifies that, in the event he is eligible for benefits under another policy, his group plan will serve as the primary plan. What is the provision called?
Coordination of benefits provision
Which of the following statements about credit life insurance is incorrect?
Debtors cannot under any circumstances choose their own credit life insurer
All premiums for life insurance must be paid
In advance
What kind of insurance is issued without a medical examination?
Industrial Life Insurance
Under Medicare Part A, the participant must pay the deductible
Once per benefit period
When can a licensee begin transacting both life and health insurance?
Only after being appointed by an authorized insurer for both life and health
Health Maintenance Organizations were established to do all of the following EXCEPT
Replace the exisiting system of health care delivery
Which of the following statements regarding key-person insurance is NOT correct?
The business may borrow from the cash value of a permanent key-person life insurance policy
Regarding defamation, which of the following statements is INCORRECT?
The code of ethics does not consider false statements unless they are in writing.
Once a variable annuity has been annuitized, which of the following is true?
The value of each annuity unit varies, but the number of annuity units is fixed
Variable contracts include all of the following EXCEPT
Variable term life
All of the following are basic forms of health insurance coverage EXCEPT
limited pay health
Robert and his employer agree on the purchase of a split-dollar life insurance policy and the usual split-dollar approach to premium payments. Each year, the employer will contribute to the premium an amount equal to
the increase in the policy's cash value
Which definition of total disability is more favorable to the insured?
"Own occupation" is more favorable
Mr. Franklin owns and pays the premiums on a Disability Income policy. On December 1, 1989, he became disabled and remained disabled until March 1, 1990. Because his policy pays him $200 in benefits for each of the months he is disabled, he received a total of $600 in benefits. When he files his 1990 income tax return, which of the following amounts of the benefit income will be subject to federal income tax?
$0
With regard to the situation described in Question 5, how much of the $75,000 death benefit that was paid to Art's wife in a lump sum is taxable income to her?
$0
Life insurance premiums are typically based on what increment of the face value?
$1,000
Sally is covered by her employer's noncontributory group disability income plan, the premium for which is 50$ a month. If she were to become disabled and receive $1,000 a month, how much of each benefit payment would be taxable income to her?
$1,000
Sidney has a monthly benefit of $2,500 for total disability under a residual disability income policy. If Sidney suffers a 40% loss of his predisability income, how much will his benefit be?
$1,000
Homer Pyle has a $1,000,000 Comprehensive Medical Policy in which the basic medical portion has a limit of $5,000. The policy has a corridor deductible of $200 and an 80/20 coinsurance provision. The policy also has a stop loss feature of $1,000. Mr. Pyle's expenses were $22,000. How much would Mr. Pyle have to pay?
$1,200
An insured has a basic hospital/surgical expense policy, which provides benefits of $50 per day for up to 30 days of hospitalization and $750 for miscellaneous charges. It bases its surgical benefits on a schedule approach. The insured is hospitalized for a severely broken leg that requires surgery. The surgical procedure has been assigned $500 by the policy, though the customary charge in the area is $600. The insured incurs the following covered expenses: 80$ per day seven days hospital charge, $675 for the surgical procedure, $800 for miscellaneous expenses. The insured's policy will pay
$1,600
Rick, who has no health insurance, experienced $3,000 in medical expenses this year. Assuming his adjusted income was $29,000, how much of those medical expenses can he deduct from his adjusted gross income, if any?
$100
Herbert and Olga, both age 48, have been married for 10 years. They have no children, and each has a well-paying job. However, neither is covered by an employer retirement plan. What is the maximum amount they set aside together in tax-deductible, traditional IRA funds in 2017?
$11,000
James died after receiving $180 monthly for six years from a $25,000 installment refund annuity. His wife Lucy, as beneficiary, now will receive the same monthly income until her payments total
$12,960
An employee paid $2,500 in social secruity taxes last year. How much did the employer have to pay on that employee's behalf?
$2,500
Assume an insurer will issue a maximum monthly disability income benefit of $5,000, provided the total of such benefits payable by all companies does not exceed 60% of the insured's regular monthly income. Ted earns $4,500 per month and has no existing disability income policy. The maximum monthly disability income benefit this insurer would issue to Ted is
$2,700
Arthur total hospital expenses of $9,500, all of which are covered by his major medical policy. The policy includes a $500 deductible and a 75/25 coinsurance feature. Of the total expense, how much will Arthur have to pay?
$2,750
Before he died, Gary received a total of $9,200 in monthly income payments from his $15,000 straight life annuity. He also was the insured under a $25,000 life insurance policy that named his wife, Darlene, as primary beneficiary. Considering the two contracts, Darlene would receive death benefits totaling
$25,000
Jan, a single, working mother, dies at age 40. Dave, her only son, would receive a one-time lump-sum benefit of
$255
Wilbur's basic medical expense policy limits the miscellaneous expense benefit to 20 times the $90 daily room and board benefit. During his recent hospital stay, miscellaneous expenses totaled $2,100. How much, if any, of this amount will Wilbur have to pay?
$300
Sarah, age 65, the owner of a $150,000 whole life policy, decides to surrender the policy and take the lump sum $90,000 cash value. Over the years, she has paid a total of $54,000 in premiums. How much, if any, of the payment will be taxed?
$36,000
Clarence is to enter the hospital for a thyroidectomy. His basic medical expense policy includes a relative value schedule for surgical expense. The schedule lists 55 units for a thyroidectomy and a conversion factor of $8. How much will the policy pay?
$440
Bob, age 43, owns a traditional IRA and a Roth IRA. What is the maximum amount that he can contribute to both accounts in 2017 without being penalized?
$5,500
If David sets up a traditional IRA, what is the maximum contribution he can make and deduct from adjusted gross income for 2017?
$5,500
Susan is covered under her employer-sponsored disability group plan. The premium is $50 a month: Susan pays $10 and the employer pays $40. Assuming Susan were to become disabled and receive monthly disability benefits of $700 from the plan, how much, if any, of the monthly benefit would be taxable income?
$560
Bill Wilson has a hospital indemnity policy that has the following benefits: Room and board: 200$ per day, up to 60 days: Misc. Expenses: 10 x the Room and Board Amount: Unscheduled Surgical Expense: $1,500: If Mr. Wilson is hospitalized for 20 days, has surgery that costs $3,000, miscellaneous expenses of $2,500, how much would his insurance policy pay?
$7,500
Art, the owner and insured under a $75,000 life policy, is killed in an accident. He had paid total premiums of $26,000. How much of the death benefit will be included in his gross estate for estate tax purposes?
$75,000
For how many days of skilled nursing facility care will Medicare pay benefits?
100
What is the maximum amount of days of skilled nursing facility care for which Medicare will pay benefits?
100
After an insured's out-of-pocket payments for eligible medical expenses reach a specified total, a Stop-Loss provision in a Major Medical policy provides for payment of what percentage of covered expenses?
100%
The Affordable Care Act mandates that children of the insured are eligible for health insurance coverage until they attain age
26
Florida law states that an agent must report any changes in his or her residence to the Dept of Insurance within how many days?
30 days
Upon resignation of employment, how many days would an employee have to convert group life insurance to an individual policy?
31
Ellen works part time to supplement her family's income. Last year she earned $6,500 and worked at least part of every month. With how many quarters will she be credited?
4
In order for a worker to be considered fully insured, how many quarters of coverage must be accumulated?
