FL Life and annuity
which department oversees market conduct examinations in florida
Office of insurance regulation
A father who dies within 3 years after purchasing a life insurance policy on his infant daughter can have the policy premiums waived under which provision?
Payor provision
Which action could result in a hearing being ordered by the Department of Financial Services?
Performing insurance transactions without a license
Which statement is true concerning a Variable Universal Life policy?
Policyowner controls where the investment will go and selects the amount of the premium payment
Who does an agent represent during the solicitation of insurance?
The insurance company
If its employees share in the cost of insurance, what type of group life insurance plan would a corporation have?
Contributory
All of the following are eligibility requirements for an association group EXCEPT
Contributory plans require a minimum of 25 participants
Which of the following features of a group Term Life policy enables an individual to leave the group and continue his or her insurance without providing evidence of insurability?
Conversion privilege
K has a life insurance policy where her husband is beneficiary and her daughter is contingent beneficiary. Under the Common Disaster clause, if K and her husband are both killed in an automobile accident, where would the death proceeds be directed?
Daughter
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?
Decreasing term policy
S is close to retiring and would like to purchase a policy that will yield greater gains than bonds, but will still protect the principal with a minimum level or risk. Which product would S be advised to purchase?
Equity index insurance
a cost of living rider gives the insured
accidental death benefits
A policyowner can generate taxable income from which of the following dividend options?
accumulation of interest
All of the following will result in the suspension of an agent's license EXCEPT
acting with fiduciary responsibility
all of the following will result in the suspension of an agent's liscense except
acting with fiduciary responsibility
a term life rider offers the insured
additional life coverage
Moody's Corporate bond index.
adjustable rates for life insurance policy loans are based on
S would like to use dividends from her life insurance policy to purchase paid-up additions. All of these would be factors that determine how much coverage can be purchased EXCEPT
beneficiary's age
Variable Whole Life Insurance can be described as
both insurance and securities product
A variable life insurance agent must be licensed and appointed as a life and variable contract agent, as well as a(n)
broker dealer
Which of the following can an agent provide to help a prospective client understand and purchase the most appropriate product?
buyer's guide
rules of disclosure
buyers guide, policy summary, 14 free-look period
what is the main reason for regulating the insurance industry
maintain the solvency of insurance companies
Florida Employee Health Care Access Act
makes group health insurance available to employers with 50 or less employees
In Florida, agents are allowed to engage in rebating if
offered to all insureds in the same actuarial class
An example of rebating would be
offering a client something of value not stated in the contract in exchange for their business
An example of unfair discrimination would be
offering different terms of coverage for different policyowners having the same risk classification
Under Florida law, a variable annuity policyowner must be notified of the accumulated value of the contract
once each year
When a policyowner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply?
conversion provision
An employee of 20 years recently retired at age 59 1/2. This employee's group life contract can be
converted to an individual permanent policy at an individual rate
What kind of life insurance starts out as temporary coverage but can be later modified to permanent coverage without evidence of insurability?
convertible term
Who is normally considered to be the owner of a 403(b) tax-sheltered annuity?
empoyee
Which of these statements describe a Modified Endowment Contract (MEC)?
exceeds the maximum amount that can be paid into a policy and still have it recognized as a life insurance contract
An ____ contained a life insurance policy states that the policy will not cover certain risks
exclusion
From what authority derives the requirement that an insurance application contains a disclosure stating that an investigative consumer report may be obtained on an applicant?
fair credit reporting act
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
fiduciary responsibility
nonprofit life insurance providers that are covered by a special section in the florida insurance code are called
fraternal life insurance organizations
M completes an application for life insurance but does not pay the initial premium. All of these actions must occur before M's policy goes into effect EXCEPT
free-look period has expired
Life and Health Guaranty Association
funded by insurance companies through assessments
Chief Financial Officer (CFO)
has the power to revoke or suspend the license of an insurance agent who violates the code of ethics
exchanges
health reform bill to help individuals and small businesses purchase health insurance coverage
Variable Life products require a producer to
hold a Life Insurance license and a Securities license
In life insurance, the needs approach is used mostly to establish
how much life insurance a client should apply for
who has the option to new a renewable term policy
insured
A whole life insurance policyowner does not wish to continue making premium payments. Which of the following enable the policyowner to sell policy for more than cash value?
