Florida Insurance Exam
T and S are named co-primary beneficiaries on a $500,000 Accidental Death and Dismemberment policy insuring their father. Their mother was named contingent beneficiary. Five years later, S dies of natural causes and the father is killed in a scuba accident shortly afterwards. How much of the death benefit will the mother receive?
$0
Advertising gifts not to exceed ___ are allowed to be given by an agent to a prospective client.
$25
J's Major Medical policy has a $2,000 deductible and an 80/20 Coinsurance clause. If J is hospitalized and receives a bill for $10,000, J would pay:
$3,600
B has a $100,000 Accidental Death and Dismemberment policy that pays triple indemnity for common carrier death. If B is killed from an accident on a commercial flight, what will the policy pay B's beneficiary?
$300,000
All of the following statements about traditional individual retirement accounts are false EXCEPT
10% penalty is applied to withdrawals before age 59 1/2
What is the maximum Social Security Disability benefit amount an insured can receive?
100% of the insured's Primary Insurance Amount (PIA)
An insurer must provide an insured with claim forms within __ days after receiving notice of a loss.
15
The minimum age at which a person can sign a life insurance application is
15 years
Employers with less than __ employees are affected by Florida's Health Insurance Coverage Continuation Act (Mini COBRA).
20
A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct?
20-Pay Life accumulates cash value faster than Straight Life
What type of policy would offer a 40-year old the quickest accumulation of cash value?
20-pay life
Within how many days after policy delivery can a Medicare Supplement policy be returned for a 100% premium refund?
30
Within how many days must a licensee notify the Department of Financial Services of a change in address?
30
An insured pays premiums on an annual basis for an individual health insurance policy. What is the MINIMUM number of days for the Grace Period provision?
31
In Florida, a health policy that is paid on a quarterly basis requires a grace period of
31 days
How many days does an insurance company have to reject a reinstatement application before it is automatically reinstated?
45
A licensed agent must be appointed by an insurance company to solicit insurance in Florida. The agent's license will terminate if a certain period of time elapses without being appointed. How long is this period of time?
48 months
The waiting period for a pre-existing condition under a Medicare Supplement policy may NOT go beyond
6 months
What do Dread Disease policies cover?
A specific disease or illness
What is Florida's definition of Life insurance replacement?
A transaction in which a new policy is bought and an old policy is terminated
P is blinded in an industrial accident. Which provision of his life insurance policy will pay a stated benefit amount?
Accidental Death and Dismemberment clause
Which of the following employer tasks does a Professional Employer Organization normally handle?
Administration tasks
The Consideration clause in a life insurance contract contains what pertinent information?
Amount of premium payments and when they are due
An example of false advertising would be
An insurer exaggerating its dividends in a magazine advertisement
What does the insuring agreement in a Life insurance contract establish?
An insurer's basic promise
When a policyowner cash surrenders a Universal Life insurance policy in it's early years, this may be considered a red flag for a(n):
Anti-Money Laundering violation
An incomplete life insurance application submitted to an insurer will result in which of these actions?
Application will be returned to the writing agent
When does a Probationary Period provision become effective in a health insurance contract?
At the policy's inception
According to Florida law, when must an agent deliver the Outline of Coverage to a Medicare Supplement applicant?
At the time of application
At what time must a policyowner have insurable interest on the insured in order for the life policy to be valid?
At the time of application
Which of the following acts is an agent NOT authorized to do on behalf of an insurer?
Authorize claim payments
All of the following are Nonforfeiture Options EXCEPT
Automatic Premium Loan Option
Who is NOT required to sign a life insurance application?
Beneficiary
P died five years after purchasing a life policy. While investigating the claim, the insurer discovered material misrepresentations made by P during the application process. Which of these actions will the insurer take?
Beneficiary will be paid the Death Benefit
Which of the following policy features allows an insured to defer current health charges to the following year's deductible instead of the current year's deducitble?
Carryover provision
A policy loan is made possible by which of these life insurance policy features?
Cash value provision
P is a Major Medical policyowner who is hospitalized as a result of injuries sustained from participating in a carjacking. How will the insurer most likely handle this claim?
Claim will be denied
J is an agent who recently told a claimant that his rights might be impaired if he does not complete a release form within a specified time. What could this agent be found guilty of?
