Unit 11: Florida Statutes, rules, and regulations pertinent to LIFE AND ANNUITY insurance, including variable products

An advertisement must not refer to a premium solely as a "______."

"deposit."

An annuity contract issued to a senior consumer who is the age of 65 or older may not contain a surrender or deferred sales charge for a withdrawal of money from an annuity exceeding _____ of the amount withdrawn

10%

In Florida, a violation of controlled business exists if the department finds that during a ____-month period, the premium writings represented by a licensed and appointed agent exceed ____ of the aggregate amount of commissions and compensation received.

12, 50%

What is the free look provision for life insurance?

14 days

For purposes of any life insurance policy that provides a grace period of more than 51 days for nonpayment of premiums, the notice of impending lapse in coverage required by this section must be mailed to the policyowner and the secondary addressee at least ______before the expiration of the grace period provided in the policy.

21 days

What is the free look provision for annuity contract?

21 days

Florida statute requires a policyowner for an individual life policy to be granted a period of not less than ____ within which payment of any premiums may be made. The statute also provides the option to the insurance company, the ability to impose an interest charge of 8% per year for the number of days elapsing before the premium is paid.

30 days

Unfair Discrimination

Knowingly making or permitting unfair discrimination between individuals of the same actuarially supportable class and equal expectation of life, in the rates charged for a life insurance or annuity contract, in the dividends or other benefits payable thereon, or in any other term or condition of such contract.

Misrepresentation and false advertising

Knowingly making, issuing, circulating, or causing to be made, issued, or circulated, any estimate, illustration, circular, statement, sales presentation, omission, comparison, or property and casualty certificate of insurance altered after being issued, which Misrepresents the benefits, advantages, conditions, or terms of any insurance policy.

A copy of a ______ and a ______ must be provided before accepting any applicant's initial premium or premium deposit.

Buyer's Guide , policy summary

A group life insurance policy, shall provide that if a person insured under the policy dies during the period within which they would have been entitled to have an individual policy issued, and before such an individual policy has become effective, the amount of life insurance that they would have been entitled to have issued under the individual policy shall be payable as a claim under the group policy, whether or not application for the individual policy or the payment of the first premium has been made.

Death during conversion

Boycott, coercion, and intimidation

Entering into any agreement to commit, or by any concerted action committing, any act of boycott, coercion, or intimidation resulting in, or tending to result in, unreasonable restraint of, of monopoly in, the business of insurance.

_______ means the Financial Industry Regulatory Authority or a succeeding agency

FINRA

Unlawful rebates

Paying, allowing, or giving, or offering to pay, allow, or give, directly or indirectly, as inducement to such insurance contract, any unlawful rebate of premiums payable on the contract, any special favor or advantage in the dividends or other benefits thereon, or any valuable consideration or inducement whatever not specified in the contract

When an applicant misstates their ______ on an application, the insurance company will adjust the coverage to reflect the corrected age according to the premiums paid.

birthdate

A group life insurance policy must provide a provision that states that after a policy has been in force for ____ years, the insurance company cannot void it because of misrepresentation or concealment by the insured in obtaining the policy.

two

The following statements, or wording that may be misleading, shall not be used in a policy solicitation of a direct response:

"No salesman will call.", "No agent will call.", "By eliminating the agent and or commission we can offer this low-cost plan."

A replacing agent must submit, with each life insurance application or annuity contract?

A statement signed by the applicant indicating if the new insurance will replace an existing life insurance or annuity policy. A signed statement (agent's report) indicating if the replacing agent knows if a replacement is involved in the transaction.

Advertising and promotional gifts and charitable contributions permitted

An agent or insurance company may give any article of merchandise, goods, wares, store gift cards, gift certificates, event tickets, anti-fraud or loss mitigation services, or other items having a total value of $100 or less per insured or prospective insured in any calendar year.

______ means an insurance product under state law that is individually 12 solicited, whether classified as an individual or group _____.

Annuity

When replacement is expected or may be involved, the agent must?

At the time of application, have the application sign a Notice to Application Regarding Replacement of Life Insurance form. It should be signed by both the applicant and the producer, and a copy should be left with the applicant. Leave with the applicant a copy of all sales proposals used in the presentation to the applicant. Submit to the replacing company a completed copy of the Notice to Applicant Regarding Replacement of Life Insurance, a copy of all sales proposals, and a completed application.

A ____ and a _____ must be provided to an applicant before 36 an insurance agent accepts the prospective insured's initial premium. The purpose of these documents is to provide disclosure statements that assist an applicant in making an informed and educated decision about the insurance they are about to purchase. Florida statute requires that both these documents be delivered during or before policy delivery.

