Florida 2-15 Final Exam

What is the maximum amount of individual life insurance coverage that a person can convert to if the existing group policy has been terminated?

$10,000

A retail shop owner is insured under a business overhead expense policy that pays a maximum monthly benefit of $2,500. His actual monthly expenses are $3,000. If the owner becomes disabled, the monthly benefit payable under his policy will be

$2,500

What is the maximum value of an item an insurer may gift a prospective insured as an advertisement?

$25

An individual long-term care policy cannot be issued until the insurer has received from the applicant a written designation of at least

1 person

If an insured pays a health insurance premium each month, how long would the grace period be under the policy?

10 Days

Within how many days after receiving a written communication of replacement must an existing insurer provide a policyowner with a policy summary?

10 Days

Your client is sole proprietor and wishes to include his family on a medical expense plan. How much of the cost of the medical expense plan can be deducted (since he is considered self-employed)?

100%

In a noncontributory group policy

100% of eligible employees must participate

What is the minimum age requirement to enter into a life insurance contract in this state?

15

On individual health insurance policies, an insurer must furnish the claimant with claim forms within how many days?

15 Days

An insurer recently collected information from a senior consumer, and used that information to make recommendations regarding insurance transactions. For how many years must this information be maintained after the transaction has been completed?

5

Under the mandatory uniform provision Legal Actions, an insured is prevented from bringing a suit against the insurer to recover on a health policy prior to

60 days after written proof of loss has been submitted.

What is the maximum age that a disabled insured worker may receive Social Security disability benefits?

65

According to the metal level classification of health plans, what percentage of health care costs will be covered under a gold plan?

80%

In individual health policies, proof of loss must be provided by the insured to the insurer within how many days of a loss?

90

The entire contract includes all of the following EXCEPT

A buyer's guide.

The policyowner has an option to pledge the life insurance policy as collateral for a bank loan. This is called

A collateral assignment

Which of the following is NOT considered eligible for group life insurance?

A credit union that needs coverage only for its top 10 employees

A policyowner who purchases an individual insurance policy and then asks for a refund within 2 weeks after the policy was delivered will receive

A full refund of the premium

A viatical settlement is a transaction outside the life insurance company where the owner sells the life insurance policy for which of the following?

A percentage of the face amount of the policy

Which of the following best defines the Probationary Period in group health policies?

A specified period of time that a person joining a group has to wait before becoming eligible for coverage

HMO contracts may only be sold by a licensed and appointed health insurance agent or a full-time salaried employee or officer of an HMO who devotes most of his or her services to

Activities other than soliciting HMO contracts from the public and who receives no commissions or compensation for procuring such contracts.

Which of the following types of care could be provided at a community center?

Adult day care

An insurer who transacts insurance in this state but whose articles of incorporation are registered in Canada is considered what type of insurer?

Alien

Which of the following statements is NOT true regarding health insurance policy provisions?

All additional provisions written by insurers are cataloged by their respective states.

Which of the following riders pays a beneficiary a death benefit that is double or triple the face amount if the insured's death was caused by an accident as defined in the policy?

An Accidental Death Rider

All of the following could qualify as a group for the purpose of purchasing group life insurance EXCEPT

An association formed 1 year ago.

An elimination (waiting) period may NOT have to be satisfied for a disability in which of the following?

An insured suffers a relapse of a prior disability within 6-months of the initial covered disability

When agents, brokers, or solicitors handle premiums for an insurer, they are acting in which capacity?

As a fiduciary

According to the terms of the policy or an agreement between the insured, the group policyholder, and the insurer, the insured person may not do which of the following?

Assign an appropriate premium based on preference

What is the latest point at which an Outline of Coverage may be presented?

At the time of policy delivery

An underwriter is reviewing an applicant with an extensive medical history. Which of the following would give the underwriter a better understanding of how the applicant has been treated for various illnesses?

Attending Physician's Statement

Answers to questions in an insurance application are called representations and, as such, they are

Believed to be true to the best of the applicant's knowledge.

An applicant misstates his age on his application for a health insurance policy. He states that he is 39, but his actual age is 49. When he files a claim, what will most likely happen?

Benefits paid will be those that would have been purchased at the correct age.

Which of the following would be TRUE of both the fixed-period and fixed-amount settlement options?

Both guarantee that the principal and interest will be fully paid out.

In addition to participation requirements, how does an insurer guard against adverse selection when underwriting group health?

By requiring that the insurance be incidental to the group

Which of the following describes the relationship between a capital sum and a principal sum?