40
All of the following types of plans are reserved for small employees EXCEPT
401 (k)s
If a licensee loses an appointment for any line of business, his or her qualifications for that portion of his or her license will remain valid for:
48 months
If a licensee loses an appointment for any line of business, his or her qualifications for the portion of his or her license will remain valid for
48 months
The waiting period before qualifying for Social Security disability benefits is how many months?
5
With three partners in a business, how many life insurance policies would be required to insure a cross-purchase buy-sell plan?
6
Benefit periods for individual short-term disability policies typically vary from
6 months to 2 years
A distribution received from an employer-sponsored retirement plan or from an IRA is eligible for a tax-free rollover if it is reinvested in an IRA within how many days after the distribution
60
What percentage of eligible employees must elect to participate before a contributory group policy can usually be issued?
75%
The Medigap policy basic Plan A benefits cover all of the following EXCEPT:
75% of hospice cost sharing and the cost of the first 3 pints of blood each year.
Written proof of loss, whether on the carriers form or not, must be filed with the carrier within how long from the date of loss?
90 days
Which of the following policies would cover all the students of a school?
A blanket policy
Albert has purchased an annuity that will pay him a monthly income for rest of his. If Albert dies before the annuity has paid back as much as he put into it, the insurance company has agreed to pay the difference to Albert's daughter. What annuity payout option did Albert select?
A cash refund
The State Guaranty Association guarantees which of the following?
A claim will be paid if your insurer becomes insolvent
Which of the following defines the authority of a life or health insurance agent?
A contract of agency
Jerry and Sarah are partners in a business. Jerry becomes disabled and can no longer participate in the business. After a 2-year elimination period, Sarah receives a lump-sum benefit payment that facilitates the purchase of Jerry's interest in the business. Jerry and Sarah most likely purchased.
A disability buy-sell agreement
With regard to health insurance policies, which of the following statements is CORRECT?
A disability policy with a 6-month elimination period is less expensive than one with a 60-day elimination period, all other factors being equal.
Which of the following would NOT be considered a preexisting illness or condition?
A disease or sickness occurring within a stated period prior to health insurance taking effect, that did not exhibit symptoms that would normally cause the affected person to seek medical attention, and was not diagnosed or treated by a physician
Which of the following statements regarding a fraternal benefit society is NOT correct?
A fraternal benefit society is a profit-making organization that operates for the benefit of its members and their families.
Which of the following statements about group insurance is CORRECT?
A group must be a "natural" group, not be organized for the sole purpose of obtaining insurance
Which of the following statements regarding Social Secruity survivor benefits is NOT correct
A healthy dependent child of a deceased worker will be entitled to an income benefit until age 18, or to age 22, if the child attends college
An HMO contract must contain all of the following EXCEPT
A listing of the surgical schedules by which surgeons are paid
Which of the following statements about HMOs is NOT correct?
A member of an HMO is called an insured
Regarding Mutual Insurance companies, which of the following statements is CORRECT?
A mutual company is structured the same as any corporation
Regarding Mutual insurance companies, which of the following statements is CORRECT?
A mutual company is structured the same as any corporation
Under Florida law, which of the following may an insurer exclude from health insurance coverage?
A newborn-child of the uncovered, married, 19-year-old of an insured
An insured suffers an injury that does not qualify for monthly Disability Income benefits but may make the insured eligible for:
A non-disabling injury benefit
Which of the following health policies cannot be canceled other than for nonpayment of premium and also cannot be changed in anyway?
A noncancelable policy
Under Medicare Part B, the participant must pay all of the following EXCEPT
A per benefit deductible
Which of the following is CORRECT?
A per stripes distribution means that a beneficiary's share of a policy's proceeds will be passed down to the beneficiary's living child or children if the named beneficiary predeceases the insured.
An insured may be able to declare a tax-deductible expense on which of the following?
A personal Major Medical policy
Regarding Stock insurance companies, which of the following statements is correct?
A stock company is structured the same as any coporation
Which of the following statements pertaining to risk is NOT correct?
A stock market venture is an example of a pure risk
Which of the following statements relating to risk is INCORRECT?
A stock market venture is an example of a pure risk
All of the following statements about the classification of applicants are correct EXCEPT?
A substandard applicant can never be rejected outright by the insurer
When advertising an insurance policy in Florida, the advertisement must contain which of the following?
A title that describes the policy
Which of the following statements concerning worker' compensation is NOT correct?
A worker receives benefits only if the work-related injury was not her fault
The beneficiary designation that would have the most secure position in a life insurance contract is
Absolute Irrevocable Primary Beneficiary
Which type of group health coverage typically does NOT contain a conversion privilege?
Accidental death and dismemberment
Clarke Kent purchased a flexible premium variable annuity. What do his payments purchase?
Accumulation units
Which of the following is a serious condition from which a patient can fully recover with proper medical attention?
Acute illness
Which of the following statements pertaining to adverse selection is NOT correct?
Adverse selection is in favor of the insurance company
Regarding unauthorized companies, which of the following statements is INCORRECT
Agents who unknowingly sell unauthorized plans will not be subject to penalties.
A contract by which the dollar values exchanged may not be equal is what kind of contract?
Aleatory contract
Which term correctly describes an insurance company that has been organized outside the United States or its possessions
Alien
Regarding Florida law on continuing education, all of the following statements are correct EXCEPT
All agents are required to complete 24 hours of credit in continuing education
Regarding Florida law on continuing education, all of the following statements are correct EXCEPT
All agents are required to ocmplete 24 hours of credit in continuing education
Which one of the following statements concerning risk pooling is CORRECT?
All forms of insurance rely on risk pooling
Which one of the following statements regarding risk pooling is CORRECT?
All forms of insurance-life, health, accident, property, and casualty-rely on risk pooling
Sliding is an unfair trade practice that applies to which of the following?
All insurance products
An application for a variable annuity must show which of the following on the first page?
All of the above
The fair Credit Reporting Act requires which of the following?
All of the above
Which of the following types of insurance could be used as part of a group employee benefit plan?
All of the above
Which of the following statements regarding variable contracts are TRUE?
All of the above statements are true
Which of the following statements regarding variable contracts is (are) TRUE?
All of these statements are true
Regarding guaranty association, which of the following statements is CORRECT?
All states have established guaranty funds or guaranty associations
Regarding guaranty associations, which of the following statements is CORRECT?
All states have established guaranty funds or guaranty associations
Regarding the Florida Life and Health Guaranty Association, which of the following statements is CORRECT?
All states have established guaranty funds or guaranty associations
Which of the following regarding the Advertising Code is NOT correct?
All states now subscribe to the Advertising Code
Which of the following is NOT a purpose of underwriting?
Allow the insurer to be able to sell their policies to applicants that are normally uninsurable
Which of the following would be classified as a "Limited Risk Policy"?
An Aviation policy
All of the following are valued contracts EXCEPT:
An HMO or PPO
Which of the following statements pertaining to unethical selling is not correct?
An agent tells a prospect that policy dividends are not guaranteed. The agent is guilty of misrepresentation
An individual purchased group credit accident and health insurance to cover a car loan. Following an accident, the individual was disabled for eight months. Which of the following benefits were paid under the policy?
