Life Insurance Chapter 11 Exam

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Advertising gifts not to exceed ___ are allowed to be given by an agent to a prospective client.

$25

A life policy loan in FL cannot charge a fixed rate of interest higher than what?

10%

What percentage of eligible persons must a policy cover in a noncontributory group?

100%

What is the minimum age at which a person can sign a life insurance application?

15 years

An insurance company can contest a life insurance contract due to application fraud within how many years?

2 years

How many hours of continuing education must a newly licensed agent complete every 2 years?

24

Agents that have been licensed for less than six years must complete __ hours of continuing education every two years.

24 hours

Within how many days must a licensee notify the Department of Financial Services of a change in address?

30 days

A group plan was recently terminated. In Florida, how many days are covered individuals guaranteed coverage after a group plan's termination?

31 days

How many days does an insurance company have to reject a reinstatement application before it is automatically reinstated?

45 days

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? *12 months *24 months *36 months *48 months

48 months or 4 years

Florida requires that an insurance agent must complete __ hours of continuing education on the subject of law and ethics every two years.

5 hours

In Florida, what is the max percentage of controlled business an agent may produce?

50%

An example of false advertising would be *Paid testimonials from celebrity endorsements *An insurer exaggerating its dividends in a magazine advertisement *An agent spending more than $25 on marketing gifts for a client *An insurer advertising in an insurance trade journal

An insurer exaggerating its dividends in a magazine advertisement

All of the following are Nonforfeiture Options EXCEPT: -Cash Surrender Option -Extended Term Option -Reduced Paid up Option -Automatic Premium Loan Option

Automatic Premium Loan Option

When is it acceptable to share commissions with another agent?

Both agents must be licensed for the same lines of insurance

How can an agent-in-charge have more than one location?

Only if the agent-in-charge is present when insurance activity occurs

K is an agent who made an improper sale of an annuity to a client. Which of the following corrective actions would the Department of Financial Services likely order K to take?

Pay monetary restitution to the client

According to FL Life Insurance replacement laws, a policyowner must be provided with a written Comparison and Summary Statement when its requested by:

Policyowner

If a policyowner does not pay the premium by the due date, the

Policyowner can make the premium payment during the grace period.

What is the purpose of the Insurance Guaranty Fund Association?

Protects policyowners against insolvent insurance companies

According to FL law, group life insurance conversion privileges must NOT what?

Require evidence of insurability

Which of these is NOT a legal entity for selling life insurance in FL? -Independent agency system -Risk management advisers -Career agency system -Personal producing general agency

Risk Management Advisers

A mutual insurance company and a stock insurance company have one main difference between them. What is this major contrast?

Stock company is owned by its shareholders. Mutual company is owned by its policyholders

Who owns a stock company?

Stockholders/Shareholders

Which of the following factors is NOT considered when the Department of Financial Services determines if an agents home is an insurance agency? -Listing the address on the agent's business cards -Business solicitation is done at this location -Clients are met at this location -The amount of premium collected at this location

The amount of premium collected at this location

During the application process, What is the agents primary responsibility?

The insurance company

W gave W's age as 50 when W purchased a Life policy. At the time of W's death seven years later, the company discovered W's true age at issue had been 59. What would the normal procedure be under the misstatement of age provision in regard to the payment of the death claim?

The proceeds would be reduced based on whatever the premium would have been if purchased at age 59.

Which of the following activities will NOT result in the suspension of an agent's license? -Making malicious and false statements about an insurer -Replacing an insurance policy from one insurer to another based on misrepresentation -Working for a foreign insurer -Misrepresenting any fact about an insurance policy

Working for a foreign insurer

During the course of an insurance transaction, if an agent makes a false or incomplete statement, he/she could be guilty of what?

Misrepresentation

Which Unfair Trade Practice involves an agent telling a prospective client that a policy's dividends are guaranteed? *Coercion *Fraud *Misrepresentation *Sliding

Misrepresentation

What is a stock life insurance company that issues both participating and nonparticipating policies is doing business on?

Mixed Plan

What are adjustable rates for life policy loans in Florida based on?

