8 - Florida Laws and Rules Pertinent to Insurance
In Florida, monthly-premium health insurance policies must provide a grace period of at least
10 days
Within how many days after policy delivery can a Medicare Supplement policy be returned for a 100% premium refund?
30
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
Florida requires that an insurance agent must complete __ hours of continuing education on the subject of law and ethics every two years.
5
According to Florida law, an additional lapse notice must be issued after the standard grace period has expired for policyowners age
64 years or older
What do Dread Disease policies cover?
A specific disease or illness
Which of the following is considered to be misrepresentation?
An agent guaranteeing a policy's dividends
All of the following entries are classified under the four principal areas of Florida insurance law EXCEPT
An agent's commission
An example of false advertising would be
An insurer exaggerating its dividends in a magazine advertisement
All of the following are Nonforfeiture Options EXCEPT
Automatic Premium Loan Option
In Florida, which of the following is considered an Unfair Trade Practice?
Coercion
Which of the following is an example of an Unfair Trade Practice?
Coercion
Which of the following areas of state regulation is NOT protected by the savings clause in ERISA? Insurance Commerce Banking Securities
Commerce All of these areas of state regulation are protected by the savings clause in ERISA EXCEPT for commerce.
All of the following are eligibility requirements for an association group EXCEPT
Contributory plans require a minimum of 25 participants . A minimum of 100 participants is required for a contributory plan.
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
Which of the following employees may NOT be excluded from a group life plan?
Full-time employees after the probationary period
In Florida, which of the following practitioners normally do NOT receive payment from health insurance policies? Optometrists Pediatricians Dentists Naturopaths
Health insurance policies in Florida must cover payment to all of these practitioners EXCEPT naturopaths.
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
What percentage of eligible persons must a policy cover in a noncontributory group?
In a noncontributory group, the policy must cover 100% of eligible persons.
A Multiple Employer Welfare Arrangement (MEWA) provides what type of benefits?
Insurance
Who is a mutual insurance company owned by?
Its policyholders
Who owns a stock company?
Its stockholders
If an agent would like to sell Variable annuities, which state examination must the agent pass?
Life and Variable contracts
Which Unfair Trade Practice involves an agent suggesting that an insurance policy is like a share of stock?
Misrepresentation
Which Unfair Trade Practice involves making a false statement on an insurance application in order to receive money from an insurer?
Misrepresentation
Which of the following is NOT an unfair claim settlement practice?
Needing written documentation of claim details
Which entity approves the insurance policy forms used in Florida?
Office of Insurance Regulation (OIR)
Which of the following types of insureds are life insurance companies allowed to make policy rate discriminations against?
People that smoke
Which of the following is NOT required in the Outline of Coverage for a health insurance policy?
Projection of the policy's future costs
The department of financial services serves as the receiver of any insurer placed into:
Receivership - The division of rehabilitation and liquidation plans, coordinates and directs the receivership process on behalf of the department.
Which of the following provisions is NOT required in HMO contracts/certificates?
Seven-day grace period Correct. A grace period of no less than 10 days must be expressly included in an HMO contract.
An agent selling Medicare Supplement policies must provide every applicant with a(n)
Suitability form
Which of the following acts is an agent NOT authorized to do on behalf of an insurer?
The correct answer is "Authorize claim payments". Agents do not authorize payment of claims.
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
The correct answer is "fiduciary responsibility". Fiduciary responsibility involves an agent handling funds of a client or insurance company honestly and fairly, and not using them for the agent's own purposes.
During the application process, the agent's primary responsibility is to
The correct answer is "the insurance company". The agent's primary responsibility in the application process is to the insurer.
Who does an agent represent during the solicitation of insurance?
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 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
In Florida, deceptive advertising is considered to be
a form of misrepresentation
Insurance companies that are organized in countries outside the United States are referred to as
alien
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
A variable life insurance agent must be licensed and appointed as a life and variable contract agent, as well as a(n)
broker dealer An agent marketing variable life insurance must be licensed and appointed as a life and variable contract agent and a broker dealer.