An amount equal to 8 months of the loan payment to the insured's creditor
Joe Agent's client is 65 years old and retired. The client is concerned about budgeting funds and needs income for everyday living expenses starting now. Joe Agent could suggest that the client purchase
An immediate annuity
Which of the following statements about misrepresentations in insurance contracts is FALSE?
An innocent misrepresentation of a material fact is not grounds to void a contract
Which of the following statements pertaining to health maintenance organizations is CORRECT?
An insurance company may sponsor an HMO or assist an HMO by providing contractual services
An accident policy is:
An insurance policy that provides payment for accidental death only
Which of the following statements regarding life insurance beneficiaries is NOT correct?
An irrevocable beneficiary may name secondary beneficiaries on the policy
Are investment gains in the separate account (and variable annuity and variable life accumulation values) subject to current income taxes?
Anticipated increase in number of units by the next anniversary
Which of the following is eligible to set up an Individual Retirement Account or Annuity (IRA)?
Any person younger than age 70 1/2 who is self-employed or working for an employer
Which of the following statements regarding annuities is NOT correct?
Anyone can set up an annuity and pay income for life
All of the following are qualifications specified by Florida law for obtaining an insurance agent's license EXCEPT:
Applicant must be 21 years of age or older
Which of the following statements regarding the Fair Credit is CORRECT
Applicants must be notified within a short period of time that their credit report has been requested
Insurance Laws covering twisting, rebating, and misrepresentation
Apply to both Life and Health Insurance
An association group that meets the requirements for group life insurance is classified as
As a natural group
John G. Submitted an application for life insurance along with the premium. He was given a "conditional receipt". When is the protection in force, assuming that John is an acceptable standard risk?
As of the date of the application or the date any required medical exam is completed, whichever is later
When must insurable interest exist?
At the issue of the policy
Which of the following acts would NOT be cause for revocation or suspension of an agent's license?
Attaining a license for the sole purpose of handling uncontrolled business
Which of the following statements best describes the purpose of Social Security
Attempts to provide a basic floor of financial protection to all working Americans
Underwriting techniques commonly used by insurers in issuing policies to applicants who do not measure up to a standard rating include all of the following EXCEPT:
Averaging total risks pending
Which of the following statements about elimination periods in disability income policies is NOT correct?
Benefits are not payable during an elimination period but are paid retroactively to the beginning of the period if the insured remains disabled throughout the period
Regarding taxation of benefits received from health insurance policies, which of the following statements is CORRECT?
Benefits received from personal disability income policies are not taxable
In an Accident and Health policy, the elimination period refers to the period
Between the first day of disability and the day to which the disability must continue before it can result in the insured receiving benefits.
A vacation cruise line that wants group health coverage for its passengers would purchase what kind of insurance?
Blanket health insurance
Regarding Blue Cross/Blue Shield plans, which of the following is INCORRECT?
Blue Cross and Blue Shield are for-profit health care service organizations
What is the name of a plan, usually funded by life insurance, to purchase a deceased partner's share of a business
Buy and sell agreement
The dismemberment benefit payment under an AD&D policy is called the
Capital Sum
Which of the following statements regarding indexed contract factors is most CORRECT?
Cash values of indexed contracts usually grow at a minimum interest rate
The beneficiary on Walter's life insurance policy reads, "Children of the Insured". Which of the following phrases best describes this type of beneficiary designation?
Class beneficiaries
The specified dollar amount that an HMO subscriber must pay for certain covered health care services is referred to as the
Co-payment
Major medical insurance requires the insured to bear a percentage of the cost of health care services being received. This requirement is called:
Coinsurance
Which of the following organization would make reimbursement payments directly to the insured individual for covered medical expenditures?
Commercial insurer
Christine's policy has a clause that reads as follows: "Should the primary beneficiary and the insured die in the same accident and the primary beneficiary fails to survive the insured by 14 days, it will be assumed that the beneficiary predeceased the insured". Which of the following phrases best describes this clause?
Common disaster provision
All of the following are types of agent authority EXCEPT:
Contractual authority
The rider that provides for increases in the monthly or weekly benefit payable under a disability policy is called the
Cost of living adjustment rider
Which of the following riders provides for changes in the benefit payable based on changes in the Consumer Price Index (CPI)
Cost-of-living adjustment rider
Which of the following provisions does the Florida Employee Health Care Access Act NOT require?
Coverage must always be renewed by carries
Which of the following organizations cannot underwrite A&H coverage?
Credit Unions
Daisy Mae was hospitalized for 7 days and her total bill was $9,000. She has a Major Medical Policy which has an 80/20 coinsurance clause with a $200 flat deductible. Which one of the following would be true?
Daisy would pay $1,960
An agent that tells a prospect that a competing insurer is charging lower premiums because it is hurting for business, would be guilty of which of the following?
Defamation
Regarding variable annuities, which of the following statements is incorrect?
During the accumulation period the investor would be purchasing annuity units
An employee has a non-qualified retirement program at her job. Which of the following statements is not true?
During the accumulation period, the employer will pay tax on any interest and/or capital gains earned by the account
Which of the following statements correctly describes the tax advantage of a qualified retirement plan?
Earnings of the plan are taxable to the employee only when the employee receives benefits
All of the following employed persons who have no employer-sponsored retirement plan would be eligible to set up and contribute to a traditional IRA EXCEPT
Edna, age 72, nurse
Regarding the "elimination period" commonly found in disability income policies, which of the following statements is INCORRECT?
Elimination period is another term for Probationary period
Which of the following statements regarding group disability income plans is NOT correct?
Employees covered under both a short-term and long-term plan collect benefits from each simultaneously
"Annuity payments are taxable to the extent that they represent interest earned rather than capital returned." When an annuitized payout option is chosen, what method is used to determine the taxable portion of each payment?
Exclusion ratio
Which section of a health insurance policy specifies the conditions, times, and circumstances under which the insured is NOT covered by the policy?
Exclusions
Which of the following would not be eligible under a Keogh plan
Executive employed by a corporation who received $5,000 in stock options
With Group health insurance, two major factors that influence dividends or experience-rating refunds are:
Expenses and claims costs
Authority granted by means of the agent's contract is called
Express authority
The acts of the agent, within the scope of his or her authority, are the acts of principal. The authority granted by means of the agent's contract is referred to as
Express authority
Which of the following policies would typically provide permanent insurance on one parent and term insurance on the other family members?
Family Plan Policy
Which of the following groups would not be eligible for group insurance coverage?
Family groups
Beth, age 50, the beneficiary of her late husband's life insurance policy, has elected to receive the proceeds in monthly installments over the next 5 years. Due to the insurer's interest earnings, Beth notices that the amount of the payments is often more than what she was guaranteed. What kind of settle option did Beth select?
Fixed-period
The difference between stock insurers, mutual insurers and fraternal benefit societies is
Form of ownership
With four partners in a business, how many insurance policies would be required to insure an entity buy-sell plan?
Four
A type of group health plan that provides health coverage to members of an association or professional society is called a
Franchise Health plan
Which of the following would NOT be a source of information to an insurance company pertaining to the insurability of an applicant?
Government tax records
Which of the following statements about group health insurance is CORRECT?
Group health plans provide more extensive benefits than individual health plans
Roland is 45 years old and married. He has a son, age 19, a freshman at a local university and a daughter, age 8. Decreasing term insurance could be recommended for Roland in order to accomplish which of the following reasons?
