2-15

The maximum rate of interest on a life insurance policy loan in Florida is:

10 % simple

In Florida the free-look period for life insurance contracts is:

14 days

Life insurance sold in Florida covers suicide after:

2 years

MEDICARE

A federal program of health insurance for persons 65 years of age and older

Stock Insurance Company

A private organization organized and incorporated under state laws for the purpose of making a profit for its stockholders (shareholders). Also referred to as a nonparticipating company.

Both contracting parties take a chance, and if the risk never occurs, no claim will be paid. This is what?

ALEATORY

A Reinsurer is a company that

ASSUMES a portion of the risk from another insurer

Misstatement of age can result in:

Adjustment of premiums or death benefits

Other Methods of Selling Insurance

An insurer using direct selling and mass marketing methods deals directly with consumers by selling its policies through vending machines, advertisements, or salaried sales representatives. No agent or broker is involved. Also includes Internet, newspaper, magazine, radio, and television ads. Provide exposure to large groups of consumers, often using direct selling methods with occasional follow-up by agents.

Counteroffer

An offeree's response to an offer in which the offeree rejects the original offer and at the same time makes a new offer.

In Florida , properly licensed and appointed agents may act as brokers in insurance transactions, in which case they may legally represent

Applicant and Insured

All of the following elements are required of a contract EXCEPT:

Assignment

Transfer of ownership of a life insurance policy is facilitated by:

Assignment provision

Under an Accidental Death and Dismemberment (AD&D) policy, insurable interst must exist at which of the following times?

At the inception of the policy

Implied Authority

Authority that is not expressed or written into the contract, but which the agent is assumed to have in order to transact the business of insurance for the principal.

What documents must be given to the insurance applicant at the time of application? Agents license and identification documents

Buyers guide and policy summary

Which of the following is true about a void contract?

CANNOT BE ENFORCE BY NEITHER PARTY

Which of the following is not a characteristic of an insurable risk?

CATASTROPHIC

Insurance policies are offered on a "take it or leave it" basis and referred to as which of the following types of contracts?

Contracts of Adhesion

The repeal of the Glass-Stegall Act allows for: Anti-trust action

Cross lines of financial service

2001 Patriot Act

Determine money laundering and detecting terrorism

The term "aleatory" refers to:

Exchange of unequal values

Federal Trade Commission (FTC) directly supervises all insurance marketing activities

FALSE

Reinsurer usually deal with policyholder/ owner

FALSE

Which of the following laws requires and insurer to notify an applicant in writing that an investigative consumer report may be made on the applicant?

Fair Credit Reporting Act (Insurance Information and Privacy Protection Act)

How does a insurer prove its competency ?

Holding a COA (cert. of Author.)

All of the following are concepts are associated with Utmost Good Faith, except?

INSURABLE INTEREST

Waiver in an insurance contract applies to the:

INSURER

1970 Fair Credit Reporting Act

In an attempt to protect an individual's right to privacy, the federal government passed the Fair Credit Reporting Act, which is the authority that requires fair and accurate reporting of information about consumers, including applications for insurance. 3 day to report that report were obtain 5 days if insurer request

1959 Intervention by the SEC

In this instance, the issue was variable annuities: Is a variable annuity an insurance product that should be regulated by the states or a securities product that should be regulated federally by the Securities and Exchange Commission (SEC)? The Supreme Court ruled that federal securities laws applied to insurers that issued variable annuities and, thus, required these insurers to conform to both SEC and state regulation. The SEC also regulates variable life insurance.

In an insurance transaction, licensed agents legally represent which of the following

Insurer

The provision in a life insurance policy that sets forth the company's basic promise to pay benefits upon the insured's death is called?

Insuring clause

What effect will a policy loan on a life insurance policy have at the time of insured's death?

Loan amount and interst and deducted before benefits are paid

What was accomplished by the enactment of Public Law 15, the McCarran-Ferguson Act?

Made it clear that continued regulation of insurance by the states was in the public's best interest Next »

Competent Parties

Minors, mentally incompetent, persons under influence of drugs or alcohol do not have legal capacity.

Owner of store is worried that staff is stealing inventory since she not paying, what kind of Hazard is described ?

Moral

Fraternal Benefit Societies

Must be nonprofit, have a lodge system, and offer insurance to its members only' SOCIAL, CHARITABLE, BENEVOLENT ACTIVITES

Participating policies are sold by:

Mutual companies

OASDI

Old Age, Survivor, and Disability Insurance; Social Security legislation since 1937 that provides federal benefits for certain individuals and their families, funded by the FICA tax.

Offer and Acceptance

One party must make an offer and the other party must accept the offer

Examples of risk avoidance except

Paying insurance prem.

Tornado is a type is an example of

Peril ( cause)

The NAIC strives to do what?

Preserve state rather than federal regulaion of the insurance industry

The PRIMARY purpose of Medicaid is to:

Provide Medical Expense coverage to persons meeting certain minimum income requirements

An agent refunds a portion of his commission to his client as an inducement to purchase an insurance policy. This is called:

REBATING

When the insured makes a statement in the application, and they believe it to be true, this is known as what?