Buyer's Guide, policy summary

The Florida Administrative Code states that an advertisement must not refer to an annuity as a ___annuity

CD

The _____ requires an agent to inform the prospective purchaser of the name of the insurance company they are representing before they perform a life insurance sales presentation. It also expresses that an agent cannot use a term, such as planner, consultant, or advisor in any way that would imply that they are engaged in that form of business if that is not the case.

Florida Life Insurance Solicitation Law

The _______ sets the procedures that an insurance company and its agents must follow when offering a prospective insured a policy that will replace an existing life insurance or annuity contract with a new form of insurance.

Florida Replacement Rule

The existing insurance company is the company whose policy is being replaced. What must the existing insurance company do?

Furnish the policyowner (when requested) a completed Comparative Information Form concerning the existing insurance. Maintain a file containing copies of all replacement material, including the Notice to the Applicant Regarding Replacement of Life Insurance and Comparative Information forms. Index the material and maintain it for a period of at least three years or until the conclusion of the next regular examination by the Florida DFS.

Twisting

Knowingly making any misleading representations or incomplete or fraudulent comparisons or fraudulent material omissions of or with respect to any insurance policies or insurers for the purpose of inducing, or tending to induce, any person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on, or convert any insurance policy or to take out a policy of insurance in another insurer.

Defamation

Knowingly making, publishing, disseminating, or circulating, directly or indirectly, or aiding, abetting, or encouraging the making, publishing, disseminating, or circulating of, any oral or written statement, or any pamphlet, circular, article, or literature, which is false or maliciously critical of, or derogatory to, any person and which is calculated to injure such person.

Agent's responsibilities at the time of sale must?

Make a record of any recommendation made to the consumer; Obtain the consumer's signed statement documenting their refusal to provide suitability information, if applicable; and Obtain the consumer's signed statement acknowledging that an annuity transaction is not recommended if they decide to enter into an annuity transaction that is not based on the insurer's or its agent's recommendation, if applicable.

When advertising a life insurance policy or annuity contract, the contract must clearly reflect the following items:

Name of the insurance company, Name of the licensed insurance agent, Policy form number(s), Type of plan, Premium payable, Payment period and Changes to face amounts and premiums (if applicable)

What must the replacing company must submit, in writing?

Notice of the proposed replacement, to the existing insurance company, within five days of the date of application. A completed Comparative Information Form (if requested) regarding the proposed insurance to the applicant.

The replacing insurance company requires its insurance agent to?

Provide a list of the applicant's life insurance or annuity contracts that are intended to be replaced, Provide a copy of the signed Notice to Application Regarding Replacement of Life Insurance form.

_________ means advice provided by an insurer or its agent to a consumer that would result in the purchase, exchange, or replacement of an annuity in accordance with that advice.

Recommendation

______ means a transaction in which a new policy or contract is to be purchased, and it is known or should be known to the proposing insurer or its agent that by reason of such transaction an existing policy or contract will be: Lapsed, forfeited, surrendered, or partially surrendered, assigned to the replacing insurer, or otherwise terminated. Converted to reduced paid-up insurance, continued as extended term insurance, or otherwise reduced in value due to the use of nonforfeiture benefits or other policy values etc.

Replacement

Sliding

Representing to the applicant that a specific ancillary coverage or product is required by law in conjunction with the purchase of insurance when such coverage or product is not required; Representing to the applicant that a specific ancillary coverage or product is included in the policy applied for without an additional charge when such charge is required; or Charging an applicant for a specific ancillary coverage or product, in addition to the cost of the insurance coverage applied for, without the informed consent of the applicant.

_______ means information related to the consumer that is reasonably appropriate to determine the suitability of a recommendation made to the consumer, including the following: Age, annual income, financial stituation and needs, including the financial resources. Financial experience. Financial objectives. Intended use of the annuity. Financial time horizon. Existing assets, including investment and life insurance holdings. Liquidity needs. Liquid net worth. Risk tolerance. Tax status.

Suitability information

Every insurance policy issued in the state of Florida must specify the following?

The names of the parties tot he contract, the subject of the insurance, the risk insured against, the policy period (effective dates of coverage), the premium, the conditions pertaining to the insurance, the form numbers and edition dates of all endorsements attached to the policy.

