Agent

Under what system do a group of doctors and hospitals in a designated area contract with an insurer to provide services at a prearranged cost to the insured? a. HMO b. PPO c. EPO d. PLHSO

b. PPO

Which statement is true regarding a variable whole life policy? a. A minimum guaranteed death benefit is provided b. It is a combination of an endowment and a increasing term policy c. Its premiums and benefits are variable d. It has guaranteed dividends

a. A minimum guaranteed death benefit is provided

S has a Whole Life policy with a premium payment due soon. Which provision would keep the policy in force if S does not make the required payment and the policy has adequate cash value from which the premium payment can be made? a. Automatic policy loan b. Assignment c. Grace period d. Waiver of premium

a. Automatic policy loan

The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives workers (and their families) whose employment has been terminated the right to a. Continue group health benefits b. Take out an individual health policy c. Transfer their coverage to another insurer d. Convert to disability coverage

a. Continue group health benefits

Florida's 14-day free-look period for life insurance policies begins at the a. Date of delivery b. Date or approval c. Date of application d. Date of physical examination

a. Date of delivery

When an insurance company sends a policy to the insured with an attached application, the element that makes the application part of the contract between the insured and the insurer is called the a. Entire contract provision b. Insuring clause c. Time limit on certain defense provision d. Legal contract clause

a. Entire contract provision

Term insurance has which of the following characteristics? a. Expires at the end of the policy period b. Builds cash value c. Has nonforfeiture options d. Endows at the end of the policy period

a. Expires at the end of the policy period

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 a. Fiduciary responsibility b. Reasonable trust c. Ethical behavior d. Legal competence

a. Fiduciary responsibility

In a life insurance contract, an insurance company's promise to pay stated benefits is called the: a. Insuring clause b. Consideration clause c. Entire contract d. Owner's rights

a. Insuring clause

A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid a. Mandatory income tax withholding on the transfer amount b. Paying transfer fees c. Paying trustee fees d. Ever paying income taxes on distribution

a. Mandatory income tax withholding on the transfer amount

A provision in a life insurance policy that pays the policy owner an amount that does not surpass the guaranteed cash value is called the: a. Policy loan provision b. Automatic premium loan provision c. Accelerated benefits provision d. Consideration clause

a. Policy loan provision

What determines the full face amount of social security retirement benefits a qualified individual is entitled to receive? a. Primary insurance amount (PIA) b. Total taxes paid into FICA c. Number of dependents d. State of residence

a. Primary insurance amount (PIA)

ABC Insurance Company has accepted a life insurance application which contains unanswered questions. The company then makes the application part of the life contract. In this situation, the insurer has a. Waived one of its legal rights b. Issued a voidable policy c. Committed an act of fraud d. Assigned the risk to a reinsurer

a. Waived one of its legal rights

An individual participant personally received eligible rollover funds from a profit-sharing plan. What is the income tax withholding requirements for this transaction? a. 10% is withheld for income taxes b. 20% is withheld for income taxes c. 30% is withheld for income taxes d. Nothing is withheld

b. 20% is withheld for income taxes

A group plan was recently terminated. In Florida, how many days are covered individuals guaranteed coverage after a group plan's termination? a. 14 b. 31 c. 45 d. 60

b. 31

How many days does an insurance company have to reject a reinstatement application before it is automatically reinstated? a. 31 b. 45 c. 60 d. 120

b. 45

The automatic premium loan provision is designed to a. Provide a source of revenue to the insurance company b. Avoid a policy lapse c. Allow a policy owner to request a policy loan d. Allow a policy owner to take out additional coverage without evidence of insurability

b. Avoid a policy lapse

If an agent combines premiums collected with their personal funds, they are engaged in a. Twisting b. Commingling c. Defamation d. Rebating

b. Commingling

N, age 50, recently bought an annuity that will pay a guaranteed $2,000/month at age 70 for life. What type of annuity did N purchase? a. Fixed period b. Fixed deferred c. Fixed immediate d. Fixed variable

b. Fixed deferred

What kind of special need would a policy owner require with an Adjustable Life insurance policy? a. Level premiums b. Flexible premiums c. Flexible nonforfeiture options d. Level death benefits

b. Flexible premiums

How are policy owner dividends treated in regards to income tax? a. Dividends are not taxable b. Interest on accumulations is taxed c. Taxed as ordinary income d. Taxed as capital gains

b. Interest on accumulations is taxed

Who is a mutual insurance company owned by? a. Its board of directors b. Its policyholders c. The state of Florida d. Its employees

b. Its policyholders

Which of these would be considered a limited-pay life policy? a. 10 year renewable and convertible term b. Life paid up at age 70 c. Straight whole life d. Renewable term to age 100

b. Life paid up at age 70

The Notice of Claims provision requires a policy owner to a. Provide proof of loss to an insurer within a specified time b. Notify an insurer of a claim within a specified time c. Wait 60 days after filing a claim to initiate a lawsuit against an insurer d. Notify their physician of a claim within a specified time