Moody's Corporate Bond Index

Which type of insurance company allows their policyowners to elect a governing body?

Mutual Company

Which of the following professional organizations has its code of ethics incorporated into Florida Law?

National Association of Insurance and Financial Advisors (NAIFA)

Which of the following is NOT an unfair settlement practice? -Failing to acknowledge and act promptly with respect to an insurance claim -Compelling an insured to initiate a lawsuit by offering less on an insurance claim -Failing to accept or deny a claim within reasonable time after proof of loss is submitted -Needing written documentation of claim details

Needing written documentation of claim details

According to FL law, a Group Life insurance policy requires a minimum of how many insureds?

No minimum

What documents must an agent submit to the replacing insurance company during the replacement of an existing life insurance policy?

Notice to existing and replacing insurers of intentions to replace

In FL, agents are allowed to engage in rebating if?

Offered to all insureds in the same actuarial class

What is an example of rebating?

Offering a client something of value not stated in the contract in exchange for their business.

Under Florida law, a variable annuity policyowner must be notified of the accumulated value of the contract how many times?

Once each year

In order for a domestic foreign, or alien insurance company to conduct business, it must be authorized by whom?

The state where they are conducting business

Group Life policies in Florida are required to contain a conversion privilege that allows for a conversion?

To an individual policy for a stated period of time

An example of an unfair claims settlement practice is what?

Turning down a claim without providing the basis of denial.

An agent who makes misleading statements that lead to the termination of an existing insurance policy so that a new policy with another insurer can be taken out has committed

Twisting

What does twisting mean?

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 so that they can purchase a new life insurance policy with another company

What can a life insurance policyowner may sell their policy to an ____ in order to receive a percentage of the policy's face value

Viatical Settlement Provider

When can The Financial Services Commission may hold hearings?

for any reason deemed necessary

Convincing a prospective insured to buy an insurance policy based on exaggerations is called?

Misrepresentation

Defamation occurs when an agent makes a false statement intended to

Malign or maliciously attack another insurer

According to Florida law, an additional lapse notice must be issued after the standard grace period has expired for policyowner age

64 years or older

How is a foreign insurance company doing business in Florida formed?

A company that was formed under the laws of another state

In Florida, deceptive advertising is considered to be

A form of misrepresentation

What is Florida's definition of Life insurance replacement?

A transaction in which a new policy is bought and an old policy is terminated.

Stock Insurance Company

A type of insurance company owned by stockholders/shareholders.

All of the following will result in the suspension of an agent's license EXCEPT: -Intentionally misrepresentation -Acting with fiduciary responsibility -Forging a name on an insurance application -Being convicted of a felony

Acting with fiduciary responsibility

Which of the following employer tasks does a Professional Employer Organization normally handle?

Administration Tasks

Insurance companies that are organized in countries outside the US are referred to as:

Alien

What type of insurance company is domiciled in England, but conducts business in FL?

Alien

J owns a business and has a Group Life policy covering her employees. J decides to cancel the policy by letting it lapse on the renewal date. What action must be taken?

All of the employees must be notified of cancellation by the insurance company or through J

Which of the following is considered to be misrepresentation? -Replacing an existing policy with a new one -An agent guaranteeing a policy's dividends -Sharing commissions with other licensed agents -Representing a foreign insurer

An agent guaranteeing dividends

What is an example of an unfair trade practice?

An agent making a material misrepresentation to the insured

All of the following entries are classified under the four principal areas of Florida insurance law EXCEPT: -An agent's commission -Policyowner's rights -Policy provisions -An agent's licensing requirements

An agent's commission

Which of the following situation does not apply to the Florida Replacement Rule? -An existing policy is reissued with a reduction in cash value -A new policy issued while an existing one is surrendered -An existing policy is subject to extensive borrowing -An existing policyholder purchases an additional policy from the same insurer

An existing policyholder purchases an additional policy from the same insurer

A variable life insurance agent must be licensed and appointed as a life and variable contract agent, as well as an what?

Broker Dealer

What can an agent provide to help a prospective client understand and purchase the most appropriate product?

