Florida 2-15 Final Exam
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 meets the insured's personal needs, and is provided by nonmedical personnel?
Custodial Care
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
An insurance company that is owned by the policyholders is called a
Mutual insurer
Which of the following statements about HMOs in Florida is FALSE?
HMOs can engage in selling insurance contracts.
All of the following statements regarding the Life insurance Policy Summary are correct EXCEPT
It must illustrate all guaranteed policy dividend values.
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
What is the maximum value of an item an insurer may gift a prospective insured as an advertisement?
$25
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
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
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
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
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
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 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
All advertisements, regardless of their source of creation, are the responsibility of the
Insurer
A stock insurer is defined as an insurer
Owned by its stockholders
Which dividend option will increase the death benefit?
Paid-up additions
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.
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
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
All of the following are consideration in an insurance policy EXCEPT
The cash value in the policy.
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 entities is considered the Principal?
The insurer issuing a policy
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
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
The guaranteed purchase option is also referred to as the
Future increase option.
All of the following are true regarding the federal Fair Credit Reporting Act EXCEPT
Reports may be sent to anyone who requests one.
Which of the following statements is INCORRECT?
The insurer does not have the right to conduct an autopsy
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
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%
According to the metal level classification of health plans, what percentage of health care costs will be covered under a gold plan?
80%
When an insured terminates membership in the insured group, the insured can convert to
Whole life without proof of insurability.
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 who transacts insurance in this state but whose articles of incorporation are registered in Canada is considered what type of insurer?
Alien
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
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
Who regulates the minimum standards for coverage in health insurance?
Florida Law
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
How does insurance distribute the financial consequences of individual losses?
It transfers the risk to all persons insured.
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 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
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
When one insurer buys insurance from another company to minimize the effects of catastrophic losses, they are
Reinsuring
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.
A licensee may have their license suspended, terminated or revoked for all of the following EXCEPT
Unknowingly overinsuring any property insurance risk
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
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.
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
What is the latest point at which an Outline of Coverage may be presented?
At the time of policy delivery
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.
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
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.
Decreasing Term insurance is often used to
Cover a mortgage.
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
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
An annuity owner receives the same guaranteed payment every month. What type of annuity is it?
Fixed
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
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 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
In group insurance, the primary purpose of the Coordination of Benefits provision is to
Prevent overinsurance
Whose responsibility is it to ensure that the application for health insurance is complete and accurate?
The agent's
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.
Considering the principles of liquidity, how would the policyowner use today's cash values in a life insurance policy?
Use it for emergency expenses
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
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
A whole life policy is surrendered for a reduced-paid up policy. The cash value in the new policy will
Continue to increase
What is the maximum age that a disabled insured worker may receive Social Security disability benefits?
65
Life Insurance can provide which of the following?
Survivor protection
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
In a noncontributory group policy
100% of eligible employees must participate
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.
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
What does an annuity protect the annuitant against?
Living longer than expected
In life insurance, which of the following is NOT required to have an insurable interest in the insured?
The beneficiary
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
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.
Which federal act defines rules pertaining to protected health information?
HIPAA
HMOs are known as what type of plans?
Service
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
If a basic medical insurance plan's benefits are exhausted, what type of plan will then begin covering those losses?
Supplementary major medical
Which of the following groups is NOT eligible for group life insurance?
Social Groups
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
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
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
Which of the following describes the relationship between a capital sum and a principal sum?
Capital sums are percentages of principal sums.
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
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
Which of the following best defines the unfair trade practice of rebating?
Offering an inducement of something of value not specified in the policy
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
To be valid, an insurance policy must have all of the following EXCEPT
Countersignature
Premiums collected on behalf of the insurance company by an agent will be held in what capacity?
Fiduciary
What Florida law governs group health insurance provisions provided by insurers and HMOs to small employers?
Florida Employee Health Care Access Act
What is the purpose of a benefit schedule?
To state what and how much is covered in the plan
Which of the following used to be called Medicare + Choice Plans?
Medicare Advantage Plans
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.
Regarding the consideration clause, which of the following is NOT correct?
Consideration of the insurer and insured must be equal.
All of the following statements are true regarding an Ordinary (Straight) Life policy EXCEPT
It does not have a guaranteed death benefit.
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.
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
All of the following statements about indexed whole life insurance are correct EXCEPT
The death benefit is not guaranteed
Maternity benefits include all of the following EXCEPT
Coverage without cost sharing.
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.
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
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.
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.
In a variable life insurance policy, all of the following assets are held in the insurance company's general account EXCEPT
Cash surrender 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.
In health insurance, the length of the grace period varies according to the
Mode of premium payment.
In order to reinstate a life insurance policy the insured must do all of the following EXCEPT
Pay next year's premium in advance
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.
What happens to the copy of the application for health insurance once the policy is issued?
It becomes part of the entire contract.
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 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
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
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?
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.
Following a covered loss, the Time Payment of Claims Provision requires that an insurance company pay disability income benefits no less frequently than
Monthly
Who is the annuity owner? a) The person who receives
The person who purchases the annuity
What is the difference between a straight life policy and a 20-pay whole life policy?
Premium payment period
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