Guarantee a college education for the son
Which kind of health insurance policy assures renewability up to a specific age of the insured, although the company reserves the right to change the premium rate on a class basis?
Guaranteed renewable
The association that is set up by each state to protect consumers if an insurer becomes insolvent is referred to as the
Guaranty Association
Which of the following statements regarding HMOs is NOT correct?
HMOs stress is curative care
Which of the following statements pertaining to life insurance premiums is CORRECT?
Harold and Billy, both age 25, each buy a whole life policy from the same company. However, Harold has a participating policy, while Billy's policy nonparticipating. Harold will pay a higher premium
All of the following may be classified as voluntary service organizations EXCEPT:
Health insurance companies
Which of the following statements pertaining to health insurance policy premium factors is CORRECT?
Health insurance policies are paid for on a year-by-year basis and are subject to periodic increases
An agent would be in violation of the controlled business statute if he sells mostly to
His family
An agent would be in violation of the controlled business statute if he sells mostly to
His spouse's employees
All of the following terms are frequently used to describe insurance companies and their site of incorporation EXCEPT:
Home-based
Which of the following statements is correct about group life insurance?
If cancelled, the members must be notified
According to the Misstatement of Age provision in a health insurance policy, which of the following statements is FALSE?
If the insured actually was older at the time of application than shown in the policy, the excess premiums paid would be refunded.
In which of the following situations would the incontestable clause NOT apply?
Impersonation
Which of the following may not be imposed as penalties for a violation of the Insurance Law by the Chief Financial Officer
Imprisonment
Which of the following statements regarding annuity payout options is NOT correct?
In a cash refund annuity, the annuitant's beneficiary always receives an amount equal to the beginning annuity fund plus all interest
The insurance market has always been cylical (hard and soft). When will a nonadmitted company be more likely to be active in illegal health insurance sales in Florida
In a hard cycle
Which of the following statements regarding disability income insurance is NOT correct?
In most cases, Social Secruity will provide the income necessary to survive if disability strikes.
With regard to life and health insurance contracts, which of the following is NOT true?
In order to execute a life or health insurance contract, the insurer must make the offer and the applicant must accept it
What are the requirements for notifying the Department of Financial Services when an agent changes their home address?
In writing within 30 days after the change
Long-Term Care (LTC) insurance coverage includes all of the following categories EXCEPT:
In-hospital short term care by licensed physicians
All of the following services and support would likely be associated with Long-Term Care coverage EXCEPT:
Inpatient hospital services
All of the following are necessary for the formation of a legally binding insurance contract EXCEPT:
Insurable Interest by the beneficiary in the life of the insured
All of the following statements are correct EXCEPT
Insurance companies invest the billions of premium dollars they receive annually in a limited range of investments
Which of the following statements about the "grace period" in life insurance contracts is NOT correct?
Insurance is not in force during the grace period but the policy can be reinstated
All of the following statements concerning the conversion privilege in group health insurance are true, EXCEPT:
Insureds who resign or are terminated have 21 days in which to convert their coverage to individual policies
The Fair Credit Reporting Act requires all of the following EXCEPT
Insurers must disclose all information in the report to the consumer upon request
All of the following statements about the taxation of insurance proceeds are correct EXCEPT
Interest earned on policy dividends is exempt from income tax
Which of the following best describes the risks borne by the annuitant in a nonqualified variable annuity?
Interest rate risks
Under which option does the insurer hold the death proceeds for a specified period of time and, at regular intervals, pay the beneficiary interest on the proceeds?
Interest-only
What is the beneficiary designation that can only be changed with the beneficiary's written agreement?
Irrevocable beneficiary
Which of the following statements about a group life insurance policy issued to an employer is FALSE?
Issued solely for the benefit of the master policyholder
Regarding the 14-day free look, which of the following is correct?
It commences when the policy is delivered
All of the following are incorrect about the prospectus except
It contains information about the nature and purpose of the insurance plan
Which of the following is correct about the prospectus that must be furnished when selling a variable life insurance policy?
It contains information about the nature and purpose of the insurance plan.
Which of the following statements about the Grace Period in a disability income policy is CORRECT
It continues coverage for a specified time from the premium due date
Which of the following statements does not describe nonqualified deferred compensation plan?
It does not allow the employer to deduct the cost of the plan
Which of the following statements about Medicare Part B is NOT correct?
It is a compulsory program
A life insurance policy is a contract of adhesion because
It is drawn up solely by the insurance company
Which of the following about Medicare Part A is CORRECT?
It is funded by a portion of a taxpayer's FICA taxes
Which of the following statements is INCORRECT about the elimination period in disability income policies?
It is the same as the probationary period
Which of the following statements pertaining to Medicaid is NOT correct?
It limits financial assistance to persons age 65 or over who are in need of medical services they cannot afford
Which of the following statements about a Qualified Pension Plan is incorrect?
It may include medical insurance for all participants
Skilled nursing care differs from intermediate care in which of the following ways?
It must be available 24 hours a day, while intermediate care is periodic but not 24-hour care
Which of the following statements about waiver of premium in health insurance policies is NOT correct?
It normally applies to both medical expense and disability income policies
Which of the following statements about the Fair Credit Reporting Act is CORRECT?
It provides that consumers have the right to question reports made about them by investigative agencies
A mortality table reveals which of the following?
It shows the average number of deaths that are expected each year in any group
Which of the following statements about Voluntary Group Accidental Death and Dismemberment Insurance is CORRECT?
It usually is a part of the basic Group Life contract
A 61 year old male would like to take a lump-sum distribution from his Keogh. What would be the tax treatment of this lump-sum distribution?
It will be taxed as ordinary income
The following statements about a Universal Life policy are true, EXCEPT:
Its cash values generally are invested in highly rated corporate bonds
Assume the following individuals are issued health insurance policies with varying renewability provisions. All other factors being equal, who would pay the highest premium?
Jack-noncancellable
Jerry is injured while working. Under state workers' compensation laws, we can assume that
Jerry will probably receive workers' compensation benefits on a monthly or weekly basis
Which of the following is NOT a basis for occupational suitability when determining total disability
Job interest
Which of the following individuals would probably qualify for Social Security disability benefits?
John, who experiences serious early-onset Alzheimer's, and is unable to remember how to get to work
Diana, the beneficiary under her husband's AD&D policy, submits an accidental death claim on May 1, 2016, following his death. However, the company denies the claim on the basis that death was due to natural causes. She decides to talk to her attorney. What is the earliest date for taking legal action against the insurer?
July 1, 2016
Kevin, the insured under a $200,000 life insurance policy, and his sole beneficiary, Lynda, are killed instantly in a car accident. Under the Uniform Simultaneous Death Act, to whose estate will the policy proceeds be paid?
Kevin's estate
The Chief Financial Officer of the XYZ Company became disabled and is not able to contribute to the business. After 90 day elimination period, the company started receiving monthly tax-free benefit payments that were used to cover expenses for outside financial services needed while the CFO was disabled. Company XYZ had most likely purchased.
Key Person Disability Insurance
Which of the following types of insurance would indemnify a business if an employee died or became disabled
Key Person Insurance
Which of the following acts is considered to be fraud
Knowingly making a false statement on an application for insurance
Examples of defamation include all of the following EXCEPT
Knowingly making false statements on an application for an insurance policy for the purpose of obtaining a fee
Examples of defamation include all of the following EXCEPT:
Knowingly making false statements on an application for an insurance policy for the purpose of obtaining a fee
HIPPA determined that Long-Term Care policies are to be treated as other health insurance contracts regarding taxation of benefit.