life-settlement contract
NAIFA (National Association of Insurance and Financial Advisors)
organizations whose code of ethics is incorporated into Florida law and whose responsibility it is to establish the activities of agents
Whole Life insurance policies are contractually guaranteed to provide each of the following, EXCEPT:
partial withdrawal features beyond surrender charge period
Insurance policies are considered aleatory contracts because
performance is conditioned upon a future occurrence
grandfathered plans
plans purchased before March23, 2010. don't have to follow the aca's rules
Federal Pension Act of 2006
This law sets forth standards for funding, participating, vesting, disclosure, and tax treatment of retirement
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 insurance company can contest a life insurance contract due to application fraud within
2 years
in florida most life insurance policies have a contestability period of
2 years
An individual participant personally received eligible rollover funds from a profit-sharing plan. What is the income tax withholding requirements for this transaction?
20% is withheld for income taxes
What type of policy would offer a 40-year old the quickest accumulation of cash value?
20-pay Life policy
which of the following types of term life policies most likely contains a renewability feature
10 year convertible term
A life policy loan in Florida cannot charge a fixed rate of interest higher than
10%
All of the following statements about traditional individual retirement accounts are false EXCEPT
10% penalty is applied to withdrawals before age 59 1/2
the minimum age at which a person can sign a life insurance application is
15 years old
N is a 40-year old applicant who would like to retire at age 70. He is looking to buy a life insurance policy with level premiums, permanent protection, and be paid-up at retirement. Which of these should N purchase?
30 pay life
A group plan was recently terminated. In Florida, how many days are covered individuals guaranteed coverage after a group plan's terminatio
31 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?
48 months
every resident agent or broker must have and maintain their place of business the usual and customary records pertaining to transactions under their license for at least
5 years
What is the excise tax rate the IRS imposes on individuals aged 70 1/2 or older who do not take the required minimum distributions from their qualified retirement plan
50%
in florida what is the maximum percentage of controlled business an agent may produce
50%
an insurer may normally delay the payment of a cash value loan or surrender value for up to
6 months
Which of the following is TRUE about a qualified retirement that is "top heavy"?
A plan is considered to be top heavy if more than 60% of plan assets are attributable to "key employees
Which of the following statements is CORRECT regarding the tax treatment of a lump-sum payment paid to a life insurance policy's primary beneficiary?
All proceeds are income tax free in the year they are received
Which of the following situations does NOT apply to the Florida Replacement Rule?
An existing policyholder purchases an additional policy from the same insurer
Which of the following acts is an agent NOT authorized to do on behalf of an insurer?
Authorize claim payments
Which of these actions is taken when a policyowner uses a Life Insurance policy as collateral for a bank loan?
Collateral assignment
On August 6, D submitted an application for a $50,000 Life Insurance policy and did not pay the initial premium. On August 18, D went to his doctor complaining of chest pains and some tests were given by the doctor. The life policy was delivered by the producer on August 20 and D explains what had recently taken place with the doctor. What action should the producer then take?
Collect initial premium along with a signed health statement
What kind of life insurance policy pays a specified monthly income to a beneficiary for 30 years and then pays a lump sum benefit at the end of that 30 years?
Family Maintenance Policy
What action should a producer take if the initial premium is NOT submitted with the application?
Forward the application to the insurer without the initial premium
A 55 year old recently received a $30,000 distribution from a previous employer's 401k plan, minus $6,000 for income tax withholding. Which federal taxes apply if none of the funds were rolled over?
Income taxes plus a 10% penalty tax on $30,000-All withdrawals
T, age 70, withdraws cash from a profit-sharing plan and purchases a Straight Life Annuity. What will this transaction provide?