Buyer's Guide

According to Florida's rules on disclosure, a life insurance applicant is expected to be provided with what?

Buyer's Guide and Policy Summary

The insurer must provide a prospective buyer with a(n)

Buyer's Guide and Policy Summary

What is an individual covered under a Group Life Insurance Policy is considered to be?

Certificate Holder

One definition of replacement is the act of replacing an existing insurance policy with another. What is Replacement?

Closely regulated and requires full disclosure

As a condition for a loan, a bank requires the borrower to purchase credit insurance from a specific company. What is the bank guilty of?

Coercion

In FL, which of the following is considered an Unfair Trade Practice? -Replacement -Coercion -Aleatory -Subrogation

Coercion

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

Which of the following is an example of Unfair Trade Practice -Shared Commissions -Fiduciary -Replacement -Coercion

Coercion

The policy summary contains specific information on all of the following, EXCEPT: -Provisions -Benefits -Commission -Coverage

Commission

An applicant who pays the initial premium at the time of application is typically given a:

Condition Receipt

According to Florida law, which of the following information does NOT need to be obtained by an agent recommending an annuity purchase?

Martial Status

All of the following are eligibility requirements for an association group EXCEPT: -Group must have been in existence for two years -Contributory plans require a minimum of 25 participants -Group must hold regular meetings at least on an annual basis -Must have been organized for some reason other than to obtain group insurance

Contributory plans require a minimum of 25 participants

When does Florida's 14-day free-look period for life insurance policies begins.

Date of delivery

Which of the following unfair trade practices involves an agent who makes malicious statements about another person's financial condition?

Defamation

What two entitles regulate variable annuities?

Department of Financial Services and Securities Exchange Commissions

In Florida, an insurer domiciled and incorporated in this state is called an

Domestic Company

What is it called when an insurance company incorporated under the laws of the state in which its home office is located?

Domestic Company

An example of an unfair claim practice would be:

Failing to effectuate prompt, fair and equitable settlements of a claim.

T is an agent an when hired, is reminded that he has responsibility to handle clients funds in an honest and ethical manner. This responsibility is referred to as

Fiduciary Responsibility

Which of the following is NOT a consequence for placing business with an unauthorized insurer? -Third degree felony -First degree misdemeanor -Insurance license revoked -Responsible for unpaid claims

First degree misdemeanor

In Florida, when agents recommend changes be made for existing coverage the agent must follow established procedures. The name of this rule is called what?

Florida Replacement Rule

Which organization was established to provide funds to protect an insured in the event of an insurer's insolvency?

Florida's Insurance Guaranty Fund Association

In FL, an insurer licensed to conduct business in FL but domiciled in New Jersey is called?

Foreign Company

Which of the following employees may NOT be excluded from a group life plan?

Full-time employees after the probationary period

How is the Insurance Guaranty Fund Association Funded? -An entity that assists in underwriting large insurance policies -Funded by admitted insurance companies through assessments -Funded by the state government -Administered by the Federal Government

Funded by admitted insurance companies through assessments

All of these are prerequisite for becoming a licensed agent EXCEPT: -Complete a pre-licensing course -Resident of FL -Be at least 18 years or older -Graduate from high school

Graduate from high school

What is a standard provision of the conversion privileges in a Group Life Policy?

Group Life coverage can be converted to an individual policy at regular rates on an attained age basis

What would be an accurate definition for controlled business?

Insurance business that is written on the agents own life property or interests

Which of the following situations are NOT subject to Florida life insurance laws? -Insurance companies day to day operations -Insurance companies life policy replacement requirements -Insurance companies setting of life insurance policy rates -Insurance companies guidelines for paying a life insurance claim

Insurance companies day to day operations

In Florida, an element of an insurance transaction would be what?

Issuing an insurance contract

According to Florida law, which of the following statements accurately describes an admitted mail order insurance company?

It may solicit insurance business by mail without the assistance of a licensed agent.

Who is a mutual insurance company owned by?

Its policyholders

If an agent would like to sell Variable annuities, which state examination must the agent pass?

Life and Variable Contracts

What is the main reason for regulating the insurance industry?

Maintain the solvency of insurance companies.


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