Coercion
On August 6, D submitted an application for a $50,000 Life Insurance policy and did not pay the initial premium. On August 18, D went to his doctor complaining of chest pains and some tests were given by the doctor. The life policy was delivered by the producer on August 20 and D explains what had recently taken place with the doctor. What action should the producer then take?
Collect initial premium along with a signed health statement
Which of the following correctly explains the actions an agent should take if a customer wants to apply for an insurance policy?
Complete the application and review the information with the customer prior to obtaining the customer's signature, then send the application off to the insurance company
K applies for a life insurance policy on herself and submits the initial premium with the application. She is given a receipt by the agent stating that coverage begins immediately if the application is approved. What kind of receipt was used?
Conditional
An insurance company receives E's application for an individual health policy. E did not complete all of the medical history questions because she could not remember the exact dates. E signed the policy and submitted it to the insurance company anyway. A few weeks later, E suffers a heart attack and is hospitalized without completing the medical history questions and paying the initial premium. E is not insured. Which of the following clauses details the conditions that E did not meet?
Consideration clause
What group term life feature permits an individual to depart from the group and continue to be covered without providing evidence of insurability?
Conversion
How are surrender charges deducted in a life policy with a rear-end loaded provision?
Deducted when the policy is discontinued
Which two entities regulate variable annuities?
Department of Financial Services; and Securities Exchange Commission
Which of the following health policy provisions states that the producer does NOT have the authority to change the policy or waive any of its provisions?
Entire Contract
Which of the following policy provisions prohibits an insurance company from incorporating external documents into an insurance policy?
Entire Contract
Which of these statements about a Guaranteed Insurability Option rider is NOT TRUE?
Evidence of insurability is required when the option is exercised
Term insurance has which of the following characteristics?
Expires at the end of the policy period
What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?
Family Maintenance Policy
After an insured gives notice of loss, what must he/she do if the insurer does not furnish forms?
File written proof of loss
Which organization was established to provide funds to protect an insured in the event of an insurer's insolvency?
Florida Life and Health Insurance Guaranty Association
What action should a producer take if the initial premium is NOT submitted with the application?
Forward the application to the insurer without the initial premium
Which of the following employees may NOT be excluded from a group life plan?
Full-time employees after the probationary period
Which type of renewability best describes a Disability Income policy that covers an individual until the age of 65, but the insurer has the right to change the premium rate for the overall risk class?
Guaranteed Renewable
How would a contingent beneficiary receive the policy proceeds in an Accidental Death and Dismemberment (AD&D) policy?
If the primary beneficiary dies before the insured
The type of annuity that can be purchased with one monetary deposit is called a(n):
Immediate annuity
Information obtained from a phone conversation to the proposed insured can be found in which of these reports?
Inspection report
The clause identifying which losses resulting from an accident or sickness are insured by the policy is called the:
Insuring clause
The clause in an Accident and Health policy which defines the benefit amounts the insurer will pay is called the:
Insuring clause
All of these Settlement options involve the systematic liquidation of the death proceeds in the event of the insured's death, EXCEPT:
Interest Only
A life insurance arrangement which circumvents insurable interest statutes is called:
Investor-Originated Life Insurance
What is the purpose of a Policy Summary?
It highlights the critical parts of the policy issued
Which of the following statements about accumulated interest earned on dividends from an insurance policy is TRUE?
It is taxed as ordinary income
Which of the following statements is CORRECT about the period in which a Term Policy can be converted?
It varies according to the contracts
On January 8, an applicant filled out an application for a life insurance policy but did not include the initial premium. The insurance company approved the application on January 14 and issued the policy January 15. The producer delivered the policy on January 26 and collected the first premium. When did the coverage become effective?
January 26
An engineering firm that would suffer financially from the death of a project manager should purchase a:
Key Person Life Policy
Stranger Originated Life Insurance (STOLI) has been found to be in violation of which of the following contractual elements?
Legal Purpose (Insurable Interest)
If an agent would like to sell Variable annuities, which state examination must the agent pass?
Life and Variable contracts
The Accelerated Death Benefit provision in a life insurance policy is also known as a(n):
Living Benefit
According to Florida law, which of the following information does NOT need to be obtained by an agent recommending an annuity purchase?
Marital status
According to the Time Payment of Claims provision, the insurer must pay Disability Income benefits no less frequently than which of the following options?