Florida's 14-day free-look period for life insurance policies begins at the
date of delivery
In Florida, an insurer licensed to conduct business in Florida, but domiciled in New Jersey, is called a(n)
foreign company
The Florida Employee Health Care Access Act was established to make
group health insurance available to employers with up to 50 employees
Convincing a prospective insured to buy an insurance policy based on exaggerations is called
misrepresentation
An example of rebating would be
offering a client something of value not stated in the contract in exchange for their business Rebating can be defined as offering a prospect something of value that is not specified in a contract in order to induce the purchase of that contract.
If a policyowner does not pay the premium by the due date, the
policyowner can make the premium payment during the grace period
A long-term care lapse notice must be delivered to both the applicant and
secondary addressee
T is an employee covered under a Group Life policy. If T's employment is terminated, the conversion privilege gives T the right to convert
to an individual policy upon employment termination
Advertising gifts not to exceed ___ are allowed to be given by an agent to a prospective client.
$25
A life policy loan in Florida cannot charge a fixed rate of interest higher than
10%
The minimum age at which a person can sign a life insurance application is
15 years
Florida requires that coverage for newborns begins "from the moment of birth" and continues for
18 months
Within how many days must a licensee notify the Department of Financial Services of a change in address?
30
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
When is a Group Health policy required to provide coverage for a newborn child?
At the moment of birth
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
S takes out a health insurance policy which contains a provision that states that the agent does not have the authority to change the policy or waive any of its provisions. Which health policy provision is this?
Entire Contract
In Florida, when agents recommend changes be made for existing coverage, the agent must follow established procedures. The name of this rule is called the
Florida Replacement Rule
All of these are a prerequisite for becoming a licensed agent EXCEPT
Graduate from high school
What would be an accurate definition of "controlled business"?
Insurance business that is written on the agent's own life, property, or interests
What is the main reason for regulating the insurance industry?
Maintain the solvency of insurance companies
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
Which of the following professional organizations has its code of ethics incorporated into Florida law?
National Association of Insurance and Financial Advisors (NAIFA) The professional organization whose code of ethics is incorporated into Florida law, and whose responsibility is to establish the activities of agents is the National Association of Insurance and Financial Advisors.
How can an agent-in-charge have more than one location?
Only if the agent-in-charge is present when insurance activity occurs Multiple locations are allowed as long as the agent-in-charge is present when insurance activity occurs.
Which of these is NOT a legal entity for selling life insurance in Florida?
Risk management advisers
Which of the following is NOT considered rebating? * Sharing commissions with an agent licensed in the same line of business * Returning premium to a client as an inducement for purchasing a policy * Giving something of value to an insured in exchange for their business * Offering special dividends
Sharing commissions with an agent licensed in the same line of business
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.
The waiting period for a pre-existing condition under a Medicare Supplement policy may NOT go beyond
The correct answer is "6 months". Under a Medicare Supplement policy, the waiting period for pre-existing conditions may not exceed 6 months.
In Florida, an element of an insurance transaction would be
The correct answer is "issuing an insurance contract". The issuance of an insurance contract is considered to be an element of an insurance transaction.
J is an agent who has induced an insured through misrepresentation to surrender an existing insurance policy. What is J guilty of?
Twisting
Which two entities regulate variable annuities?
Variable annuities are regulated by both the Department of Financial Services and the Securities Exchange Commission.
All of the following will result in the suspension of an agent's license EXCEPT
acting with fiduciary responsibility
An example of an unfair trade practice is
an agent making a material misrepresentation to the insured
The coordination of benefits (COB) provision exists in order to
avoid duplication of benefit payments The purpose of the coordination of benefits (COB) provision, found only in group health plans, is to avoid duplication of benefit payments.
An individual covered under a Group Life insurance policy is considered to be a(n)
certificate holder
A stock insurance company
is owned exclusively by its shareholders
When replacing or exchanging an annuity, the agent must disclose to the annuitant
the possible tax ramifications as a result of the transaction An agent must disclose the possible tax consequences of replacing or exchanging an existing annuity or life insurance policy.
An example of an unfair claims settlement practice is
turning down a claim without providing the basis of denial
What type of insurance company is domiciled in England, but conducts business in Florida?