Income that cannot be outlived by the owner
Which of these actions should a producer take when submitting an insurance application to an insurer?
Inform insurer of relevant information not included on the application
Which of the following situations are not subject to Florida life insurance laws?
Insurance companies' day-to-day operations
variable annuities may invest premiums in each of the following except
Insurer's corporate business account
How are policyowner dividends treated in regards to income tax?
Interest on accumulations is taxed
which of these arrangements allows one to bypass insurable interest laws
Investor-Originated Life Insurance
Which statement regarding third-party ownership of a life-insurance policy is true?
It is used extensively in estate-planning as well as business circumstances
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
On January 8, an applicant filled out and application for a life insurance policy but did not include the initial premium. The insurance company approved the application on January 14 and issued the policy January 15. The producer delivered the policy on January 26 and collected the first premium. When did the coverage become effective?
January 26
T has an annuity that guarantees and income payments for the rest of his life. The contract also guarantees that if T dies before receiving payments for 20 years, the remaining payments will be paid to his son for the balance of the 20 years. What type of annuity is this?
Life Annuity with period Certain
if an agent would like to sell variable annuities which state examination must the agent pass
Life and Variable contracts
The Accelerated Death Benefit provision in a life insurance policy is also known as a(n)
Living Benefit
Which of these is an element of a Single Premium annuity?
Lump-sum payment
Which of these factors do NOT play a role in the underwriting of a life insurance policy?
Marital status
medical bureau
detects misrepresentation, identifies fraud and controls the cost of insurance
K buys a policy where the premium stays fixed for the first 5 years. The premium then increases in year 6 and stays level thereafter, all the while the death benefit remains the same. What kind of policy is this?
Modified Whole Life
Which of the following professional organizations has its code of ethics incorporated into Florida law?
National Association of Insurance and Financial Advisors (NAIFA)
Which statement is true regarding a minor beneficiary?
Normally, a guardian is required to be appointed in the Beneficiary clause of the contract
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 tax would an IRA participant be subjected to on distributions received prior to age 59 1/2?
Ordinary income tax and a 10% tax penalty for early withdrawal
P is the insured on a participating life policy. Which statement is true if P's premiums are waived due to a disability?
P will still received dividends
M had an annual life insurance premium payment due January 1. She died January 10 without making the premium payment. What action will the insurer take?
Pay face amount minus the past due premium
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
P is a producer who notices 5 questions on a life application were not answered. What actions should P take?
Set up a meeting with the applicant to answer the remaining questions
Which of the following is NOT considered rebating?
Sharing commission with an agent licensed in the same line of business
S recently received a $500,000 lump sum retirement buyout from her employer. She would like to buy an annuity that will immediately furnish her with a guaranteed income for life. What type of annuity is best suited for her situation?
Single Premium
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.
A policy of adhesion can only be modified by whom?
The Insurance Company
What is the underlying concept regarding level premiums?
The early years are charged more than what is needed
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
And individual who purchases a life annuity is given protection against
The risk of living longer than expected
which of the following life insurance policies combined term insurance with an investment element
Universal life insurance
What type of annuity has a cash value that is based upon the performance of it's underlying investment funds?
Variable
Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options?
Variable Life
a life policy combines investment choices with a form of term coverage
Variable Universal
Which of the following policies is characterized by a flexible premium and death benefit and allows the policyowner control of the investment aspect of the plan?
Variable Universal Life
A return of premium life insurance policy is
Whole life and Increasing term
Which of these is an element of a variable life policy?
a fixed, level premium
In Florida, deceptive advertising is considered to be
a form of misrepresentation
A stock life insurance company that issues both participating and nonparticipating policies is doing business on
a mixed plan
dividends
a return of overcharged premiums, and are therefore not taxable
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
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
Group life insurance policies are generally written as
annual renewable term
what is the initial course of underwriting for an insurance policy
application containing statements from the insured
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
Omitting information that affects the issuance or the rate of an insurance contract is called
concealment
Florida's 14-day free-look period for life insurance policies begins at the
date of delivery
quarterly premium payments increase the annual cost of insurance because
interest to the insurer is decreased while the administrative costs are increased
In Florida, an element of an insurance transaction would be
issuing an insurance contract
Convincing a prospective insured to buy an insurance policy based on exaggerations is called
misrepresentation
which type of insurance company allows their policyowners to elect a governing body
mutual insurance companies
What benefit does the Payor clause on a Juvenile Life policy provide?