Capital sums are percentages of principal sums.

In a variable life insurance policy, all of the following assets are held in the insurance company's general account EXCEPT

Cash surrender values.

Insurers CANNOT transact insurance in this state without a

Certificate of Authority

Which of the following would be an example of an insurer participating in the unfair trade practice of discrimination?

Changing the insured higher premiums based on her race

A producer advises a policyholder that he should replace his life insurance policy with another, similar policy. The agent is advising this, however, for the sole purpose of earning a commission. What violation has the agent committed?

Churning

Which of the following sources would explain the state policies regarding appropriate agent conduct?

Code of Ethics of the Florida Association of Insurance and Financial Advisers

An applicant gives her agent a completed application and the initial premium. What can the agent issue her that acknowledges the initial premium payment?

Conditional Receipt

Regarding the consideration clause, which of the following is NOT correct?

Consideration of the insurer and insured must be equal.

A whole life policy is surrendered for a reduced-paid up policy. The cash value in the new policy will

Continue to increase

An individual has a $200,000 convertible term life insurance policy. If he chooses, he can

Convert to a whole life policy for the same face amount without proof of insurability.

To be valid, an insurance policy must have all of the following EXCEPT

Countersignature

Decreasing Term insurance is often used to

Cover a mortgage.

Maternity benefits include all of the following EXCEPT

Coverage without cost sharing.

When filling out an application for insurance, the applicant makes a mistake. If a fresh application were not available, what could the applicant do to properly correct the mistake?

Cross the incorrect answer out, write the correct one beside it, and initial the answer.

Which of the following meets the insured's personal needs, and is provided by nonmedical personnel?

Custodial Care

During policy solicitation, an insurer exaggerates the financial condition of one of its competitors, and makes it sounds worse than it is. This is an example of

Defamation

An employee has just started working for a small group corporation and works 25 hours per week. The employee is

Eligible to receive full health coverage

The Uniform Provision Law that prevents an insurance company from altering its agreement with a policyholder by referring to documents or other items not contained in the policy is called the

Entire Contract Provision.

The "stop-loss" feature on a major medical policy is intended to

Establish a maximum amount of out-of-pocket expense that an insured will have to pay for medical expense in a calendar year.

When life insurance proceeds are used to pay inheritance taxes and federal estate taxes, it is known as

Estate conservation

When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option?

Extended Term

A husband and wife both incur expenses that are attributed to a single major medical insurance deductible. Which type of deductible do they have in their policy? .

Family

A married couple wants to include the entire family in their whole life policy under one rider. Which of the following riders will help them achieve that goal?

Family term

The presumptive disability provision assumes that the insured is totally disabled upon loss of all of the following EXCEPT

Felling

Premiums collected on behalf of the insurance company by an agent will be held in what capacity?

Fiduciary

An annuity owner receives the same guaranteed payment every month. What type of annuity is it?

Fixed

Jacob is receiving fixed amount benefit payments from his late wife's insurance policy. He was told that if he dies before all of the benefits are paid, the remaining amount will go to the contingent beneficiary. Which settlement option did Jacob choose?

Fixed amount

What Florida law governs group health insurance provisions provided by insurers and HMOs to small employers?

Florida Employee Health Care Access Act

Who regulates the minimum standards for coverage in health insurance?

Florida Law

An insured's cancelable health insurance policy is being cancelled. One day before the policy is scheduled to end, he is involved in a major accident and is hospitalized for a week. Which of the following best describes the coverage that he would receive?

Full benefits, as if the policy were still completely in effect

The guaranteed purchase option is also referred to as the

Future increase option.

Which federal act defines rules pertaining to protected health information?

HIPAA

Which of the following statements about HMOs in Florida is FALSE?

HMOs can engage in selling insurance contracts.

An agent delivers a life policy. He explains a policy change was made and asks the applicant to sign a statement acknowledging the changes were explained. The agent says the premium has not been paid and must be paid before the policy goes into effect. He collects a Statement of Good Health, relinquishes the policy, and leaves. What did he do wrong?

He left the policy with the insured without collecting the premium

According to the Fair Credit Reporting Act, all of the following statements are true EXCEPT

If an applicant is declined for an insurance policy, he or she has no right to know what was in the report.

Which of the following is NOT true regarding a deferred annuity?

Income payments begin within 1 year from the date of purchase.

If a soliciting producer suspects that there could be misrepresentation on the part of the applicant for insurance, what must the producer do?