Monthly
What are adjustable rates for life policy loans in Florida based on?
Moody's corporate bond index
Which of the following is NOT an unfair claim settlement practice?
Needing written documentation of claim details
What type of renewability guarantees premium rates and renewability?
Noncancellable
P and Q are married and have three children. P is the primary beneficiary on Q's Accidental Death and Dismemberment (AD&D) policy and Q's sister R is the contingent beneficiary. P, Q, and R are involved in a car accident and Q and R are killed instantly. The Accidental Death benefits will be paid to:
P only
P completes an application for a $10,000 life policy, but does not give the producer the initial premium. P's coverage becomes effective when:
P receives the policy and pays the premium
M had an annual life insurance premium payment due January 1. She died January 10 without making the premium payment. What action will the insurer take?
Pay face amount minus the past due premium
Which of the following types of insureds are life insurance companies allowed to make policy rate discriminations against?
People that smoke
Which of these characteristics is consistent with a Straight Life policy?
Premiums are payable for as long as there is insurance coverage in force
What is considered to be a characteristic of a Conditionally Renewable Health Insurance policy?
Premiums may increase at time of renewal
T is covered by two health insurance plans: a group plan through his employer and his spouse's plan as a dependent. Under the Model Group Coordination of Benefits provision, when T files a claim, his employer's plan is considered the:
Primary carrier
Which of the following is NOT required in the Outline of Coverage for a health insurance policy?
Projection of the policy's future costs
When an insured has the same disability within a specified time period and the insurance company provides the same benefits without a new waiting period, the second disability is covered under which of the following benefits?
Recurrent Disability
Which type of policy pays benefits to a policyholder covered under a Hospital Expense policy?
Reimbursement
Which of these provisions require proof of insurability after a policy has lapsed?
Reinstatement
R had received full disability income benefits for 6 months. When he returns to work, he is only able to resume half his normal daily workload. Which provision pays reduced benefits to R while he is not working at full capacity?
Residual Disability
Agent J takes an application and initial premium from an applicant and sends the application and premium check to the insurance company. The insurance company returns the check back to J because the check is made out to J instead of the insurance company. What action should J take?
Return to the customer, collect a new check made out to the insurance company, and send the new check out to the insurance company
J would like to maintain the right to change beneficiaries. Which beneficiary designation should be used?
Revocable
Which of the following provisions is NOT required in HMO contracts/certificates?
Seven-day grace period
Which type of plan allows an employer to give money to an employee for buying a life insurance policy and also permits the employee to select the beneficiary?
Split-dollar plan
The insuring clause
States the scope and limits of the coverage
Which of the following is the reimbursement of benefits for the treatment of a beneficiary's injuries caused by a third party?
Subrogation
An agent selling Medicare Supplement policies must provide every applicant with a(n)
Suitability form
Which of the following costs would a Basic Hospital/Surgical policy likely cover?
Surgically removing a facial birthmark
What would the Medical Information Bureau (MIB) identify?
Testing positive for marijuana use from a previous screening
When applied to Whole Life insurance, the word "straight" denotes:
The duration of premium payments
Which of the following statements regarding a Tax Sheltered Annuity (TSA) is INCORRECT?
The income from the TSA is received income tax-free
J, an Accidental Death and Dismemberment (AD&D) policy holder, dies after injuries sustained in an accident. J's age as stated on the application five years ago was found to be understated by ten years. Which of the following actions will the insurance company take?
The insurer will adjust the benefit to what the premiums paid would have purchased at the insured's actual age
T was insured under an individual Disability Income policy and was severely burned in a fire. As a result, T became totally disabled. The insurer began making monthly benefit payments, but later discovered that the fire was set by T in what was described as arson. What actions will the insurer take?
The insurer will rescind the policy, deny the claim, and recover all payments made
According to Florida Law, in which of the following situations would a dependent handicapped child NOT be covered under a Family Health policy?
The premiums for the handicapped child are not paid
Which of the following statements is true about most Blue Cross/Blue Shield organizations?
They are nonprofit organizations
How does a typical Variable Life Policy investment account grow?
Through mutual funds, stocks, bonds
The policy provision that entitles the insurer to establish conditions the insured must meet while a claim is pending is:
Time Limit on Certain Defenses
Which Accident and Health policy provision addresses preexisting conditions?