b. Notify an insurer of a claim within a specified time

What is the consideration given by the insurer in the Consideration clause of a life policy? a. Promise to never cancel coverage b. Promise to pay a death benefit to a named beneficiary c. Promise to not raise premiums d. Promise to accept an insured's assignment of benefits

b. Promise to pay a death benefit to a named beneficiary

K failed to pay a renewal premium within the time granted by the insurer. K then sends in a payment which the insurer subsequently accepts. Which policy provision specifies that coverage may be restored in this situation? a. Free-look b. Reinstatement c. Grace period d. Consideration

b. Reinstatement

Which of these is NOT a legal entity for selling life insurance in Florida? a. Independent agency system b. Risk management advisers c. Career agency system d. Personal producing general agency

b. Risk management advisers

P is an employee who quits her job and wants to convert her group health coverage to an individual policy. After the expiration of COBRA laws, which of the following statements is TRUE? a. She DOES need to provide evidence of insurability b. She does NOT need to provide evidence of insurability c. She will have up to 6 months to convert to an individual policy d. She will be paying exactly the same premium for the individual plan as she did the group plan

b. She does NOT need to provide evidence of insurability

What type of life policy covers two people and pays upon the death of the last insured? a. Shared b. Survivorship c. Adjustable d. Joint

b. Survivorship

Why is an applicant's signature required on a life insurance application? a. To attest that the statements on the application are warranties b. To attest that the statements on the application are accurate to the best of the applicant's knowledge c. To give power of attorney to the producer if needed d. To attest that all statements on the application are guaranteed to be true

b. To attest that the statements on the application are accurate to the best of the applicant's knowledge

Life insurance immediately creates an estate upon the death of an insured. Which of the following policies is characterized by a guaranteed minimum death benefit? a. Universal life b. Variable life c. Fixed annuity d. Modified endowment contract

b. Variable life

Life insurance immediately creates an estate upon the death of an insured. Which of the following policies is characterized by a guaranteed minimum death benefit? a. Universal life b. Variable life c. Fixed annuity d. Modified endowment contract

b. Variable life

What kind of life policy either pays the face value upon the death of the insured or when the insured reaches age 100? a. Term life b. Whole life c. Credit life d. Universal life

b. Whole life

Which of the following is the best description of "insurer"? a. A professional organization that typically handles only administration functions b. Any business location where insurance discussions take place c. Any person, corporation, association or society that writes insurance contracts d. Any person, corporation, association or society that only manages insurance claims

c. Any person, corporation, association or society that writes insurance contracts

P, age 50, purchased an annuity that P will fund with $500/ month for 15 years. The annuity will then pay P retirement payments after the 15 years. Which type of annuity did P purchase? a. Immediate b. Retroactive c. Deferred d. Universal

c. Deferred

Which of these statements is INCORRECT regarding the federal income tax treatment of life insurance? a. Premiums are normally not tax deductible b. Cash dividends are normally not taxed c. Entire cash surrender value is taxable d. Proceeds are received tax-free if there is a named beneficiary

c. Entire cash surrender value is taxable

This type of deductible provision waives the deductible for all family members after some of them have satisfied individual deductibles within the same year: a. Individual deductible b. Corridor deductible c. Family maximum deductible d. Common accident deductible

c. Family maximum deductible

Which type of renewability best describes a Disability Income policy that covers an individual until the age of 65, but the insurer has the right to change the premium rate for the overall risk class? a. Conditionally renewable b. Noncancellable c. Guaranteed renewable d. Optionally renewable

c. Guaranteed renewable

Which type of provider is known for stressing preventative medical care? a. Multiple Employer Welfare Arrangements (MEWA) b. Major medical provider c. Health Maintenance Organizations (HMOs) d. Preferred Provider Organizations (PPOs)

c. Health Maintenance Organizations (HMOs)

What kind of premium does a whole life policy have? a. Decreasing b. Adjustable c. Level d. Deferred

c. Level

When a life insurance policy exceeds certain IRS table values, the result would create which of the following? a. 1035 exchange b. An investment c. Modified Endowment Contract (MEC) d. Endowment

c. Modified Endowment Contract (MEC)