premiums are waived if the payor becomes disabled
Office of Insurance Regulation
promotes the public welfare by maintaining the solvency of insurance companies
According to Florida law, group life insurance conversion privileges must NOT
require evidence of insurability
which of the following types of permanent life insurance policies offers highest initial cash value
single premium
Which type of plan allows an employer to give money to an employee for buying a life insurance policy and also permits the employee to select the beneficiary?
split-dollar plan
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
A(n) rider may be used to include coverage for children under their parents' life insurance policy
term
During the application process, the agent's primary responsibility is to
the insurance company
coercion
the intent of convincing an applicant to buy insurance by force
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
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 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
J is an agent who has induced an insured through misrepresentation to surrender an existing insurance policy. What is J guilty of?
twisting
Misrepresentation
uses publications and sales material or makes misleading statements to unfairly influence a purchase of a policy
annuity
ways of providing a stream of income for a guaranteed period of time
churning
when an agent has a policyowner replace one policy for another with the same company for the sole purpose of making commission
twisting
when an agent persuades a policyowner to cancel their policy, to purchase a new life policy for another company
rebating
when an agent refund part of their commission, or exchanges anything of value to induce someone to purchase an insurance policy
sliding
when an agent tells an applicant they are required by law to to buy an additional product, to get the product they want
A policy that becomes a Modified Endowment Contract (MEC):
will loose many of its tax advantages
an agent's license can be suspended or revoked by
writing primarily controlled business
When is the face amount of a Whole Life policy paid?
The face amount of a Whole Life policy will be paid when the insured dies or on maturity of the policy, whichever occurs first.
Which product would best serve a retired individual looking to invest a lump-sum of money through an insurance company?
annuity
D is the policyowner and insured for a $50,000 life insurance policy. The beneficiary is D's wife. D and his wife divorce and D remarries, transferring ownership of his policy to his new wife. If D dies without making any further changes, to whom will the policy proceeds be paid to?
ex-wife
Which of the following is not a consequence for placing business with an unauthorized user?
first degree misdemeanor
According to Florida law, a Group Life insurance policy requires a minimum of how many insureds?
no minimum
What type of life insurance gives the greatest amount of coverage for a limited period of time?
term life
Which of these life insurance riders allows the applicant to have excess coverage?
term rider
which two entities regulate variable annuities?
the U.S. Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (FINRA
C is trying to determine whether to convert her convertible term life policy to whole life. What factor would affect her decision the most?
the cost
which of the following is considered an element of a variable life policy
underlying equity investment
What type of life insurance incorporates flexible premiums and an adjustable death benefit?
universal life
A ______ Life policy offers the owner investment in products such as money-market funds, long-term bonds, or equities
variable
In order to sell a ____ life policy, a producer is required to register with the FINRA
variable
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
waived one of its legal rights
Which of the following nonforfeiture options offers the highest death benefit?
extended term
which of these is not a source of funding for social security benefits
federal government
Credit life insurance is typically issued with which of the following types of coverage?
decreasing term
Additional coverage can be added to a Whole Life policy by adding a(n)
decreasing term rider
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?
deferred
What type of policy covers 2 lives and pays the face amount after the first one dies
joint life policy
Q is severely injured in an automobile accident and becomes totally disabled. How many months must Q be disabled before being able to apply for Social Security disability benefits?
5 months
What is Florida's definition of Life insurance replacement?
A transaction in which a new policy is bought and an old policy is terminated
All the following are Nonforfeiture options EXCEPT
Automatic Premium Loan Option
What is considered to be a characteristic of an immediate annuity?
