Insurance pt.3
How would a contingent beneficiary receive the policy proceeds in an Accidental Death and Dismemberment (AD&D) policy? • If the primary beneficiary is a minor at the time of the insured's death • If the primary beneficiary dies before the insured • If the insured died of accidental causes • If the insured died of natural causes
If the primary beneficiary dies before the insured
What is being delivered during a policy delivery? • A binding receipt to the proposed insured • Insurance contract to the proposed insured • Application and initial premium to the insurer • Policy summary sheet and disclosure material to the proposed insured
Insurance contract to the proposed insured
Under the USA Patriot Act, insurers are required to report receipt of cash payments in excess of • $10.000 • $7.500 • $5.000 • $2.500
$10.000
An employee with $25,000 group term life coverage was recently fired. This employee's group coverage may be converted to a • $125.000 individual whole life policy • $25.000 modified whole life policy • $25.000 individual term life policy • $25,000 individual whole life policy
$25,000 individual whole life policy
The minimum age at which a person can sign a life insurance application is • 15 years • 16 years • 17 years • 18 years
15 years
Florida requires that coverage for newborns begins "from the moment of birth" and continues for • 31 days • 6 months • 12 months • 18 months
18 months
A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct? • Straight life accumulates faster than Limited-pay Life • 20-Pay Life accumulates cash value faster than Straight Life • Cash value accumulation of both 20-Pay Life and Straight Life depend on the insurer's financial rating • 20-Pay Life and Straight Life accumulate cash value at the same rate
20-Pay Life accumulates cash value faster than Straight Life
J is 35-years old and looking to purchase a whole life insurance policy. Which of the following types of policies will provide the most rapid growth of cash value? • Life Paid-up at Age 70 • 20-pay Life • Increasing Term to age 65 • Straight Life
20-pay life
Within how many days after policy delivery can a Medicare Supplement policy be returned for a 100% premium refund? • 15 • 20 • 25 • 30
30
How long is the typical free look period for Long Term care insurance policies? • 20 days • 30 davs • 40 days • 50 days
30 days
An insured pays premiums on an annual basis for an individual health insurance policy. What is the MINIMUM number of days for the Grace Period provision? • 7 • 10 • 20 • 31
31
In Florida, a health policy that is paid on a quarterly basis requires a grace period of • 7 days • 10 days • 31 davs • 45 days
31 days
What is Florida's definition of Life insurance replacement? • A transaction in which coverage on an existing policy is increased • A transaction in which group life coverage is converted to an individual policy • A transaction in which a new policy is bought and an old policy is terminated • A transaction in which a policyowner reinstates a lapsed policy
A transaction in which a new policy is bought and an old policy is terminated
Which of the following types of policies pays a benefit if the insured goes blind? • Universal life • AD&D • Endowment • Adjustable life
AD&D
The option that provides an additional death benefit for a limited amount of time at the lowest possible cost is called an): • Term rider • Accidental Death and Dismemberment rider (AD&D) • Family rider • Annuity
Accidental Death and Dismemberment rider (AD&D)
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
When does a Probationary Period provision become effective in a health insurance contract? • At the policy's inception • 30 davs after the policy's inception • When a claim is submitted • When a covered loss occurs
At the policy's inception
At what time must a policyowner have insurable interest on the insured in order for the life policy to be valid? • After the Contestable period • When the policy proceeds are paid • At the time of application • When the insured dies
At the time of application
Which of the following acts is an agent NOT authorized to do on behalf of an insurer? • Accept premiums from policyowners • Complete insurance applications • Authorize claim payments • Ask health related questions
Authorize claim payments
A pilot applies for Life insurance. The insurer approves the application with a $10 additional monthly premium modification due to the risk involved. The pilot declines the additional premium modification. The insurer will then likely issue the coverage with a(n) • Aviation Exclusion • Graded Benefit • Disability Rider • Waiver of Premium
Aviation exclusion
Which of the following can an agent provide to help a prospective client understand and purchase the most appropriate product? • Policy summary • Conditional receipt • Buyer's guide • Illustration
Buyer's Guide
Which statement about a whole life policy is true? • Beneficiary may be changed only with the consent of the premium payor • Death benefit can usually be adjusted • Cash value may be borrowed against • Premiums are flexible
Cash value may be borrowed against
The Bureau of Unclaimed Property is overseen by the • Unclaimed Property Commissioner • Chief Financial Officer • Governor • Insurance Department
Chief Financial Officer