M has an annual life insurance premium payment due January 1. She died January 19 without making the premium payment. What action will the insurer take? a. Collect premium from M's estate b. Deny the claim c. Pay face amount minus the past due premium d. Subtract past due premium from cash value

c. Pay face amount minus the past due premium

Which of the following actions is NOT possible with a Universal Life policy? a. Policy's cash value may be used to pay premiums b. Premium payments may be made at unscheduled times c. Premiums may be applied as a credit against income tax d. Face amount may be adjusted

c. Premiums may be applied as a credit against income tax

What type of life insurance are credit policies issued as? a. Whole b. Variable c. Term d. Universal

c. Term

All of these statements about Equity indexed life insurance are correct, EXCEPT a. Cash value has a minimum rate of accumulation b. If the gain on the index goes beyond the policy's minimum rate of return, the cash value will mirror that of the index c. The premiums can be lowered or raised, based on investment performance d. Tied to an equity index such as the S&P 500

c. The premiums can be lowered or raised, based on investment performance

An employee with $25,000 group term life coverage was recently fired. This employee's group coverage may be converted to a a. $125,000 individual whole life policy b. $25,000 modified whole life policy c. $25,000 individual term life policy d. $25,000 individual whole life policy

d. $25,000 individual whole life policy

How many days after policy delivery can a medicare supplement policy be returned for a 100% refund? a. 15 b. 20 c. 25 d. 30

d. 30

A statement made by an insured in an insurance application that must be true to the best of one's knowledge and which becomes a part of the contract is known as a. An insuring agreement b. A mutual assent c. A warranty d. A representation

d. A representation

Insurance contracts are known as ___ because certain future conditions or acts must occur before any claims can be paid a. Consideration b. Unilateral c. Aleatory d. Conditional

d. Conditional

Insurance policies are offered on a "take it or leave it" basis, which make them: a. Conditional contracts b. Aleatory contracts c. Unilateral contracts d. Contracts of adhesion

d. Contracts of adhesion

F needs life insurance that provides coverage for only a limited amount of time with a death benefit that changes regularly according to a schedule. What kind of policy is needed? a. Level term policy b. Whole life policy c. Limited-pay policy d. Decreasing term policy

d. Decreasing term policy

F needs life insurance that provides coverage for only a limited amount of time with a death benefit that changes regularly according to a schedule. What kind of policy is needed? a. Level term policy b. Whole life policy c. Limited-pay policy d. Decreasing term policy

d. Decreasing term policy

An employee requested that the balance of her 401(k) account be sent directly to her in one lump sum. Upon receipt of the distribution, she immediately has the funds rolled over into an IRA. What is the tax consequence of the distribution sent to this employee? a. Distribution is subject to capital gains tax b. Distribution is subject to ordinary income tax c. Distribution is subject to a tax penalty d. Distribution is subject to federal income tax withholding

d. Distribution is subject to federal income tax withholding

K purchased a $10,000 Life Policy that will pay the face amount to her if she lives to age 65, or to her beneficiary if she dies before age 65. K purchased which of the following types of policies? a. Limited-pay life b. Term to age 65 c. Whole life paid-up at age 65 d. Endowment at age 65

d. Endowment at age 65

Basic Medical Expense insurance: a. Normally has a deductible and coinsurance b. Covers an illness but not an accident c. Pays for lost wages while hospitalized d. Has lower benefit limits than Major Medical Insurance

d. Has lower benefit limits than Major Medical Insurance

K is looking to purchase Renewable Term insurance. Which of these types of Term insurance may be renewable? a. Increasing b. Decreasing c. Adjustable d. Level

d. Level

Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary? a. Interest only b. Fixed period c. Fixed income d. Life income

d. Life income

The Accelerated Death Benefit provision in a life insurance policy is also known as a. 1035 exchange b. Inter vivos gift c. Non-forfeiture option d. Living benefit

d. Living benefit

Which of the following best describes a short-term medical expense policy? a. Conditionally renewable b. Noncancellable c. Guaranteed renewable d. Nonrenewable

d. Nonrenewable

In an individual retirement account (IRA), rollover contributions are a. Subject to capital gains tax b. Subject to ordinary income tax c. Partially limited by dollar amount d. Not limited by dollar amount

d. Not limited by dollar amount

All of these statements concerning Settlement Options are true, EXCEPT a. Increased proceeds can be provided through accumulation of interest b. Rapid depletion of proceeds can be avoided c. Proceeds can be administered by the insurance company d. Only the beneficiary may select

d. Only the beneficiary may select

In a life insurance policy, which provision states who may select policy options, designate and name a beneficiary and be the recipient of any financial benefits from the policy? a. Nonforfeiture b. Entire contract c. Insuring clause d. Owners rights

d. Owners rights

Whole life insurance policies are contractually guaranteed to provide each of the following EXCEPT a. Cash value that will ultimately replace the death benefit b. Nonforfeiture benefit options c. Premiums that remain fixed for the life of the policy d. Partial withdrawal features beyond a surrender charge period

d. Partial withdrawal features beyond a surrender charge period

Which of these statements concerning an individual straight life annuity is accurate? a. Life expectancy of the annuitant is not a factor b. The payments are received tax free c. Only available to employees of nonprofit charitable, educational and religious organizations d. Payments are made to an annuitant for life

d. Payments are made to an annuitant for life

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 a. Coercion b. Rebating c. Defamation d. Twisting

d. Twisting

A term life insurance policy matures a. Upon endowment of the contract b. Upon death of the insured c. When the cash value equals the death benefit d. Upon the insured's death during the term of the policy

d. Upon the insured's death during the term of the policy