Life & Health Law 1 (Chapter 26)

Which of the following would NOT be a consequence for aiding and abetting an unauthorized insurer? Conviction of a first-degree misdemeanor Conviction of a third-degree felony Liability for all unpaid claims Suspension or revocation of all insurance licenses

Conviction of a first-degree misdemeanor

Which areas of insurance have most frequently been plagued with unauthorized insurers: Health Insurance Life Insurance Annuities Property Insurance

Health Insurance Explanation:The state is concerned with the subject of unauthorized insurers. Please make sure you have an understanding of this subject.

68. Which of the following is NOT true concerning the Florida Insurance Guarantee Fund? All life, health, and annuity insurers are members as a condition of their authority to transact insurance in Florida Residents of other states whose company is domiciled in FloridaI t does not cover Health Maintenance insurance It automatically covers contracts covering Medicare Parts C & D

It automatically covers contracts covering Medicare Parts C & D

Defamation is all the following EXCEPT: It may be derogatory It is not meant to be maliciously critical It can be written (Libel) It can be spoken (Slander)

It is not meant to be maliciously critical Explanation:It's common for the state exam to try to confuse you between misrepresentation and defamation. Misrepresentation is about your own products or your own company, whereas defamation is generally about another person's products or another person's company. I like to think of misrepresentation as false promises about my own stuff and defamation as talking badly about others.

All the below are characteristics of a mutual company EXCEPT: Owned and controlled by policy owners Makes a profit for stockholders The policyholders elect a board of trustees or directors to manage the firm Pays dividends from surplus

Makes a profit for stockholders Explanation:Remember....A mutual company is owned by it's policy holders and is in business for the purpose of offering the same products at the lowest net price.Click Here, online supplemental course

Under Florida's Code of Ethics, rebating is declared unethical but may still be done if all of the following is adhered to except: The rebate must be available to all insureds in the same actuarial class The rebate must be uniformly applied to all who purchase the same policy The agent must file a rebating schedule with the insurance company issuing the policy Notice must be given to the Department of Insurance

Notice must be given to the Department of Insurance Explanation:Even though it is declared unethical, rebating is legal. A strict adherence to the requirements must be met.

Who is charged with rehabilitating or liquidating insurers where necessary? Office of Financial Regulation Office of Insurance Regulation Department of Rehabilitation Financial Services Commission

Office of Insurance Regulation Explanation:Most likely, the answer on the state exam will actually be the Department of Financial Services, which was not an answer here. The book gives two different answers to the same question, so here we made Office of Insurance Regulation the answer choice, just in case.

The following penalties may be imposed upon an agent by the Chief Financial Officer EXCEPT: Fines of $5,000 for nonwillful and $75,000 for willfully submitting fraudulent signatures on an application or other policy-related document Up to $50,000 for violation of a cease & desist order Fines of $5,000 for nonwillful and $75,000 for willful violations of twisting and churning Revocation of the agent's company contract

Revocation of the agent's company contract Explanation:It is worth it to be able to match the penalties and fines with the offense for the state exam.

An applicant asks an agent for a greater face value or death benefit than the agent's company is willing to offer a policy for. The agent places this application with another company who WILL offer a policy for that benefit. Even though the agent is NOT appointed with that company this would be: Excess or rejected business and is allowed Not allowed until the agents becomes appointed with the company Dejected business Surplus amounts

Surplus amounts Excess or rejected business and is allowedExplanation:Excess or rejected business is when amounts over what the company will issue or business that the company will write only on a sub-standard basis WOULD be accepted by another company at lower rates. An agent MAY place this business with another company AND receive commissions on what is called a "single-case" agreement. This is allowed in Florida.

Which of the following statements concerning an agent's license is not correct? The agent must report in writing, to the OIR, with-in 30 days of pleading guilty to a felony The insurance license will terminate if four years elapses without being appointed The insurance license is suspended automatically for bankruptcy An agent may appoint himself as an agent

The insurance license is suspended automatically for bankruptcy Explanation:The license will terminate if 4 years elapse. I just made the other choices up to throw you off.

An emergency cease and desist order would be issued by the Office of Financial Regulation in all of the following circumstances except: The office finds that a subpoenaed person has not appeared before the court. The office finds that the conduct of the financial institution is likely to cause insolvency. The office finds that the conduct of the financial institution is likely to cause substantial dissipation of assets or earnings. The office finds that the conduct of the financial institution is likely to cause substantial prejudice to the depositors or shareholders.

The office finds that a subpoenaed person has not appeared before the court. Explanation: When a subpoenaed person does not appear, the office may get a court order for the person to appear. Emergency cease and desist orders are used in the other three instances.

49. An individual becomes licensed, then appointed by a domiciled insurance company. He subsequently writes insurance on all his relatives. Which statement would be correct?This is called controlled business and is encouraged because family members would rather deal with someone they know. This is controlled business and could subject the agent to revocation of his license. This is rebating and is allowed. This is rebating and is not allowed.