An insurance company receives E's application for an individual health policy. E did not complete all of the medical history questions because she could not remember the exact dates. E signed the policy and submitted it to the insurance company anyway. A few weeks later, E suffers a heart attack and is hospitalized without completing the medical history questions and paying the initial premium. E is not insured. Which of the following clauses details the conditions that E did not meet? • Entire Contract clause • MIB clause • Insuring clause • Consideration clause
Consideration clause
When an employee is required to pay a portion of the premium for an employer/employee group health plan, the employee is covered under which of the following plans? • Joint • Noncontributory • Contributory • Participating
Contributory
A life insurance application may be rejected on the basis of all of these factors EXCEPT • Medical history • Hobbies • Gender • Weight
Gender
Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it? • Modified Whole Life • 20-Pay Life • Decreasing Term • Endowment
Decreasing term
Which two entities regulate variable annuities? • National Association of Insurance Commissioners; and Department of Financial Services • Department of Financial Services; and Securities Exchange Commission • National Association of Insurance and Financial Advisors; and Securities Exchange Commission • Financial Industry Regulatory Authority; and Department of Financial Services
Department of Financial Services; and Securities Exchange Commission
Which of the following statements does NOT accurately describe the tax treatment of premiums and benefits of individual Accident and Health insurance? • Disability income policy premiums are NOT tax-deductible • Disability income policy premiums are tax-deductible • Major medical policy benefits are normally not taxed • Disability income policy benefits are normally not taxed
Disability income policy premiums are tax-deductible
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: • Entire Contract provision • Insuring clause • Time Limit on Certain Defense provision • Legal Contract clause
Entire Contract provision
If the insured and primary beneficiary are both killed in the same accident and it cannot be determined who died first, where are the death proceeds to be directed under the Uniform Simultaneous Death Act? • Primary beneficiary's estate • Primary beneficiary's next of kin • Insured's estate • Insured's contingent beneficiary
Insured's contingent beneficiary
An architecture firm would stand to lose a lot of money in the event of the death of its project manager. Which type of policy should the firm purchase on its project manager? • Universal Lifé insurance Policy • Key Person Life Policy • Graded Insurance Policy • Executive Insurance
Key Person Life Policy
Which of the following situations does a Critical Illness plan cover? • Asthma • Leukemia • Alcohol rehabilitation • Severe car accident
Leukemia
Which of these would be considered a Limited-Pay Life policy? • 10-year Renewable and Convertible Term • Life Paid-Up at Age 70 • Straight Whole Life • Renewable Term to Age 100
Life Paid-Up at Age 70
The Accelerated Death Benefit provision in a life insurance policy is also known as a(n): • 1035 exchange • Inter vivos gift • Non-forfeiture option • Living Benefit
Living Benefit
What is the main reason for regulating the insurance industry? • Add revenue to Florida's treasury • Maintain the solvency of insurance companies • Controlling the replacement of existing insurance policies • Setting sales quotas for insurers
Maintain the solvency of insurance companies
According to Florida law, a Group Life insurance policy requires a minimum of how many insureds? • 2 • 25 • 100 • No minimum
No minimum
Which of these options can an individual use their medical flexible spending account to pay for? • Vitamins and supplements • Prescription drugs • Household expenditures • Cosmetic procedures
prescription drugs
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? • Nonforfeiture • Entire Contract • Insuring Clause • Owner's Rights
Owner's Rights
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? • Sell the client a more appropriate annuity • Pay monetary restitution to the client • Provide a written apology letter • Pay a penalty of three times the client's loss
Pay monetary restitution to the client
The provision that defines to whom the insurer will pay benefits to is called: • Entire Contract • Proof of Loss • Claim Forms • Payment of Claims
Payment of Claims
Which of these characteristics is consistent with a Straight Life policy? • Owner can adjust both premium and death benefit • Premiums are lower for the first five years, increase the sixth year, then levels off for the remaining length of the contract • Owner has the option of converting to term insurance • Premiums are payable for as long as there is insurance coverage in force
Premiums are payable for as long as there is insurance coverage in force
Which of these Nonforfeiture Options continue a build-up of cash value? • Waiver of Premium • Extended Term • Reduced Paid-Up • Cash Surrender
Reduced Paid-Up
The provision that can be used to put an insurance policy back in force after it has lapsed due to nonpayment is called: • Reinstatement • Grace period • Automatic premium loan • Waiver of premium
Reinstatement
What does a 401(k) plan generally provide its participants? • Tax-free distributions • Salary-deferral distributions • Salary-deferral contributions • A defined retirement benefit
Salary-deferral contributions