LTC benefits are taxable to the insured, independent of the "qualified" or "nonqualified" status of the LTC policy
The concept used by insurance companies to increase their ability to predict losses accurately is referred to as the
Law of Large Numbers
The concept used by insurance companies to increase their ability to predict losses accurately referred to as the
Law of Large numbers
The concept used by insurance companies to increase their ability to predict losses accurately is referred to as the
Law of large numbers
What are legal reserves in life insurance?
Liabilities
Which of the following persons may solicit applications for HMO coverage?
Licensed health agent
Which of the following options will pay the beneficiary the largest monthly life income payment?
Life income only
Joe Client purchased a variable annuity contract and selected an annuity option that gave him the largest possible monthly payment. Which of the following did he select?
Life only annuity
What annuity payout option provides for lifetime payments to the annuitant but guarantees a certain minimum term of payments, whether or not the annuitant is living?
Life with period certain
Agnes purchases a round-trip travel accident policy at the airport before leaving on a business trip. Her policy would be which type of insurance?
Limited Risk
Which of the following examples pertaining to accidental death and dismemberment insurance is CORRECT?
Linda has a $40,000 AD&D policy that pays triple indemnity. If she should be killed in a train wreck, her beneficiary would receive $120,000
Assume the following persons buy identical life insurance policies from the same company. Generally speaking, who will pay the lowest premiums, if all have standard ratings?
Linda, age 28
The purpose of an annuity is to:
Liquidate both principal and interest during the annuity period
Which of the following is NOT covered under a basic medical expense health insurance policy?
Loss of income following hospitalization
If you are currently insured, for which benefits are you eligible?
Lump Sum Death Benefit
Which one of the following statements regarding Multiple Employer Trusts (METs) is FALSE?
METs provide coverage only on a self-funded basis
Medicare supplement (Medigap) policies are designed to
Make up for what Medicare doesn't cover
All of the following are key factors that are evaluated in the health insurance underwriting process EXCEPT
Martial status
Which of the following would probably NOT be considered in underwriting a health insurance risk?
Martial status
Mary names her husband, Rick, as primary beneficiary of her life insurance policy and her two children, Pam and Matt, as contingent beneficiaries. Rick dies in March. Pam and Matt are killed simultaneously in a car accident later that month. Hearing the news, Mary has a fatal heart attack. In this case, Mary's life insurance proceeds will be paid
Mary's estate
Which of the following examples pertaining to Social Security benefits is CORRECT?
Mason, who is married with one son, age 16, is a fully insured retired worker receiving Social Security benefits. In addition, his spouse is eligible for benefits at age 62 and his son, is eligible for benefits until he is 18 years old
Which of the following Acts assured continued state regulation of insurance?
McCarran-Ferguson Act of 1945
All of the following types of benefits are covered by the Social Secruity Program except:
Medical Expense Benefits for Workers
Which of the following statements regarding health insurance is CORRECT?
Medical expense policies reimburse the insured for the costs of medical care
Medicare Part B covers:
Medical expenses
Which of the following is NOT covered under an accidental death and dismemberment policy?
Medical expenses
Which of the following statements pertaining to Medicare is CORRECT?
Medicare Part A is automatically provided when a qualified individual applies for social security benefits
Which of the following statements regarding Medicare Part B is NOT correct?
Medicare Part B will pay 100% of covered reasonable charges, following an annual deductible
Which of the following is a form of private insurance that is designed to pay some or all of the Medicare deductible and co-payment amounts?
Medigap
Regarding a company's reserves for health insurance, all of the statements below are true, EXCEPT:
Minimum requirements for the reserves are stipulated by federal law
Which of the following sections of a basic medical expense insurance plans covers expenses billed by a hospital for service other than room and board?
Miscellaneous Hospital Expense Benefit
Which of the following statements about an agent's fiduciary responsibilities is NOT correct?
Money held by the agent that belongs to the company may be commingled with the agent's own personal funds
What kind of table reflects the average number of disabilities due to sickness or accidents at various ages?
Morbidity
Which of the following factors is most important when computing basic premiums for life insurance?
Mortality
Which of the following statements best describes indexed contracts?
Most of the investments backing indexed contracts are similar to those for non-indexed contracts
An applicant submitted an application for a life insurance policy without the premium. The applicant was killed in an automobile accident after the policy was issued but before it was delivered. Which of the following is CORRECT?
No benefit would be paid
Tim is insured under an AD&D policy that uses the "means" definition. If he intentionally jumps from the roof of his house after installing an antenna (instead of climbing down the ladder) and so severely injures his leg that it must be amputated, which of the following statements is CORRECT?
No benefit would be payable because he intentionally jumped from the roof
Bill names his church as the beneficiary of his $300,000 life insurance policy. When Bill dies, who is responsible for the income taxes payable on the lump-sum proceeds received by the church?
No income tax is payable on the death proceeds
Which of the following types of health insurance policies prevents the company from changing the premium rate or modifying the coverage in any way?
Noncancellable
Which of the following nonforfeiture options, if any, automatically takes effect when a term policy lapses?
None of the above
Which of the following statements regarding nonforfeiture values is FALSE?
Nonforfeiture values are present in all forms of life insurance
Regarding risk, which of the following statements is CORRECT?
Not all pure risks are insurable
If an insurer determines that an insured lawfully owns or possesses a firearm, the insurer may
Not discriminate in any way
An insured was hospitalized due to an accident and five months later, he died. His AD&D policy would pay which of the following?
Nothing because he lived for more than 90 days from the date of the accident.
Basic physicians expense insurance provides benefits for which of the following?
Office visits
An admitted insurance company is:
One that has been licensed by the state of Florida Office of Insurance Regulation to transact specified classes of insurance
A non-admitted insurance company is:
One that has not been licensed by the Florida Office of Insurance Regulation to transact business within your state
When would a material concealment by a policyowner offer an insurer the opportunity to rescind a life insurance contract?
Only during the contestable period
David has an Accident & Health (A&H) policy, which the insurance company declines to renew at the policy anniversary date. What type of policy is this?
Optionally renewable
Regarding Personal Producing General Agengies (PPGAs), all of the following are true EXCEPT
PPGAs spend most of their time recruiting, training, and supervising new agents
A collection of health care providers, such as physicians, hospitals and clinics, who offer their services to certain groups at prearranged prices is called a/an
PPO
The system whereby doctors and hospitals contract with an insurer to provide services at a prearranged cost to the insured is call a/an
PPO
Under what system do a group of doctors and hospitals in a designated area contract with an insurer to provide services at a prearranged cost to the insured
PPO
A major gap in Medicare coverage occurs in:
Part A, in the way skilled nursing care is covered
Under Medicare Part B, the participant must
Pay 20% of covered charges above the deductible
With regard to a typical dismemberment provision, the "Principal Sum" is best described by which one of the following?
Payment of a minimum sum if death follows the loss of a hand, foot, or eye.
A father purchases a juvenile policy on the life of his son. He wants to assure that in the event he dies or becomes disabled, the premiums would be waived until his son becomes the owner of the policy. What provision would he purchase?
Payor Rider
What type of designation would provide that the children of a named beneficiary are to share in policy proceeds if the named beneficiary is deceased?