Inform the insurance company

Which of the following is the primary source of information that an insurer uses to evaluate an insured's risk for life insurance?

Insurance application b) Risk analysis c) The law of large numbers

Which of the following terms refers to solicitation, negotiation, effectuation or advising related to an insurance contract?

Insurance transaction

Insureds have the right to do which of the following if they have NOT received the proper claim forms within 15 days of their notice to the insurer of a covered loss under a major medical policy?

Insureds have the right to do which of the following if they have NOT received the proper claim forms within 15 days of their notice to the insurer of a covered loss under a major medical policy?

All advertisements, regardless of their source of creation, are the responsibility of the

Insurer

Riley reads an agreement on the first page of her policy which includes a list of losses that will be covered by her insurer. What is the name of this agreement?

Insuring Clause

What happens to the copy of the application for health insurance once the policy is issued?

It becomes part of the entire contract.

All of the following statements are true regarding an Ordinary (Straight) Life policy EXCEPT

It does not have a guaranteed death benefit.

What advantage does the "recurrent disability" provision provide to the insured under a disability income policy?

It eliminates the imposition of a second elimination period for the same disability.

All of the following statements regarding the Life insurance Policy Summary are correct EXCEPT

It must illustrate all guaranteed policy dividend values.

Which of the following best describes a Major Medical Expense Policy?

It provides catastrophic medical coverage beyond basic benefits on a usual, customary and reasonable basis.

How does insurance distribute the financial consequences of individual losses?

It transfers the risk to all persons insured.

If a business wants to make sure it will be able to cover losses due to the disability of its top employee, the business should get which type of insurance?

Key person disability income

What does an annuity protect the annuitant against?

Living longer than expected

An insured was seriously injured in a skiing accident that required him to be hospitalized for 5 weeks. His medical expense policy covered all of the following EXCEPT

Loss of income while hospitalized. b) Necessary medicine and

Which of the following used to be called Medicare + Choice Plans?

Medicare Advantage Plans

Which of the following statements is INCORRECT?

Medicare and Medigap policies provide coverage for long-term custodial or nursing home care.

All of the following are excluded from coverage in an individual health insurance policy EXCEPT

Mental illness.

An insurance agent visits a potential client and explains various types of policies. The customer displays a lack of interest, so the agent guarantees higher dividends than he knows would be possible. Which term describes what the agent has done?

Misrepresentation

In health insurance, the length of the grace period varies according to the

Mode of premium payment.

Following a covered loss, the Time Payment of Claims Provision requires that an insurance company pay disability income benefits no less frequently than

Monthly

An insurance company that is owned by the policyholders is called a

Mutual insurer

Which of the following best defines the unfair trade practice of rebating?

Offering an inducement of something of value not specified in the policy

Which statement best describes agreement as it relates to insurance contracts?

One party accepts the exact terms of the other party's offer.

When may HIV-related test results be provided to the MIB?

Only if the individual is not identified

Insurance contracts are unilateral in nature. What does that mean?

Only one party makes a promise

A stock insurer is defined as an insurer

Owned by its stockholders

Which dividend option will increase the death benefit?

Paid-up additions

When the owner of a participating whole life policy uses the dividend to provide more life insurance coverage, which of the following dividend options is being used?

Paid-up additions b) Reduce the premium

In order to reinstate a life insurance policy the insured must do all of the following EXCEPT

Pay next year's premium in advance

A married couple purchase a life insurance policy on their newborn baby. They are concerned about what would happen to the policy if either one of them were unable to continue making the premium payments due to death or disability. Which policy rider should their agent recommend?

Payor benefit

In a group life policy with a death benefit of more than $50,000 a) Premium cost above $50,000 is taxable as income to the employee.

Premium cost above $50,00 is taxable as income to the employee

What is the difference between a straight life policy and a 20-pay whole life policy?

Premium payment period

In group insurance, the primary purpose of the Coordination of Benefits provision is to

Prevent overinsurance

Which of the following is NOT mandatory under the Uniform Provisions Law as applied to accident and health policies?

Probationary Period

All of the following are true regarding a producer's fiduciary responsibilities EXCEPT

Producers may commingle personal funds with company funds.

All of the following are true of annually renewable term insurance Except

Proof of insurability must be provided at each renewal.

The Guaranteed Insurability Rider allows the owner to purchase additional amounts of life insurance without proof of insurability at all of the following EXCEPT

Purchase of a new home

Jack's retirement plan meets all federal requirements and entitles him to certain tax benefits as the owner of the plan. What term best describes Jack's retirement plan?