Alien
According to Florida law, when must an agent deliver the Outline of Coverage to a Medicare Supplement applicant?
At the time of application
The Bureau of Unclaimed Property is overseen by the
Chief Financial Officer
Which of the following unfair trade practices involves an agent who makes malicious statements about another person's financial condition?
Defamation
An example of sliding would be
charging for an additional product without the applicant's consent Sliding involves selling additional coverage to an insurance applicant who doesn't want or need it. An agent will often "slide" this additional coverage in without the customer's knowledge or consent.
An insurance company incorporated under the laws of the state in which its home office is located is called a(n) ____ company.
domestic
During the course of an insurance transaction, if an agent makes a false or incomplete statement, he/she could be found guilty of
misrepresentation
Under Florida law, a variable annuity policyowner must be notified of the accumulated value of the contract
once each year A variable annuity policyholder must be informed at least once each year of the accumulated value of the contract during the premium payment period.
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
According to Florida's life insurance replacement laws, a policyowner must be provided with a written Comparison and Summary Statement when it's requested by
the policyowner
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
In Florida, what is the maximum percentage of controlled business an agent may produce?
50%
Which of the following employer tasks does a Professional Employer Organization normally handle?
A Professional Employer Organization typically handles administration functions.
According to Florida law, group life insurance conversion privileges must NOT
The correct answer is "require evidence of insurability". Florida's insurance law that governs group life insurance conversion privileges provides that the individual policies do not require evidence of insurability.
How many hours of continuing education must a newly licensed agent complete every two years?
24
A license may be denied, suspended, or revoked if the licensee
Being found guilty of misrepresentation may result in the Department of Financial Services denying, suspending, revoking, or not renewing any license.
The insurer must provide a prospective buyer with a(n)
Buyer's Guide and Policy Summary
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 Florida life insurance laws apply to all of these situations EXCEPT "Insurance companies' day-to-day operations".
Which Unfair Trade Practice involves an agent telling a prospective client that a policy's dividends are guaranteed?
The correct answer is "Misrepresentation". An agent who tells a client that dividends are guaranteed may be guilty of misrepresentation.
An applicant who pays the initial premium at the time of application is typically given a(n)
conditional receipt A conditional receipt is normally given to an applicant who pays the initial premium at the time of application.
Group Life policies in Florida are required to contain a conversion privilege that allows for conversion
to an individual policy for a stated period of time
An agent's license can be suspended or revoked by
writing primarily controlled business
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 the cancellation either by the insurance company or through J An insurer must notify each certificate holder (employee) when the master policy has expired or is being cancelled. The insurer may take such action through the policyholder (employer).
What do families pay that are covered by the Florida Healthy Kids Corporation?
A portion of the premium
Which of the following situations does NOT apply to the Florida Replacement Rule? *An existing policy is reissued with a reduction in cash value *A new policy is 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 Florida's Replacement Rule applies to all of these situations EXCEPT "An existing policyholder purchases an additional policy from the same insurer".
Which of the following can an agent provide to help a prospective client understand and purchase the most appropriate product?
Buyer's guide
According to Florida law, which of the following information does NOT need to be obtained by an agent recommending an annuity purchase?
Marital status
Under an Individual Disability policy in Florida, what is the minimum schedule of time in which claims must be made to an insured?
Monthly Claims on an individual disability policies must be paid out at monthly intervals, at minimum.
According to Florida law, a Group Life insurance policy requires a minimum of how many insureds?
No minimum
Which of the following 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 intention to replace
Which of the following factors is NOT considered when the Department of Financial Services determines if an agent's home is an insurance agency?
The amount of premium collected at this location
What is the required minimum percentage of employee participation for a noncontributory group health insurance plan according to Florida Law?
The correct answer is "0%". Most noncontributory group health plans require 100% participation by eligible members. Under Florida law, there is no specific minimum percentage participation for employees covered by employee group health insurance.
In order for a domestic, foreign, or alien insurance company to conduct business, it must be authorized by whom?
The correct answer is "The state where they are conducting business". Domestic, foreign, or alien companies must be authorized by each state where they conduct business.