REPRESENTATION

Lapsed life insurance policies may be reinstated by virtue of:

Reinstatement provision

Life insurance policy dividends are:

Return of part of the premium paid

Installing storm shutters on your home is an example of:

Risk reduction

advertising code

Rules established by the National Association of Insurance Commissioners (NAIC) to regulate insurance advertising.

The purpose of the Medical Information Bureau (MIB) is to:

Share medical data among member companies

SMI

Supplemental medical insurance (Medicare)

After 2 years, the insured assigns ownership to the investors, who make the premium payments and will receive the death benefit when the insured dies

TRUE

NAIC has standing committees that work regularly to examine various aspects of the insurance industry

TRUE

An agent who deposits the insureds premium into his own personal checking account has violated what?

The Fiduciary Rules

Which of the following statements pertaining to the Medical Information Bureau is CORRECT?

The MIB provides assistance in the underwriting process

Apparent Authority

The appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created.

Express Authority

The authority granted to an agent by means of the agent's written contract.

An agent takes an application from a customer and does not collect any premium. If the policy is issued by the insurer, when is the policy actually effective?

The date the agent delivers the policy and collects the premium and a statement of continued good health

A married insured has an Accidental Death and Dismemberment (AD&D) policy that names his brother as the primary beneficiary and his son as the contingent beneficiary. If the insured and his brother ar both killed instantly in a train accident, the policy proceeds would be paid to which of the following?

The insured's son

All the following information is provided to the certificate holder on a group life policy EXCEPT?

The name and license ID of the insurance agent who took the application

Subrogation

The transfer to the insurance from insured to insurer

1945-The McCarran-Ferguson Act (Public Law 15)

This law made it clear that the states' continued regulation of insurance was in the public's best interest.

The term "Competent" as applied to an insurer means all of the following, except?

Unauthorized

The Social Secutiry program provides all of the following benefits EXCEPT?

Workers compensation

warranty

a guarantee that a product meets certain standards of quality

Risk Retention Group

a mutual insurance company formed to insure people in the same business, occupation, or profession

Reinsurer

a specialized branch of the insurance industry because they insure insurers

special features of insurance contracts

aleatory, adhension, unilateral, conditional and valued or indemnity and utmost good faith

Buyer's Guide and Policy Summary

an insurer must provide these to any prospective purchaser upon request or prior to accepting the applicant's initial premium or premium deposit unless there is a 14 day free-look provision.

Consideration

applicant in exchange for the insurers promise to pay

producers are expected to adhere to al of the following standard t protect consumers and promote consumers and promote suitable sales except :

assessing prospects financial ability to pay commissions

Easter egg

business, trust, estates

National Association of Insurance Commissioners (NAIC)

encourage uniformity is state insurance laws and regulations preserve state regulations of the insurance business

Self-Insurers

establishes a self-funded plan to cover potential losses instead of transferring the risk to an insurance company

Agent Authority

express, implied, apparent

Concealment

fraudulent failure to disclose a material fact

The Entire Contract Provision in a life insurance policy states that all of the following constitute the entire contract, except:

future changes to the policy

An appointment is defined as what?

he authority given by an insurer to transact insurance or adjust claims

Pure risk are

insurable ( loss no gain )

Accelerated Benefits Provision allows:

insured to receive portion of death benefits while alive

Mutual Insurance Company

issues participating policies and is owned by the policyholders who receive non-taxable dividends as a return of unused premium

which of the following insurance concept founded on the ability to predict # of frequency disability and deaths within a certain group during a specific time?

law of large #

Insurance Producers

license agen who sells insurance

Element of Insurable Risk

loss must be due to chance loss must be measurable loss exposure randomly and large selected loss CAN NOT BE CATASTROPHIC

unfair trade practice acts

misrepresentation and false advertising; tie-in sales; rebating; other deceptive practices

General law of contracts

offer and acceptance consideration legal purpose competent parties

Medicaid

program that provides medical benefits for low-income persons.

State Guaranty Association

protect policy owners in the event of any insurance company going out of business, becoming insolvent, or the in ability to pay claims

1999 Financial Services Modernization Act

repealed the Glass Steagall Act. Under this new legislation, commercial banks, investment banks, retail brokerages, and insurance companies can now enter each other's lines of business.

All of the following are common exclusions in a life insurance policy in Florida, except:

scuba diving

Legal Purpose

the object of the contract and the reason the parties enter into the agreement must be legal.

Insurable Interest

the person applying for the policy must be at risk of suffering a significant loss if the insured dies

Stranger-Originated Life Insurance (STOLI)

transactions are life insurance arrangements where investors persuade individuals (typically seniors) to take out new life insurance.

Buying insurance is one of the most effective ways of

transferring risk

Risk can be best defined as

uncertainty regarding financial loss

Adjustment of premiums or death benefits Next »

void

Utmost Good Faith

warranty, representation, concealment