Per Stirpes
Mr. Williams names his son John a beneficiary of his life insurance policy. What designation should he use if he wants to make sure that John's children would receive John's share of the life insurance policy proceeds should John predecease his father?
Per stripes
An immediate specific event causing loss and risk is defined as a
Peril
An annuity may be purchased under all of the following methods EXCEPT:
Periodic payment, immediate annuity
Which of the following scenarios pertaining to IRAs is NOT correct?
Peter inherits $15,000 in IRA benefits from his father, who died in 2008. Peter can set up a tax-favored rollover IRA with the money and defer current income tax on the benefits received.
With regards to group health insurance plans, which of the following is a CORRECT statement?
Plans issued by mutual companies usually provide for dividends
Which of the following is NOT included in the context of "unfair trade practices"?
Pointing out to a prospect that dividends are not guaranteed
If an irrevocable beneficiary dies before the policyowner, who of the following gains control of a life insurance policy with a reversionary irrevocable clause?
Policyowner
Which of the following can an individual include as qualifying expenses for purposes of determining a medical tax deduction?
Premium contributions paid by the individual to a group medical expense plan
Which of the following is a TRUE statement?
Premiums are based on mortality, interest assumed, and loading for expenses and contingencies
Which of the following statements about long-term care insurance policies is NOT correct?
Premiums for a long-term care policy are based solely on the insured's age, health, and the type of benefits provided
Which of the following statements pertaining to life insurance premiums is CORRECT?
Premiums for group term insurance covering employees are tax deductible, assuming certain requirements are met
What amount will be paid by the insurance company in the event death of the insured results from suicide during the first year the contract is in force?
Premiums paid up to date of death
Which of the following provisions would provide full benefits for the rest of the benefit period if an insured suffered a stroke and lost the ability to speak?
Presumptive disability
The death benefit payment under an AD&D policy is called the
Principal Sum
What is the initial period of time specified in a disability income policy that must pass, after a policy is in force, before a loss due to sickness can be covered?
Probationary period
Before proposing any variable product the agent must provide the prospect with the
Prospectus
Which of the following options in a renewable term policy might provide the insured a rate lower than what the contract states?
Re-entry option
All of the following are considered moral hazards EXCEPT
Reckless driving
A 50-year old male applied for a $75,000 Ordinary Life Policy and paid the first annual premium at the time that the application was signed. His agent gave him a receipt conditional upon the applicant passing a medical examination. Before taking the physical examination, the applicant had a heart attack and died. The insurance company will:
Refund the premium tendered since all of the conditions required had not been met
All of the following activities by an agent may result in the suspension or revocation of an agent's license EXCEPT:
Representing an authorized insurance entity
All of the following factors would affect a health insurance policy's premium rate EXCEPT
Residential address of the insured
Which of the following terms relates to disability income insurance
Residual amount benefit
Which of the following income needs is distinctive from the other three?
Retirement Income
What two organization regulate variable life and variable annuities
Secruities and Exchange Commmission (SEC) and the state
Regarding Social Security taxes, which of the following statements is not true?
Self-employed persons pay a lower tax rate than do employed persons, although their tax is figured on the same wage base
All of the following would constitute unlawful acts of rebating EXCEPT:
Sending birthday cards to a policyowner's children
An agent's authorized duties generally include all of the following EXCEPT:
Signing minor endorsements, or making minor changes in policies already issued
In what types of limited-pay policy is the period the shortest and the premium the largest?
Single-Premium life policy
Regarding sliding, which of the following statements is CORRECT?
Sliding is an unfair trade practice that applies to all insurance products
Which of the following riders provides for additional income while waiting for social insurance benefits to begin?
Social Insurance Substitute
Under which form of business life insurance is the cost of the policy divided between a key person in the business and the employer?
Split Dollar Insurance
Which of the following forms of life insurance would an employer use to help an employee carry life insurance protection needed by the employee's family?
Split dollar insurance
Which of the following controls advertising and sales literature used by the health insurance industry?
State Insurance Departments
What must an insurer do when it receives notice of a claim?
Supply the insured with proof of loss forms within a specified time period
All of the follOwing are covered under Part A of Medicare EXCEPT:
Surgeons and physicians fees
Interest payments to a surviving spouse or proceeds held under the Interest Only option are:
Taxable as ordinary income
Which of the following statements regarding the Medical Information Bureau (MIB) is CORRECT?
The MIB operations help to hold down the cost of life insurance for all policyowners through the prevention of misrepresentation and fraud
Which of the following statements pertaining to the Medical Information Bureau (MIB) is CORRECT?
The MIB provides assistance in the underwriting of life insurance
The core policy (Plan A) developed by the NAIC as a standard Medicare supplement policy includes all of the following EXCEPT
The Medicare Part A deductible
In determining Social Security retirement benefits, which of the following statements is CORRECT?
The PIA is a determination of the amount equal to the worker's full retirement benefit at the worker's full retirement age.
Which of the following statements pertaining to agents is NOT correct?
The acts of an agent are not the acts of the principal
An agent prints business cards that contain the company's name, even though he is not specifically given permission to do so in his contract. Which of the following statements is CORRECT?
The agent has implied authority to print the business cards
The Time Limit on Certain Defenses provision allows which of the following?
The company to void the policy due to a fraudulent statement in the application
Which of the following statements regarding Business Overhead Expense insurance is NOT correct?
The coverage generally is sold on a group basis
Regarding group life premiums and proceeds, which one of the following statements is CORRECT?
The employee has to report the employer-paid premiums as income for coverage above $50,000
Which of the following phrases best describes vesting?
The employee's right to funds or benefits, contributed by the employer, should the employee leave that employer.
Which of the following is the applicant for a group insurance plan?
The employer
What is the income tax consequence if Marie's employer pays for her group disability income coverage?
The employer can deduct the premium payments
Which of the following statements most aptly describes health insurance benefits
The greater the benefits, the higher the premium
Which of the following statements about the Chief Financial Officer and the Office of Insurance Regulation examination authority is NOT correct?
The head of a State Office of Insurance Regulation is generally responsible for enforcing criminal penalties against those who violate the Insurance Code
Which of the following definitions of "total" disability used in disability income insurance would be the most liberal (advantageous) for the insured?
The inability of the insured to engage in "his/her own" occupation for wage or profit
All of the following statements regarding the requirements of the Federal Fair Credit Reporting Act are true, EXCEPT:
The information furnished by the insurance company must contain medical information
Which of the following would cause a Common Disaster Clause in a life insurance policy to become effective?
The insured and the beneficiary are killed in the same accident even though the beneficiary survives the insured but dies within the fixed period stipulated in the policy, for example 15 days or 30 days
A policyholder names his wife as the primary beneficiary and his brother as a contingent beneficiary. Under these circumstances, which one of the following statements is correct?
The insured may change either beneficiary without obtaining her approval
Under the provisions of the Uniform Simultaneous Death Act of Florida who would be presumed to have survived longest if the insured and beneficiary died simultaneously
The insured would be presumed to have survived
Regarding the elements of insurable risk, which of the following statements is FALSE?
The loss exposurers to be insured must be small
Regarding the elements of insurable risk, which of the following statements is INCORRECT?
The loss need not be definite and measurable
From a tax standpoint, when a policyowner surrenders a life insurance policy and receives a lump-sum payment of the cash value, which of the following applies?