Which of the following activities will NOT result in the suspension of an agent's license?
Working for a foreign insurer
According to Florida's rules on disclosure, a life insurance applicant is expected to be provided with
a Buyer's Guide and Policy Summary
In Florida, an insurer domiciled and incorporated in this state is called a(n)
domestic company
An example of an unfair claims practice would be
failing to effectuate prompt, fair, and equitable settlements of a claim
A foreign insurance company doing business in Florida
is a company that was formed under the laws of another state
Defamation occurs when an agent makes a false statement intended to
malign another insurer Defamation is an unfair trade practice involving false, maliciously critical, or derogatory statements intended to injure a person or company engaged in the insurance business.
In Florida, agents are allowed to engage in rebating if
offered to all insureds in the same actuarial class
An example of unfair discrimination would be
offering different terms of coverage for different policyowners having the same risk classification
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 Twisting is knowingly making misleading statements that would cause an insured to lapse, assign, or terminate an insurance policy in order to switch companies.
Agents that have been licensed for less than six years must complete __ hours of continuing education every two years.
24
Which action could result in a hearing being ordered by the Department of Financial Services?
Performing insurance transactions without a license
The Financial Services Commission may hold hearings
for any reason deemed necessary
In Florida, a health policy that is paid on a quarterly basis requires a grace period of
31 days
One definition of replacement is "the act of replacing an existing insurance policy with another". Replacement is
closely regulated and requires full disclosure
In Florida, most life insurance policies have a contestability period of
2 years
An insurance company can contest a life insurance contract due to application fraud within
2 years There is a 2 year time limit for an insurer to contest a life insurance contract due to application fraud.
What is Florida's definition of Life insurance replacement?
A transaction in which a new policy is bought and an old policy is terminated
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
Nonprofit life insurance providers that are covered by a special section in the Florida insurance code are called
Fraternal life insurance organizations
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
The correct answer is "First degree misdemeanor". All of these are possible consequences for placing business with an unauthorized insurer EXCEPT the conviction of a first degree misdemeanor.
A stock life insurance company that issues both participating and nonparticipating policies is doing business on
The correct answer is "a mixed plan". When a stock life insurance company issues both participating and nonparticipating policies, the company is doing business on a mixed plan.
Employers with less than __ employees are affected by Florida's Health Insurance Coverage Continuation Act (Mini COBRA).
20
Association Plans that are designed to provide health benefits to their members are regulated by the state because
they are insured by an authorized insurer Association Plans must be fully insured by an authorized insurer. The insurer is subject to state regulation.
Under Florida law, which of the following provisions is NOT required in a Medicare Supplement policy?
Limitation on pre-existing conditions for up to 12 months There is only a 6-month limitation on pre-existing conditions for Medicare Supplements.
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 The Department of Financial Services may order the agent to pay monetary restitution to the client.
What is required in the Florida Employee Health Care Access Act?
Small group benefit plans are to be issued on a "guarantee-issue" basis
Which of the following is a standard provision of the conversion privileges in a Group Life policy?
The correct answer is "Group Life coverage can be converted to an individual policy at regular rates on an attained-age basis". Conversion at regular rates on an attained-age basis without a medical exam is a standard provision for conversion privileges in Group Life policies.
The Life and Health Insurance Guaranty Association is
The correct answer is "funded by admitted insurance companies through assessments". The Life and Health Insurance Guaranty Association is funded by insurance companies through assessments and will pay claims if an insurance company becomes insolvent.
The act of an insurance company publishing misleading information about its policy's provisions is called
false advertising
What is the purpose of the Life and Health Insurance Guaranty Association?
Protects policyowners against insolvent insurance companies
According to Florida Law, in which of the following situations would a dependent handicapped child NOT be covered under a Family Health policy? *The handicapped child has reached the limiting age *The premiums for the handicapped child are not paid *The handicapped child becomes a full-time student *The family moves outside the provider network
The premiums for the handicapped child are not paid Under a Family Health policy issued in Florida, a handicapped child must continue to be covered in all of these situations EXCEPT when premium payments cease to be paid.
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 Written notice of a claim must be given to the insurer within 20 days.