Benefit payments start within one payment period of purchase
Which of these is NOT considered to be a cost connected with an individual's death?
Business expenses
Which of the following is an important underwriting principle of group life insurance?
Everyone must be covered in the group
Which of these statements about a Guaranteed Insurability Option rider is NOT TRUE?
Evidence of insurability is required when the option is exercised
An insured is past due on his life insurance premium, but is still within the Grace Period. What will the beneficiary receive if the insured dies during this Grace Period?
Full face amount minus any past due premiums
Which of the following employees may NOT be excluded from a group life plan?
Full-time employees after the probationary period
Which of the following 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
Q applied for life insurance and submitted the initial premium on January 1. The policy was issued February 1, but it was not delivered by the agent until February 7. Q is dissatisfied and returns the policy February 13. How will the insurer handle this situation?
Policy was returned within the free-look period, premium will be fully refunded
Which statement is correct regarding the premium payment schedule for whole life policies?
Premiums are payable throughout the insured's lifetime/ coverage lasts until death of the insured
What determines the full amount of Social Security retirement benefits a qualified individual is entitled to receive?
Primary Insurance Amount (PIA)
a retirement plan that sets aside part of the company's net income for distributions to qualified employees is called a
Profit-sharing plan
T is covered by an Accidental Death and Dismemberment (AD&D) policy that has an irrevocable beneficiary. What action will the insurance company take if T requests a change of beneficiary?
Request of the change will be refused
Agent J takes an application and initial premium from an applicant and sends the application and premium check to the insurance company. The insurance company returns the check back to J because the check is made out to J instead of the insurance company. What action should J take?
Return to the customer, collect a new check made out to the insurance company, and send the new check out to the insurance company
Post-tax dollar contributions are found in
Roth IRA investments
What does a 401(k) plan generally provide its participants
Salary-deferral contributions
Which type of life policy contains a monthly mortality charge as well as self-directed investment choices?
Variable Universal Life
Q would like to purchase $100,000 of permanent protection on his wife and $50,000 of Term coverage on himself under the same policy. What kind of policy should Q purchase?
Whole life policy with other insured rider
According to Florida's rules on disclosure, a life insurance applicant is expected to be provided with
a Buyer's Guide and Policy Summary
When a stock life insurance company issues both participating and nonparticipating policies is doing business on
a mixed plan
L takes out a life insurance policy and dies 10 years later. During the claim process, the insurer discovers that L had understated her age on the application. Under the Misstatement of Age provision, the insurer will
adjust the death benefit to a reduced amount
Before a life insurance policy is issued, which of these components of the contract is required?
applicant's signature on application
an individual covered under a group life insurance policy is considered to be a
certificate holder
One definition of replacement is "the act of replacing an existing insurance policy with another". Replacement is
closely regulated and requires full disclosure
Which of the following areas of state regulation is NOT protected by the savings clause in ERISA?
commerce
If an agent combines premiums collected with their personal funds, they have engaged in
commingling
The incontestable clause allows an insurer to
contest a claim during the contestable period
An annuity promises that, if the annuitant dies before receiving payments equal to the correct value, the payments will be continued to a beneficiary until an amount equal to the contract value has been paid. This type of annuity is called
installment refund annuity
Which of these needs is satisfied by Adjustable life insurance?
insured's needs for flexible premiums
a life insurance arrangement which circumvents insurable statutes is called
investor-originated life insurance
Defamation occurs when an agent makes a false statement intended to
malign another insurer
A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid
mandatory income tax withholding on the transfer amount
On a life insurance policy, who is qualified to change the beneficiary designation?
policyowner
when is it acceptable to share commissions with another agent
when they're licensed in the same line of insurance.
What kind of life policy either pays the face value upon the death of the insured or when the insured reaches age 100?
whole life
a life insurance policy that provides a policyowner with cash value along with a level face amount
whole life
If a 1--year term life policy contains a renewability provision, the policy will renew
without evidence of insurability