Qualified

Which of the following would make a child over the age of 5 INELIGIBLE for Florida Healthy Kids coverage?

Qualifying for Medicaid

An insured purchased a health insurance policy with a renewability clause that states the policy is "Guaranteed Renewable." This means that as long as the required premiums are paid, the policy will continue until the insured

Reaches 65

When one insurer buys insurance from another company to minimize the effects of catastrophic losses, they are

Reinsuring

An insured had a heart attack while jogging but, is expected to return to work in approximately 6 weeks. The insured's Disability income policy will

Replace a percentage of his lost income

All of the following are true regarding the federal Fair Credit Reporting Act EXCEPT

Reports may be sent to anyone who requests one.

HMOs are known as what type of plans?

Service

Which of the following groups is NOT eligible for group life insurance?

Social Groups

When an agent delivered an insurance policy to the insured, he collected the initial premium, as well as a document verifying that the insured had not had any injuries or illness since the application date. What is this document called?

Statement of Good Health

Why does Florida have state laws regulating Medicare Supplement Insurance?

States cannot enforce and prosecute federal laws

Which of the following actions does NOT constitute false advertising?

Stating that dividends are not guaranteed

If a basic medical insurance plan's benefits are exhausted, what type of plan will then begin covering those losses?

Supplementary major medical

Life Insurance can provide which of the following?

Survivor protection

Which of the following policies would NOT offer a policy loan option?

Term Life

Which of the following statements regarding HIV testing is NOT true?

Test results must be sent to the Department of Insurance.

What Florida insurance regulation established an outline of appropriate and inappropriate business behavior for life insurance agents?

The Code of Ethics of the Florida Association of Insurance and Financial Advisors

Whose responsibility is it to ensure that the application for health insurance is complete and accurate?

The agent's

An insurer is attempting to determine the insurability of an applicant and decides to obtain medical information from several different sources. Which of the following must be notified of the investigation?

The applicant

Which of the following is a permissible reason for an insurance company to contest payment of a claim based on statements in the application?

The application contains material misstatements.

In life insurance, which of the following is NOT required to have an insurable interest in the insured?

The beneficiary

All of the following are consideration in an insurance policy EXCEPT

The cash value in the policy.

All of the following statements about indexed whole life insurance are correct EXCEPT

The death benefit is not guaranteed

Life insurance creates an immediate estate. Which of the following best explains this statement?

The face value of the policy is payable to the beneficiary upon the death of the insured.

What is the only difference between blanket insurance and group health insurance?

The insured members are not named.

Under the Payment of Claims provision, to whom will the insured's benefits be paid if the insured is deceased?

The insured's primary beneficiary

If a life policy insured is 64 years of age or older, the insurer must advise him or her of which of the following?

The insured's right to designate a secondary addressee to receive a copy of a policy lapse notice

Which of the following statements is INCORRECT?

The insurer does not have the right to conduct an autopsy

Which of the following entities is considered the Principal?

The insurer issuing a policy

Who is the annuity owner? a) The person who receives

The person who purchases the annuity

According to the Common Disaster clause, if the insured and primary beneficiary are killed in the same accident and it cannot be determined who died first, which of the following will be assumed?

The primary beneficiary died before the insured

An agent has completed 28 hours of continuing education to renew her license. Upon renewal, she realizes she has 4 extra hours of credit. What will happen to those extra hours?

They will be carried over to the next 2-year period

Medicare is a health insurance program for all the following individuals EXCEPT

Those with low income and low assets.

An employee is covered under COBRA. His previous premium payment was $100 per month. His employer now collects $102 each month. Why does the employer collect an extra $2?

To cover the employer's administration costs

What is the purpose of a benefit schedule?

To state what and how much is covered in the plan

Two individuals of the same age, health status, and life expectancy apply for individual insurance coverage. When policies are issued by the same insurer, the premium rates are different based on the insured's race. What practice does this describe?

Unfair discrimination

Which of the following policies can be described as a flexible premium adjustable life policy?

Universal Life

A licensee may have their license suspended, terminated or revoked for all of the following EXCEPT

Unknowingly overinsuring any property insurance risk

Considering the principles of liquidity, how would the policyowner use today's cash values in a life insurance policy?

Use it for emergency expenses

When an insured terminates membership in the insured group, the insured can convert to

Whole life without proof of insurability.

A limited health insurance policy that will pay a lump sum to an insured diagnosed with a heart attack, stroke, or renal failure is known as

critical illness insurance