As with individual contracts, a copy of the ______ is attached to the back of the policy when issued. All statements made by the policyholder are considered representations and not warranties.

application

An advertisement that involves an invitation to join an ______, ______, or ______, must solicit the insurance on a separate and distinct application that requires separate signatures for each application.

association, trust, discretionary group

In accordance with Florida law, upon the conclusion of a hearing for an unfair trade practice or unfair or deceptive act or practice, the department may issue an order requiring the violator to __________ from engaging in such activity. The department or office, at its discretion, may order a suspension or revocation of any person's certificate of authority or license. The department or office may also order a monetary penalty not to exceed $50,000.

cease and desist

The final item an insurance agent should be familiar with is the _____. This ____ is an outline of acceptable conduct and behaviors, sometimes known as _______ that are derived from model legislation developed by the National Association of Insurance Commissioners (NAIC) and the Florida Association of Insurance and Financial Advisors (FAIFA).

code of ethics, marketing ethics

Before executing a replacement or exchange of an annuity contract resulting from a recommendation, the agent must provide, on an approved form, information that ______ the differences between the existing annuity contract and the annuity contract being recommended in order to determine the suitability of the recommendation and its benefit to the consumer.

compares

In the state of Florida, if a policyowner names their spouse as a beneficiary and subsequently divorces or legally dissolves their marriage, the spousal beneficiary will be considered void if the beneficiary designation was made prior to the ________.

divorce

What five categories are eligible for group coverage?

employer-employee group, labor union group, trustee group, debtor group, association group, and credit union member.

If an insurance policy becomes a claim during the _______, the insurance company may deduct the amount of the premium due and up to 8% interest per year from the settlement.

grace period

Florida statute entitles a policyowner of a _______ policy to be granted a period of not less than 31 days within which payment of any premiums, excluding the first, may be made. If an insured under the group policy dies during the grace period, the death benefit will be paid

group life insurance

An _____ is responsible for all of its advertisements, regardless of who wrote, created, presented, or distributed them. When soliciting or selling insurance products, Florida law requires agents to indicate to prospective insureds that they are acting as insurance agents concerning insurance products and identify the insurers or other risk-bearing entities that are authorized under this code and approved by the office to do business in this state.

insurance company

The department or office shall have the power and right to conduct ___________ in the event to determine if an individual or party has engaged in any unfair method of competition or unfair or deceptive act or practice.

investigations and hearings

The owner of a life insurance contract has the right to change the beneficiary listed on the policy at any time unless such a beneficiary is designated as ________.

irrevocable

Fraud

is an intentional concealment or misrepresentation of a material fact that is used for the purpose of inducing another party to make or refrain from entering into a contract, or to deceive or cheat a party.

Controlled business

is any coverage written by a licensed and 44 appointed insurance agent on their own life, health, or property, and/or that of the agent's immediate family or business associates.

Churning

is the practice whereby policy values in an existing life insurance policy or annuity contract, including, but not limited to, cash, loan values, or dividend values, and in any riders to that policy or contract, are directly or indirectly used to purchase another insurance policy or annuity contract with that same insurer for the purpose of earning additional premiums, fees, commissions, or other compensation

If an advertisement contains an earnings performance designation, such as a rate to be earned, an interest, or a rate of return, it must be prominently disclosed to the ______ or ______.

policyholder, certificate holder

Insurers and agents must maintain or be able to make available to the office or department ________ of the information collected from the consumer and other information used in making the recommendations that were the basis for insurance transactions for five years after the insurance transaction was completed by the insurer.

records

A group life insurance policy must contain a provision that permits an insurance company to require that an individual be able to provide ______ proof that they are insurable for the coverage requested.

satisfactory

Florida statute requires that a contract for life insurance issued or issued for delivery in this state, covering a natural person who is the age of 64 years or older that has been in force for at least one year, may not be lapsed for nonpayment of premium unless, after expiration of the grace period, and at least 21 days before the effective date of any such lapse, the insurer has mailed a notification of the impending lapse in coverage to the policyowner and to a specified _______ if such addressee has been designated in writing by name and address by the policyowner.

secondary addressee

The purpose of ______ is to establish a system to ensure that the insurance needs and financial objectives of consumers are appropriately addressed at the time of the transaction of an annuity product.

suitability

An executed copy of this form must be provided by the agent to the insurer, or to the person or entity that has contracted with the insurer to perform this function as authorized by this section, within _______ after execution of the form, and must be provided to the consumer no later than the date of delivery of the contract or contracts.

ten days

When an individual separates from their group, whether due to ______ or______, the individual is entitled to an individual life insurance policy, issued by the insurance company without proof of insurability, provided the individual makes an application and first premium payment within 31 days after such separation.

termination, self-separation

Replacing insurance companies must maintain copies of all replacement material and sales materials, along with a replacement register cross-indexed by agent and existing insurance company, to be replaced, for a period for at least _______ or until the conclusion of the next regular examination by the Florida Department of Financial Services (DFS).

three years