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 benefits, which of the following statements is TRUE? • She DOES need to provide evidence of insurability • She does NOT need to provide evidence of insurability • She will have up to 6 months to convert to an individual policy • She will be paying exactly the same premium for the individual plan as she did the group plan
She DOES need to provide evidence of insurability
Upon delivery of a rated life insurance policy, the Producer must obtain each of the following, EXCEPT: • Signed HIPAA disclosure • Signed amendment • Signed statement of Good Health • The required premium
Signed HIPAA disclosure
An immediate annuity consists of a: • variable premium • flexible premium • single premium • deferred premium
Single Premium
K has inherited a large sum of money. K purchases an annuity with this sum on July 1, and starts receiving payments August 1. These payments will continue for as long as she and her spouse lives. Which type of annuity did K purchase? • Single Premium Deferred Annuity with Period Certain • Flexible Premium with Survivor Annuity • Flexible Premium with Period Certain • Single Premium Immediate Joint with Survivor Annuity
Single premium immediate joint with survivor annuity
What is required in the Florida Employee Health Care Access Act? • Small group benefit plans are to be issued on a "conditionally-issue" basis • Small group benefit plans are to be issued on a "guarantee-issue" basis • All small group benefit plans have a 60 day grace period • All small group benefit plans have no lifetime benefit limits
Small group benefit plans are to be issued on a "guarantee-issue" basis
A mutual insurance company and a stock insurance company have one main difference between them. What is this major contrast? • Stock company is regulated by the state where it's incorporated. Mutual company is regulated by its policyholders. • Stock company is considered an authorized insurer. Mutual company is considered an unauthorized insurer. • Stock company is owned by its policyholders. Mutual company is owned by its shareholders. • Stock company is owned by its shareholders. Mutual company is owned by its policyholders.
Stock company is owned by its shareholders. Mutual company is owned by its policyholders.
Which of the following costs would a Basic Hospital/Surgical policy likely cover? • Surgically removing a facial birthmark • Care given at a nursing home • Treating a wound from a soldier injured at war • Lost income caused by a hospital stay
Surgically removing a facial birthmark
D was actively serving in the Marines when he was killed in an automobile accident while on leave. His $100,000 Whole life policy contains a War Exclusion clause. How much will D's beneficiary's receive? • Refund of premiums paid plus interest • Nothing, due to actively serving in the armed forces • Double the face amount because cause of death was accidental • The full face amount
The full face amount
Which of the following statements is true about most Blue Cross/Blue Shield organizations? • They are the same as private insurance companies • They are federally sponsored • They are nonprofit organizations • They are owned by hospitals and physicians
They are nonprofit organizations
Which of the following is considered an accurate statement of an unfair trade practice? • Coercion involves making a malicious statement about the financial condition of an insurance company • 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 • No more than 25% of an agent's insurance sales are allowed to come from controlled business • Rebating occurs when someone intentionally deceives another with the intent to gain financially
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
S, age 40, is looking to buy a Life Insurance policy that will allow for increases or decreases in coverage as his needs change. The policy best suited for S would be • Straight Life • Universal Life • an Endowment • Modified Whole Life
Universal Life
What type of life insurance incorporates flexible premiums and an adjustable death benefit? • Endowment Policy • Modified Whole Life • Decreasing Term • Universal Life
Universal Life
A(n)______Life policy offers the owner investment in products such as money-market funds, long-term bonds and equities. • Adiustable • Term • Universal • Variable
Variable
A(n)_______annuity pays benefits based on units rather than stated dollar amounts. • Deferred • Variable • Immediate • Unit
Variable
A(n)_______Life policy combines investment choices with a form of Term coverage • Straight Whole • Variable Universal • Variable Term • Adjustable Universal
Variable Universal
A $20,000 life insurance policy application is completed, however the producer does not collect the initial premium. At what point does the coverage go into effect? • When the applicant receives the policy and pays the initial premium • When the MIB report is received • Upon a completed medical examination • Upon policy approval
When the applicant receives the policy and pays the initial premium
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 • need to be individually approved or declined during the underwriting process • must contribute toward the group health policy's premiums • take a physical examination before the master policy is issued
are eligible to participate, regardless of their individual health history