This is controlled business and could subject the agent to revocation of his license. Explanation:Controlled business is business that an agent writes on himself, members of his family, employees of his business, etc. This will subject the agent to possible revocation of his license. Controlled business is allowed if the agent writes uncontrolled insurance (on the general public) equal to the value of the controlled business. I guess this is to prevent someone, like a majority stockholder in a bank, from getting licensed and then writing business on the debtors.

Miami Mutual rewards their clients with a matching deposit of 10% into their annuity when they open an account. Which statement below is correct? This is rebating and would be allowed. This is rebating and would not be allowed. This is twisting and would be allowed. This is twisting and would not be allowed.

This is rebating and would be allowed .Explanation:Rebating in Florida is an acceptable practice if certain conditions are met. Some of the conditions are as follows: 1. The insurer must rebate for all insureds in the same actuarial class who purchase the same policy and can not discriminate. 2. The amount or per centage of the rebate shall be the same for all. 3. Records must be kept for the most recent five years.

77. Of the following terms, which best describes the act of replacing existing life insurance with a new life insurance policy based upon incomplete or incorrect representations?Twisting Rebating Embezzlement Concealment

Twisting Explanation:Twisting is replacement plus misrepresentation.

Charging a risk in the same actuarial class as another a higher premium would be an example of: Unfair discrimination Coercion Rating Adverse selection

Unfair discrimination Explanation:Unfair discrimination is charging someone more because they have a "trait" like sickle cell". If they are in same actuarial class, there is no need to "rate" them.

Can an agent in charge be designated as the agent in charge for more than one location? Yes, as long as insurance activities requiring licensure as an agent do not occur at any location when the agent is not physically present Yes, provided that the agent in charge has a designated office at each location insurance activities may be conducted even if the agent in charge is not physically present Yes, the number of locations is unlimited and there are no requirements requiring physical presence No, an agent in charge may be named agent in charge of only one location

Yes, as long as insurance activities requiring licensure as an agent do not occur at any location when the agent is not physically present

All of the following describe an unaffiliated agent except: a licensed agent a limited lines agent one who is not appointed by an insurer one who is self-appointed

a limited lines agent

If an unauthorized insurer fails to pay part or all of the claim, who is responsible for paying the claim? the Department of Financial Services the Florida Life and Health Insurance Guarantee Association any agent involved in the transaction who knew, or reasonably should have known, that the insurance contract was made with an unauthorized insurer all of the above

any agent involved in the transaction who knew, or reasonably should have known, that the insurance contract was made with an unauthorized insurer. Explanation:The key here is that the insurer is unauthorized, meaning that it does not hold a certificate of authority to do insurance business in Florida. The Department and the Guarantee Association would not be responsible for such entities as they are illegal, and anyone representing such an entity commits a felony. An unauthorized insurer may also be called an unlicensed entity.

When MUST the Office of Insurance Regulation conduct a market conduct examination on domestic insurers? as often as warranted at least once every year at least once every three years at least once every five years

at least once every five years Explanation:The office MAY examine insurers as often as is warranted, but MUST examine each domestic insurer at least once every five years.

If a domestic insurer has held a certificate of authority for less than three years, how often must the Office of Insurance Regulation conduct an examination? as often as warranted at least once every year at least once every three years at least once every five years

at least once every year Explanation:The office must conduct an examination at least once a year if the insurer has held a certificate of authority for less than three years.

Any activity limiting a client's free choice regarding transacting insurance is: intimidation coercion defamation twisting

coercion Explanation:Ex. A bank requiring that to approve a loan would require a life insurance policy to pay off the loan should the applicant die would NOT be coercion unless the bank required the applicant to buy the policy from THEM.

The Department of Financial Services (department) have all of the following powers and duties except: enforce the insurance code enact laws relating to the insurance code conduct an investigation to determine if a person has violated the code employ actuaries

enact laws relating to the insurance code Explanation:Many people have reported seeing the word "enact" on the state exam. It's important to note that the word "enact" means to make law, which is reserved for Congress and not the Department of Financial Services. The department of Financial Services could be compared to the police in the sense that they enforce laws but do not enact them. The department may also employ actuaries.

39. The term agency refers to which of the following? agent adjuster location all of the above

location Explanation:An insurance agency is a business location at which someone is performing actions that may legally only be done by a licensed insurance agent, but it does NOT include the agent or adjuster themselves - it is specifically and only the business location.

All of the following would be found under the Unfair Trade Practices Act except: false advertising coercion discrimination rebating

rebating Explanation: Rebating is not an illegal act. However, there are strict guidelines that must be adhered to. If one were to discriminate while rebating, this would make rebating an illegal act because discrimination is covered under the unfair trade practices act.

