Florida statutes, rules, and regulations common to all lines

what are the most common penalties for violations of insurance statues?

A cease and desist order, a fine, and license suspension or revocation.

What types of premium is charged on a straight life policy?

A level premium for the life of the insured

what types of license(s) is/are required to sell variable annuities?

A life insurance license and a securities license

What are the four elements of an insurance contract?

Agreement ( offer and acceptance),consideration, competent, parties, and legal purpose

In flexible premium payment annuities, the term flexible refers to what?

Amount of premium

What is a warranty in an insurance contract?

An absolutely true statement upon which the validity of the insurance contract is based

Who is considered of nonresident agent?

An agent who resides and is licensed in another state, but who is authorized to transact insurance in this state.

The death protection component of a universal life policy is expressed as what type of coverage?

Annually renewable term

If there is no named beneficiary for the annuity benefits, to which entity will the benefits be paid?

Annuitant's estate

When must insurable interest exist in a life insurance policy?

At the time of application

When must the policy summary for a life insurance policy be delivered to the policyowner?

At the time of policy delivery

If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered what type of insurer?

Authorized or admitted

What types of licensee represents the insured?

Broker

When a change needs to be made on the application for insurance, which is the best method for correcting the information?

Complete a new application or ask the applicant to initial the correction on the original application

when are producers required to do in order to renew their license?

Complete continuing education hours and pay renewal fee

An individual has borrowed $10,000 on a 5-year not from his bank. The note is due in installments. What type of life insurance policy would be best suited to this situation?

Decreasing term

What type of life insurance is best suited to cover a mortgage?

Decreasing term

two individuals who are in the same risk and age class are charged different rates for their insurance policies due to an insignificant factor. what is this called?

Discrimination

Insurers are classified according to their domicile. What are the three types of insurers?

Domestic, foreign, and alien.

What policy component must decrease in decreasing term insurance?

Face amount

For what reason can a temporary license be issued?

For continuation of business in case the licensed producer dies or becomes disabled

what are the two classifications of annuities according to the time when annuity payments begin?

Immediate and deferred

What type of annuity can be purchased with a single premium?

Immediate annuity

What two elements are necessary for a life insurance contract to have a legal purpose?

Insurable interest and consent

what do individuals use to transfer their risk of loss to a larger group

Insurance

in general, who can be excluded from producer licensing and examination requirements?

Insurance company officers, directors, or any other employees who do not transact insurance and who do not receive commissions for their services (usually, their responsibilities include administrative, executive or clerical).

what is controlled business?

Insurance on the producer's own life or property, or the lives or property of the producer's family or business associates.

What entities make up the Medical Information Bureau?

Insurers

what are the three main instances when insurable interest exists in life insurance?

Insuring your own life, the life of a family member, or the life of a business partners or someone who has financial obligation to the policyowner.

what report is used to assess risk associated with a health insurance applicant's lifestyle and character?

Investigative consumer report

what type of report provides information about the applicant's hobbies, habits and financial status?

Investigative consumer report

A whole life policy that requires that the policy owner only pays premiums for a specified number of years is known as what kind of policy?

Limited- pay a whole life

What illegal act does a producer commit when the producer represents a policy in a more favorable light than the policy really is?

Misrepresentation

on its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payments of losses or claims. What is the company guilty of?

Misrepresentation

Can insurers advertise the existence of the guaranty association during solicitation and sale of insurance policies?

No, advertising of the existence of the guaranty association for the purpose of solicitation and sale of insurance policies by insurers is an illegal business practice.

What universal life option has gradually increasing cash value and a level death benefit?

Option A

How can health insurance policies be delivered to the insured?

Personally delivered by the agent or mailed

What document describes the specific information about a policy?

Policy summary

What risk classification would typically qualify for lower premiums?

Preferred risk

Who can usually be granted a temporary license?

Producer's spouse or designee in case the licensed producer dies or becomes disabled

what is the main responsibility of a company's underwriting unit?

Risk selection

What type of whole life insurance policies only requires a payment of premium at its inception, and in addition to providing insurance protection for the life of the insured, endows at the insured's age 100?

Single premium whole life

What are the three types of risk rating classifications in life insurance?

Standard, substandard, and preferred

What type of annuity is suitable for someone who wants to select the benefit option that will pay the largest amount only for as long as the annuitant lives?

Straight life

What is the purpose of the agent's report during the application process?

The agent's report discusses the agent's personal observations about the proposed insured that may help in the underwriting process.

Who is a field underwriter?

The agent/producer

Regarding annuity payments, what is the difference between the annuitant and the beneficiary of an annuity?

The annuitant receives payments from the annuity during the annuitization period; the beneficiary receives benefits after the annuitant's death.

who must be notified of a producer's change of address.