The Automatic Premium Loan provision is designed to: • provide a source of revenue to the insurance company • avoid a policy lapse • allow a policyowner to request a policy loan • allow a policyowner to take out additional coverage without evidence of insurability
avoid a policy lapse
Group health plans typically contain a coordination of benefits (COB) provision. This provision's purpose is to • avoid the duplication of benefit payments • assure the policyowner that no changes will be made to the contract • limit the time during which an insurer may contest the validitv of an insurance claim • give the policyowner additional time to pav overdue premiums
avoid the duplication of benefit payments
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 • Defamation • Rebating • Misrepresentation
coercion
The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives workers (and their families) whose employment has been terminated the right to: • continue group health benefits • take out an individual health policy • transfer their coverage to another insurer • convert to disability coverage
continue group health benefits
Florida's 14-day free-look period for life insurance policies begins at the • date of delivery • date of approval • date of application • date of physical examination
date of delivery
T purchased a $100,000 single premium, Straight Life annuity 5 years ago. He has received monthly payments since the inception of the annuity. If T dies, the insurance company • does NOT have to make any further payments • MUST make full payments to the beneficiary • MUST make half-payments to the beneficiary • has the option to continue making payments based on what has already been paid out
does NOT have to make any further payments
Under an individual Health Insurance policy, the Time Limit of Certain Defenses provision states that nonfraudulent misstatements first become incontestable two years • from the date that the policy was issued • from the date that the application was signed • from the date initial premium was collected • from the date of the sales appointment
from the date that the policy was issued
Insurers/agents must, in Florida, offer and issue all 'small employer health plans on a _______basis. • fair • nonrenewal • discounted • guaranteed-issue
guaranteed-issue
Under a Basic Medical Expense policy, what does the hospitalization expense portion cover? • hospital room and board • hospital administration expenses • surgeon's fees • physician fees
hospital room and board
Who has the option to renew a Renewable Term policy? • Agency • Agent • Insured • Beneficiary
insured
A policyowner's rights are limited under which beneficiary designation? • Revocable • Tertiary • Contingent • Irrevocable
irrevocable
A foreign insurance company doing business in Florida • is not subiect to Florida insurance laws • is a company that was formed under the laws of another state • is a company that was formed under the laws of another country • is only authorized to write business outside the United States
is a company that was formed under the laws of another state
A stock insurance company • is owned exclusively by its policyowners • guarantees dividends to its shareholders • elects a governing body by its policyowners • is owned exclusively by its shareholders
is owned exclusively by its shareholders
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 • paying transfer fees • paying trustee fees • ever paying income taxes on the distributions
mandatory income tax withholding on the transfer amount
When funds are shifted straight from one IRA to another IRA, what percentage of the tax is withheld? • 10% • 20% • 30% • None
none
In Florida, agents are allowed to engage in rebating if • the amount rebated stays below a maximum percentage of annual premium • the transaction is reported to the IRS for tax purposes • the insured gives his/her written consent • offered to all insureds in the same actuarial class
offered to all insureds in the same actuarial class
A long-term care lapse notice must be delivered to both the applicant and • secondary addressee • beneficiary • personal physician • MIB
secondary addressee
The investment gains from a Universal Life Policy usually go toward: • the death benefit • the dividends • the cash value • paying off a policy loan
the cash value
The amount of coverage on a group credit life policy is limited to: • half of the insured's total loan value • the insured's total loan value • 75% of the insured's total loan value • $25,000
the insured's total loan value
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 • they conduct business in Florida • they provide a service to their members • they require a certain level of member participation
they are insured by an authorized insurer
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? • Five • Ten • Twenty • Thirty
twenty
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 • coercion • rebating • defamation • twisting
twisting
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 • broker • insurer • viator agent
viatical settlement provider
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 • issued a voidable policy • committed an act of fraud • assigned the risk to a reinsurer
waived one of its legal rights
An agent's license can be suspended or revoked by • writing primarily controlled business • not meeting annual sales quota • replacing an existing insurance policy with a new one • issuing a binding receipt
writing primarily controlled business