Time Limit on Certain Defenses
A person insured under a health policy is required to give the insurance company a Notice of Claim within how many days after a covered loss?
Twenty
Which of the following is considered an accurate statement of an unfair trade practice?
Twisting involves an agent using misrepresentation to convince a policyowner to cancel their current policy so that they can purchase a new life insurance policy with another company
Which of the following is a characteristic of a variable annuity?
Underlying equity investments
According to Florida's rules on disclosure, a life insurance applicant is expected to be provided with
a Certificate of Coverage and Buyer's Guide
To be eligible for Social Security disability benefits, an employee must be unable to perform:
any occupation
In Florida, the underwriting and issuance of a master group health policy requires that all employees
are eligible to participate, regardless of their individual health history
The automatic premium loan provision is designed to:
avoid a policy lapse
The coordination of benefits (COB) provision exists in order to
avoid duplication of benefit payments
In order to establish a Health Reimbursement Arrangement (HRA), it MUST:
be established by the employer
A life insurance application must be signed by all of these, EXCEPT:
beneficiary
The guarantee of insurability option provides a long-term care policyowner the ability to:
buy additional coverage at a later date
An individual covered under a Group Life insurance policy is considered to be a(n)
certificate holder
The incontestable clause allows an insurer to:
contest a claim during the contestable period
What type of group insurance plan involves employees sharing the cost?
contributory plan
Florida's 14-day free-look period for life insurance policies begins at the
date of delivery
Medicare Part A and Part B do NOT pay for:
dental work
In Florida, an insurer domiciled and incorporated in this state is called a(n)
domestic company
The sections of an insurance contract which limit coverage are called:
exclusions
T is an agent and when hired, is reminded that he has a responsibility to handle clients' funds in an honest and ethical manner. This responsibility is referred to as
fiduciary responsibility
The Life and Health Insurance Guaranty Association is
funded by admitted insurance companies through assessments
The Florida Employee Health Care Access Act was established to make
group health insurance available to employers with up to 50 employees
When determining the monthly benefit amount for a Disability Income policy, the factor that limits the amount a prospective insured may purchase is:
income
The Accidental Death and Dismemberment (AD&D) provision in a life insurance policy would pay additional benefits if the insured:
is blinded in an accident
A license may be denied, suspended, or revoked if the licensee
is found guilty of misrepresentation
A stock insurance company
is owned exclusively by its shareholders
Pre-hospitalization authorization is considered an example of:
managed care
Rick recently died and left behind an individual IRA account in his name. His widow was forwarded the balance of the IRA. The widow qualifies for the:
marital deduction
Periodic health claim payments MUST be made at least:
monthly
If an insurance company issues a Disability Income policy that it cannot cancel or for which it cannot increase premiums, the type of renewability that best desribes this policy is called:
noncancellable
An example of unfair discrimination would be
offering different terms of coverage for different policyowners having the same risk classification
Under Florida law, a variable annuity policyowner must be notified of the accumulated value of the contract
once each year
Upon reaching the limiting age, a handicapped child can extend their health insurance coverage as a dependent
only if the child is incapable of employment and chiefly dependent on the policyowner
Whole Life insurance policies are contractually guaranteed to provide each of the following, EXCEPT:
partial withdrawal features beyond a surrender charge period
Insurance policies are considered aleatory contracts because
performance is conditioned upon a future occurrence
If a policyowner does not pay the premium by the due date, the
policyowner can make the premium payment during the grace period
According to Florida law, group life insurance conversion privileges must NOT
require evidence of insurability
What is the Suicide provision designed to do?
safeguard the insurer from an applicant who is contemplating suicide
Which of the following services is NOT covered under a hospitalization expense policy?
surgeon's fees
Which of the following statements is correct regarding an employer/employee group health plan?
the employer receives a master policy and the employees receive certificates
When replacing or exchanging an annuity, the agent must disclose to the annuitant
the possible tax ramifications as a result of the transaction
Under a Renewable Term policy,
the renewal premium is calculated on the basis of the insured's attained age
A Business Disability Buyout plan policy is designed:
to pay benefits to the Corporation or other shareholders
A term life insurance policy matures:
upon the insured's death during the term of the policy
A life insurance policyowner may sell their policy to a(n) _____ in order to receive a percentage of the policy's face value.
viatical settlement provider
An agent's license can be suspended or revoked by
writing primarily controlled business