All the following are major areas in which the Chief Financial Officer and the Office of Insurance Regulation are involved except: regulating banks with-in the state regulating policy forms, provisions and rates assessing insurer solvency issuing certificates of authority

regulating banks with-in the state Explanation:Bank activities are regulated by the Office of Financial Regulation.

Hoggie was licensed in March of 2010 and was appointed in April of the same year. In March of 2011 Hoggie gave up his appointment but maintained his license with the intent of returning to the business at a later time. What must Hoggie do to get reappointed in April of 2015? apply to the insurance company for reappointment pay all late fees and reapply for the appointment retake the examination continue to flip burgers and forget about it

retake the examination Explanation:Once you pass the state examination, you are licensed by the state. You will then be appointed by an insurance company. If 4 years go by without an appointment, you will need to retake the exam. ugh!

The term agent may include all of the following except: service representative life agent health agent title agent

service representative

Concealing coverage within a policy is considered: fraud sliding misrepresentation rebating

sliding Explanation:Concealing coverage within a policy is sliding, which means the agent is trying to sneak something additional into the policy for the purpose of increasing the premium and, therefore, the commission. Misrepresentation happens when you try to make your insurance company or policy look like it is better or offers more than it actually does. Rebating is an inducement to purchase a policy (usually a financial inducement).

Adding a rider or endorsement to a policy without the client's knowledge or telling them that the rider or endorsement is required by law would be an example of: coercion intimidation tacking on sliding

sliding Explanation:Telling the client that the rider (extra benefit) is included at no extra charge, adding benefits on without her knowledge, or that the extra benefit is required by law is SLIDING. The agent would do this for the higher premium and extra commission.

A company that charges different premiums for people in the same actuarial class could be found guilty of: twisting unfair discrimination segregation unfair trade practices

unfair discrimination Explanation:Unfair discrimination... The unfair trade practices act gives the CFO the power to investigate and impose penalties. The CFO would use this to fine a company if they were found guilty of discriminating.

57. Florida law requires anyone convicted of a felony to report this to the Office of Insurance regulation within: 10 days 30 days 45 days 60 days

30 days

An insurer may not deliver a policy, application, certificate rider, endorsement, or annuity contract until such forms have been approved by the Office of Insurance Regulation, and such forms have to have been filed with the office at least how many days before delivery to a consumer? 15 days 30 days 45 days 60 days

30 days Explanation:The insurer must file the forms with the office at least 30 days before being presented to an applicant. Once the form has been filed, if the office takes no action on the form for 30 days then the form is deemed approved.

Which of the following statements is/are true regarding misrepresentation? An innocent misrepresentation of a material fact is grounds to void a contract A fraudulent misrepresentation of an immaterial fact would not necessarily void the contract An advertisement that would cause a reasonable person to believe the state or federal government stands behind any returns on insurance products is a misrepresentation. All of the above

All of the above Explanation:Misrepresentation is discussed in detail in chapters 4 and 26 and is common on the state exam.

Of the following terms, which best describes the act of using cash value from one policy to purchase another policy from the same insurer?Twisting Rebating Embezzlement Churning

Churning Explanation:Churning is using the cash value from one policy to purchase another policy. It IS illegal replacement because the value of the previous policy has been reduced. Remember, anytime the values have been reduced and a new policy is issued, this constitutes replacement. Churning and twisting appear similar. Twisting is illegal replacement with another company.

Will the annual premium required for a 3% reserve interest assumption be greater or smaller than for a 3 1/2% reserve interest assumption? Smaller GreaterNot enough information to answer The annual premium has nothing to do with interest assumption

Greater Explanation:A "reserve interest assumption" is a fancy name for an interest rate that the company is making from its investments. The more money a company makes from its investments, the less it needs consumers to pay in premium, and vice versa. The questions asks about the premium, so since 3% is lower than 3 1/2%, the premium for the 3% interest rate would have to be higher than that of the 3 1/2% interest rate.

67. All the following types of insurance companies may be approved to operate in nearly all states EXCEPT:Fraternal Insurance CompaniesMutual Insurance Companies. (issue Par. Policies).Lloyds of London Stock Insurance Companies (issue Non Par. Policies).

Lloyds of London

Which of the following would make rebating a prohibited practice? rebating to all in the same actuarial class maintaining copies of all rebating schedules for the most recent 3 years maintaining copies of all rebating schedules for the most recent 5 years rebating without regard to discrimination

maintaining copies of all rebating schedules for the most recent 3 years

All of the following are characteristics of a mutual insurance company except: management elects the board of directors the policyowners are the owners of the company dividends, if any, are paid to the policyowners it must be incorporated in order to operate

management elects the board of directors Explanation:The policyowners have the right to elect the board of directors.

Willful violation of the Insurance code is a: third degree felony second degree misdemeanor first degree felony first degree misdemeanor

second degree misdemeanor