The lump-sum, less the policyowner's cost basis, is taxable as ordinary income
Which of the following statements pertaining to a life insurance policy application is CORRECT?
The names of both the insured and the beneficiary are indicated on the application
Regarding a straight-life variable annuity, which of the following statements is TRUE?
The number of annuity units a client redeems never changes
After retirement starts, which of the following is TRUE?
The number of annuity units stay the same
Which of the following characteristics is associated with disability buy-out plans?
The option to elect a lump-sum payment
Regarding beneficiaries, which of the following statements is CORRECT?
The policy owner may name anyone as beneficiary
Which of the following are parties to an insurance contract?
The policyowner and the insurer
How does naming an irrevocable beneficiary affect the policyowner's rights in the contract?
The policyowner cannot exercise any rights unless written consent of the beneficiary is obtained
Which of the following statements regarding business continuation plans is CORRECT?
The premium for Business Overhead Insurance is tax-deductible, however the benefits are treated as taxable income
Which of the following statements about COBRA is CORRECT?
The premium for continued group medical coverage may be up to 102% of the premium that would otherwise be charged.
Which one of the following statements regarding risk pooling and the law of large numbers is NOT correct?
The smaller the number of risks combined into one group, the less uncertainty there will be as to the amount of loss that will be incurred
Which one of the following statements regarding risk pooling and the law of large numbers is NOT correct?
The smaller the number of risks combined into one group, the less uncertainty there will be as to the amount of loss that will be incurred.
All of the following statements regarding survivor financial needs are correct EXCEPT
The term dependency period refers to the 20-year period immediately following the insured's death during which the widowed spouse must depend on Social Security
When a variable annuity has been annuitized, which of the following statements is TRUE?
The value of each annuity unit varies, but the number of annuity units is fixed
An investor, age 65, wishes to annuitize a variable annuity. Which of the following statements is true?
The value of the accumulation unit will be used to calculate the total number of Annuity units. The number of units then remains the same
Which of the following best describes human life value?
The value today of an individual's future earnings that are devoted to his or her dependents
Which of the following statements regarding ways to determine the proper amount of life insurance is CORRECT?
There are two basic approaches to determining the amount of life insurance that is needed: the human life value approach and the needs approach
What is the grace period for paying premiums on an HMO contract?
There is a 10-day grace period
Which of the following statements about 401 (k) plans is CORRECT
There is a limit on employee deferrals
All of the following statements regarding guaranty funds are correct EXCEPT:
They are established by the federal government to protect consumers if an insurer becomes insolvent
Which of the following statements about deductible provisions in medical insurance policies is NOT correct?
They are most common in basic medical expense policies
Which of the following statements is true about most Blue Cross/Blue Shield organizations?
They are nonprofit organizations
Which of the following is true about variable products?
They are primarily life insurance contracts
Which of the following statements regarding deferred compensation plans is CORRECT?
They permit a business to provide extra benefits to officers, executives, and other highly paid employees
Which of the following is the purpose of medical cost management?
To control health claims expenses
What is the effect of an impairment rider attached to a health insurance policy?
To exclude from coverage losses resulting from specified conditions
All of the following are objectives of the National Association of Insurance Commisioners (NAIC) EXCEPT:
To promote Federal insurance regulation
The National Association of Insurance Commissioners (NAIC) has all of the following objectives EXCEPT:
To promote federal insurance legislation
Which of the following is NOT an objective of the National Association of Insurance Commissioners (NAIC)?
To promote federal insurance legislation
Each of the following is a function of accident insurance EXCEPT:
To provide benefits for the loss of time away from the job as a result of sickness
Which of the following is NOT a function of accident insurance?
To provide benefits for the loss of time away from the job as a result of sickness.
After submitting a notice of claim to the insurance company, the insured had not received the proper claim forms within 15 days. The insured has the right
To submit a description of the loss, in his own words, in any form, as proof of loss
An insured notified the health insurance company of a claim on August 1. As of August 18, he had not received the proper claim forms from the company. The insured has the right
To submit a description of the loss, in his own words, in any form, as proof of loss
If an agent replaces a policy without doing a full and fair comparison for the client, he would be guilty of:
Twisting
In what way must the Notice to Buyer be conveyed to an HMO subscriber who is eligible for Medicare?
Typing the notice on the first page of the application and contract
Which of the following statements pertaining to the grace period an reinstatement provisions in health insurance policies is NOT correct?
Under a health policy's reinstatement terms, insured losses from accidental injuries and sickness are covered immediately after reinstatement
Which of the following statements pertaining to life insurance policy settlement options NOT correct?
Under the fixed-period option, the payment of excess interest will lengthen the payment period
When referring to employee retirement plans, the term nonqualified refers to plans
Under which the employer may discriminate as to the inclusion of employees within the plan
Insurance contracts where only one party makes any kind of enforceable promise is called a/an
Unilateral contract
Which of the following would NOT indicate moral hazard with a prospect?
Unmarried status
The amount of time allowed for delayed disability benefits may be
Up to 90 days depending on the policy
If an application for health insurance is submitted to an insurance company with no premium payment, coverage under the policy begins at which of the following times, if any?
Upon payment of the premium
Which of the following examples pertaining to major medical policy deductibles is CORRECT?
Valeria incurs a hospital bill of $8,300. Her basic medical expense insurance pays $2,400. Valerie pays a $200 deductible and her major medical plan takes care of the balance of covered expenses. Her deductible would be classified as a corridor deductible
Assume a health insurance contract states that it will pay $350 a month to the insured, should she become totally disabled. Which term most aptly defines this kind of contract?
Valued
An agreement that is not legally enforceable under any circumstance is called a/an
Void contract
Voluntary relinquishment of a given right is called a
Waiver
In which of the following situations is a medical examination virtually never required in the health insurance underwriting process?
When application is made for limited accident coverage
All of the following statements regarding policy replacement are false except:
When policyowners desire to replace existing policies, agents must strictly follow an replacement regulation in their state
How are medical expense insurance premiums to be deducted for income tax purposes?
When premiums are lumped with other medical expenses, the total amount deductible is the amount that exceeds 7.5% of the taxpayer's adjusted gross income
Which of the following is considered to be constructive delivery
When the policy has been sent to the agent for unconditional delivery
When a cash value life insurance policy is converted into an annuity in a nontaxable transaction, that event is generally known as
a 1035 exchange
Three business partners individually agree to acquire the interest of a deceased partner and own life insurance on each of the other partners in the amount of his or her share of business's buyout value. What is described here is
a cross-purchase buy-sell plan
An insurance company operating within the state in which it is chartered and in which its home office is located is referred to as
a domestic insurer
The term co-payment means
a fixed amount per visit or service the subscriber must pay
When a medical expense policy pays benefits on a fixed-rate basis, it pays
a flat amount per day for hospital room and board
An insurance company operating within the state in which is it is chartered and in which its home office is NOT located is referred to as
a foreign insurer
The difference between scheduled premium and flexible premium variable life insurance policies will include
a guaranteed minimum death benefit versus only a variable death benefit
The written agreement between the subscriber and the HMO is called
a health maintenance contract
Joanna and her husband, Tom, have a $40,000 annuity that pays them $200 a month. Tom dies and Joanna continues receiving $200 monthly check as long as she lives. When Joanna dies, the annuity payments cease. This is an example of
a joint and full survivor annuity
All of the following should be eligible to establish a Keogh retirement plan EXCEPT
a major stockholder-employee in a family corporation
If a medical report is required on an applicant, it is completed by
a paramedic or examining physician
A clause that states that policy distributions payable to a beneficiary after the insured dies are not assignable or transferable and may not be attached in anyway is called
a spend-thrift clause
The period of time from a variable annuity's issue date until the start of payments is known as the
accumulation period
Regarding the standardized Medigap plans, insurers may
add names or titles to the existing plan letter designations (A though N)
Under the misstatement of age provision in a health insurance policy, what can a company do if it discovers that an insured gave a wrong age at the time of application?