The department of insurance (commissioner/director/superintendent)

If an applicant for a life insurance policy and the potential insured are two different people, what would be the underwriter's main concern?

The existence of insurable interest between the applicant and the insured

what law protects consumers from the circulation of inaccurate or obsolete information?

The fair credit reporting act

Whole life insurance policies mature when the insured reaches the age of 100. If the owner of a whole life policy (the insured) dies at age 80, and there are no outstanding loans on the policy, what portion of the death benefit will be paid to the beneficiary?

The full death benefit

who is responsible for the contents of insurance advertisements?

The insurance company?

Who bears the investment risk in a fixed annuity?

The insurer

who is responsible for the costs associated with the examination of insurers?

The insurer who is being examined

who must have insurable interest in the insured?

The policy owner

what happens to the premium in an annually renewable term life policy?

The premium increases with each renewal

How is the information obtained for an investigative consumer report?

Through interviews with the applicant's, friends and neighbors

To whom may a certificate of authority be issued?

To an insurer authorized to transact business in this state.

What is the purpose of establishing the target premium for a universal life policy?

To prevent the policy from lapsing

What is the best way to handle incomplete insurance applications?

To return the application to the applicant for completion

What is the name of the process that insurance companies use to determine whether or not an applicant is insurable?

Underwriting

Health insurance contracts are unilateral. What does that mean?

Unilateral means only one party makes a legally enforceable promise

When would a misrepresentation be considered material?

When it may alter the underwriting decision

In insurance, when is the offer usually made on a contract?

When the insurance application is submitted

When would a 20-pay whole life policy

When the insures age 100

what type of insurance would perform the function of cash accumulation?

Whole life insurance

what is policy replacement

a new policy is issued while an existing policy is terminated or reissued with a reduction in cash value

Who is an insurance agent?

a person authorized to sell, solicit and negotiate insurance contracts.

who must be a member of insurance guaranty associations?

all insurers authorized to write insurance within a state

If an insurer holds a Certificate of Authority, it is known as what type of insurer?

authorized or admitted

If the Commissioner/Superintendent finds a licensee engaging in an unfair method of competition or an unfair practice, what order will be issued?

cease and desist order

what document is required for an insurance company to transact insurance?

certificate of authority

health contracts are prepared by insurers and must be accepted by the insured on an as is basis. This describes what aspect of health insurance contract?

contract of adhesion

If a producer makes maliciously critical statements about another insurer, what is this illegal practice called?

defamation

At what point does coverage begin when an agent issues a conditional receipt for a life insurance policy

either on the date of the application or the date of the medical exam (whichever occurs last)

What does term "level" refer to in level term insurance?

face amount

Insurance is a contract that protects the insured from what?

loss

Who may share in the commission from the sale of a life insurance policy?

only producers properly licensed for the type of insurance transaction

what is adverse selection?

people who are more likely to submit insurance claims are seeking insurance more often than preferred risks

What term describes the fee a person pays an insurance company to receive coverage?

premium

if an insurer needs to obtain information about the applicant from investigators, what is the insurer required to do?

provide the applicant a disclosure authorization notice

An agent offers a client free tickets to a sporting event in exchange for the purchase of an insurance policy. What is the agent guilty of?

rebating

If an agent fails to obtain the applicant's signature on the insurance application, what must the insurer do?

send the application back to the applicant for signature

who owns stock companies?

stockholders

in the agent/insurer relationship, who is considered the principal?

the Insurer

If an applicant does not receive a copy of the new insurance policy, who would be held responsible?

the agent

what types of licensee represents the insurance company?

the agent

Whose responsibility is it to determine that all the questions on an insurance application are answered?

the agent's

what is insurance underwriting?

the process of risk selection and classification

what is the purpose of cease and desist order?

to prevent a producer or insurer from further violating laws for transacting insurance

what is the purpose of insurance guaranty associations?

to protect policyowner's, insureds and beneficiaries from financial losses caused by insolvent insurers.

What is the main reason for purchasing an annuity

to provide income that the annuitant cannot outlive

What types of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch polices from one to another?

twisting

During which stage in the insurance process do insurers evaluate information that identifies adverse selection risks?

underwriting

In health care insurance contracts, the insured is not legally bound to any particular action; however, the insurer is obligated to pay for losses covered by the policy. What contract element does this describe?

unilateral

When would a misrepresentation on an insurance application be considered fraud?

when it is intentional and material

When is controlled business legal?

when the commissions from the controlled business do not exceed the aggregate commissions on all the other business ( specific limits may vary from state to state)

In forming an insurance contract, when does an acceptance usually occur?

when the insurer approves a prepaid application

When does an insurance policy go into effect

when the policy is delivered and the premium is paid

When can the Commissioner or Director examine insurers?

whenever deemed necessary, but at least once every few years ( please check your state regulations for specific time requirement)