adjust the benefits
All of the following conditions are typically covered in a long-term insurance policy EXCEPT
alcohol dependency
All of the following statements about SIMPLE plans are correct EXCEPT
an employer must make a nonelective contribution of 2% of compensation on behalf of each eligible employee
A partnership owns, pays for, and is the beneficiary of the life insurance policies on the lives of its individual partners. This is known as
an entity buy-sell plan
All of the following statements about accelerated death benefits and viatical settlements are correct EXCEPT
an insured who sells an insurance policy to a viatical company usually receives 100% of the policy's face value
Before variable annuity benefits can be paid out, the accumulation units in the participant's account must be converted to
annuity units
The conformity with state statutes provision in a health insurance policy stipulates that any policy provision that is in conflict with the statutes of the state where the insured resides is
automatically amended to conform to the minimum requirements of the state's statutes
Which of the following statements about key-person insurance is CORRECT?
because the business has complete control over the policy, it can be considered a business asset
Theodore received a $15,000 cash benefit from his $50,000 accidental death and dismemberment policy for the accidental loss of one eye. The amount he received could be identified as the policy's
capital sum
All of the following are required uniform provisions in individual health insurance policies EXCEPT
change of occupation
The purpose of COBRA requirements concerns
continuation of health insurance
All of the following are considered unfair trade practices with regard to HMOs EXCEPT
conversion
Separate account values and variable contract values fluctuate
daily
All of the following are primary premium factors EXCEPT
dividends
The miscellaneous expense benefit in a basic hospital expense policy normally will cover
drugs and medicine administered in the hospital
HMOs offering group coverage must have an open enrollment at least
for 30 days every 18 months
Rudy is eligible for full death, retirement, and disability benefits under social security. His worker status is
fully insured
All of the following statements regarding annuities are correct EXCEPT
generally, annuity contracts issued today require fixed, level funding payments
All of the following are primary risk factors in underwriting individual health insurance policies EXCEPT
geographical location
Elaine signs an application for a $50,000 nonmedical life policy, pays the first premium, and receives a conditional insurability receipt. If Elaine were killed in an auto accident two days later
her beneficiary would receive $50,000, if Elaine qualified for the policy as applied for
Marty just received his first Social Security disability payment. From this, we can assume
his disability is expected to last at least 12 months
Fred owns a small hardware store and is covered under a business overhead expense policy. If he becomes disabled, he can expect all the following expenses to be covered EXCEPT
his salary
An individual who buys a membership in a prepaid health clinic because the premium is less than an HMO should be aware the clinic cannot provide
hospitalization
If a consumer is harmed by an insurer or agent who violates Florida laws relating to annuity sales, all of the following actions may be ordered by the OIR except
immediate surrender of all licenses
During the accumulation period of a deferred variable annuity, the value of individual accounts rises or falls based solely on
investment performance
When a policyowner cannot exercise his rights of ownership without the policy beneficiary's consent, the beneficiary is designated
irrevocable
All of the following statements correctly describe the purpose of social security except
it provides a source of income for a meaningful standard of living during retirement
Savings of the HMO system are based on all of the following EXCEPT
keeping the premium high enough to net a profit
In order to sell HMO contracts, an agent must do all of the following EXCEPT
maintain a bond of not less than $10,000
All of the following statements about beneficiary designations are correct EXCEPT
minors cannot be named life insurance beneficiaries
A company may change the wording of a uniform policy provision in its health insurance policies only if the
modified provision is not less favorable to the insured
A tendency that people may have have that increases risk and the chance of loss is a
moral hazard
A tendency that people may have that increases risk and the chance of loss is a
moral hazard
Which of the following premium factors is unique to health insurance (as opposed to life insurance)?
morbidity
All of the following statements about variable annuities are correct EXCEPT
once a variable annuity has been annuitized, the amount of monthly annuity income cannot fluctuate
An immediate specific event causing loss and risk is defined as a
peril
An individual characteristic that increases the chance of peril is a
physical hazard
HMOs are known for stressing
preventive care and early intervention
HMOs are known for stressing
preventive medicine and early treatment
The amount payable as a death benefit in an accidental death and dismemberment policy is known as the
principal sum
A spendthrift clause in a life insurance contract
protects the unpaid death proceeds from the claims of the beneficiary's creditors
The Florida HMO Consumer Assistance Plan
provides coverage for subscribers to HMOs that become insolvent
The Office of Insurance Regulation will NOT issue a Certificate of Authority to an HMO until it has
received a valid Health Care Provider Certificate from the Agency for Health Care Administration of Florida
The legislature stated that the purpose of HMOs is to do all of the following EXCEPT
replace the existing system of health care delivery
All of the following activitIes by an agent may result in the suspension or revocation of an agent's license EXCEPT:
representing an authorized insurance entity
Underwriting is a process of
selection, classification, and rating risks
Variable life insurance and variable annuities contracts derive their product values largely from
separate account performance
Insurer selling variable contracts are subject to
state insurance and federal securities regulation
All of the following are types of deductible provisions associated with major medical policies EXCEPT
stop-loss
A variable contracts agent must notify the Department within 30 days of any change in the following EXCEPT
the agent's insurer
The term capitation means
the amount paid to the physician for each member
The primary distinction between the insurability and approval types of conditional receipts is when
the coverage goes into effect
Sandra has a life insurance policy that states her husband, Gerald, is to receive the full death benefit. If he predeceases her, their 3 children are to share the benefit equally. If her husband and all 3 children predecease her, the benefit is payable to the first community church. All of the following statements are correct EXCEPT
the designation of the first community church can be contested by any of Sandra's relatives who survive the children
Ben is 65 years old and is eligible for Medicare. He works for an employer that has 100 employees. Ben's employer-sponsored health insurance plan is
the primary payor and Medicare is the secondary payor.
All of the following statements concerning a common disaster provision are correct EXCEPT
the provision stipulates that if the primary beneficiary outlives the insured by more than 48 hours, then the proceeds will be paid to the primary beneficiary's estate
The method used today to change beneficiaries is known as
the recording method
Generally, the party, who delivers an insurance policy to the new policyowner is
the sales agent
If an agent signs up an HMO subscriber who is eligible for Medicare
the subscriber is disenrolled from Medicare
All of the following statements about facility of payment provisions are correct EXCEPT
they are often found in group life policies
All of the following statements regarding Roth IRAs are true EXCEPT
they mandate distributions no later than 70 1/2
Common stocks are predominantly used in the separate account portfolios because they
usually provide a hedge against inflation
All of the following are methods of keeping premium costs to a minimum in a health policy EXCEPT
waiving the right to receive benefit payments when due
How often must HMOs file a report of their activities to the Office of Insurance Regulation
within 3 months after the close of a fiscal year
