Life Health Variable Annuity License

A Peril is: Question 3 options: A) A specific event causing a loss B) An illness and injury C) Considered loss protection D) Relates to law of large numbers

A specific event causing a loss In other words, a Peril is the cause of a Risk

What Benefit Schedule is based on each employee's salary? A) Earnings B) Employment Position C) Flat Benefit D) Rate Benefit

A) Earnings Under an earnings schedule, the amount of life insurance provided to individual employees is based on each employee's salary or earnings

In regards to IRA participation, the additional catch up amount allowed in 2011 and after is: A) $1,000 B) $5,000 C) $5,500 D) None of the Choices Provided

A) $1,000 Be sure not to confuse the catch up amount with the yearly IRA contribution limit

Exchanging a life insurance policy for another life insurance policy, endowment policy, or annuity contract are allowed under a: A) 1035 Exchange B) Viatical C) Accelerated Death D) Tax Exchange

A) 1035 Exchange A 1035 Exchange is defined as exchanging like kind contracts without taxing the benefits:

This permits the transfer of funds of like products without having to pay taxes on the proceeds: A) 1035 Exchange B) Indexed Annuity C) Ratcheting D) Point-to-Point

A) 1035 Exchange Section 1035 of the Internal Revenue Code provides for tax-free exchanges of certain kinds of financial products, including annuity contracts

Under COBRA, when the employee terminates employment he or she can continue group medical coverage up to: A) 18 months by paying the required premium B) 20 months by paying the required premium C) 18 months by paying at least 50% of the required premium D) The employee cannot continue group medical coverage

A) 18 months by paying the required premium Known as the Consolidate Omnibus Budget Reconciliation Act of 1985 (i.e., COBRA), requires employers with 20 or more employees to continue group medical expense coverage for terminated workers (as well as their spouses, divorced spouses, and dependent children) for up to 18 months

COBRA Continuation of Benefits is a federal law that affects employers with: A) 20 or More Employees B) 30 or More Employees C) 1 or More Employees D) 40 or More Employees

A) 20 or More Employees Known as the Consolidated Omnibus Budget Reconciliation Act of 1985 (i.e., COBRA), requires employers with 20 or more employees to continue group medical expense coverage for terminated workers (as well as their spouses, divorced spouses, and dependent children) for up to 18 months (or 36 months, in some situations) following termination

The Conversion Privilege must be exercised within how many days of leaving employment? A) 30 B) 50 C) 75 D) 10

A) 30 he conversion must be exercised within a given period of time, usually 30 to 31 days, depending on the state. During this time, the individual remains insured under the group plan, whether or not a conversion ultimately takes place

Florida Law requires the agent to notify the department of any change of name, residence address, business address or mailing address within: A) 30 days of the change B) 10 days of the change C) 20 days of the change D) This is not a requirement

A) 30 days of the change Florida law states: Every licensee shall notify the Department of Financial Services, in writing, within 30 days after a change of his or her name, his or her residence address, his or her principal business street address or mailing address, contact telephone number (including a business telephone number), or e-mail address

Medicare Supplements are given a: A) 30-day Free Look Period B) 10-day Free Look Period C) 20-day Free Look Period D) 35-day Free Look Period

A) 30-day Free Look Period In the case of Medicare Supplements and Long-Term Care policies the period is 30 days

Profit Sharing is defined as: A) A plan in which contributions are tied to the company's profits. B) A plan in which benefits are in the form of company stock. C) A category of plans that establishes some specific benefit at retirement. D) A plan which is a tax-sheltered annuity for Non Profit Organizations.

A) A plan in which contributions are tied to the company's profits. Profit-Sharing plans are established and maintained by an employer and allow employees to participate in the profits of the company

Insurance which provides a stated lump-sum benefit in the event of accidental death or in the event of loss of body parts due to accidental injury is defined as: A) Accidental Death and Dismemberment B) Disability Income Insurance C) Whole Life Insurance D) Major Medical

A) Accidental Death and Dismemberment Accidental Death and Dismemberment insurance is the primary form of pure accident coverage. As such, it serves a somewhat limited purpose: it provides a stated lump-sum benefit in the event of accidental death or in the event of loss of body members due to accidental injury

Benefit payments requiring that the cause and the result of an accident must be unintentional is defined as: A) Accidental Means B) Accidental Result C) Capital Sum D) Accidental Cause

A) Accidental Means By way of a review, policies that base their benefit payments on Accidental Means require that both the cause and the result of an accident must be unintentional

The __________ is the time when funds are being paid into the annuity and the __________ is the time period when benefits are being paid to the annuitant: A) Accumulation Period; Annuity Period B) Annuity Period; Accumulation Period C) Funding Period; Payout Period D) Payout Period; Funding Period

A) Accumulation Period; Annuity Period The accumulation period is that time during which funds are being paid into the annuity, in the form of payments by the contract holder and interest earnings credited by the insurer. The payout or annuity period refers to the point at which the annuity ceases to be an accumulation vehicle and begins to generate benefit payments on a regular basis

A company which has filed with the Department and is licensed to transact business in the state is defined as a(n): A) Admitted B) Non-admitted C) Fraternal D) Domestic

A) Admitted An Admitted Insurance Company is one which the Office of Insurance Regulation has licensed to transact business in Florida under the provisions of the state laws

A fixed, unchanging fraction of each payment is considered a return of principal and so is excluded from gross income for tax purposes. Thus, that that portion of the proceeds is received tax free. This is defined as: A) Annuity Rule B) Policy Surrender C) Dividends D) None of the Choices Provided

A) Annuity Rule The Annuity Rule is a method of taxing life insurance proceeds

Defamation is defined as: A) Any statement maliciously critical of a person or calculated to injure a person. B) Any actions where the agent misrepresents an HMO contract. C) Any action to protect the interest of the consumer. D) Libel or Slander.

A) Any statement maliciously critical of a person or calculated to injure a person. Defamation is making any oral or written statement or any pamphlet, circular, article, or literature that is false or maliciously critical of any person and that is calculate to injure such person

Making a policy effective at an earlier date than the present is defined as: A) Backdating B) Binding Receipts C) Interim Coverage D) None of the Choices Provided

A) Backdating Most states put a six month limit on backdating

The maximum length of time that Disability Income benefits will be paid to the disabled insured is defined as the: A) Benefit Period B) Elimination Period C) Probationary Period D) Disability Period

A) Benefit Period The Benefit Period is the maximum length of time that Disability Income benefits will be paid to the disabled insured. The longer the benefit period, the higher the cost of the policy

This receipt provides temporary insurance coverage until the insurance company rejects the application: A) Binding B) Conditional C) Pro-Rated D) Insurability

A) Binding The Binding Receipt is also known as the "Temorary Insurance Agreement"

This provision activates only when the insured and primary beneficiary die as a result of the same accident: A) Common Disaster Provision B) Spendthrift Trust Clause C) Facility-of-Payment Provision D) None of the Choices Provided

A) Common Disaster Provision This provides policyowners greater control over payment of the policy proceeds

Interest is earned on premiums paid for a health insurance policy causing the premium to: A) Decrease B) Increase C) Remain the Same D) Double

A) Decrease A large portion of every premium received is invested to earn interest. The interest earnings reduce the premium amount that otherwise would be required from policy owners

This plan provides funds to purchase the disabled owners' or partners' share of the business: A) Disability Buy Sell B) Pension C) Business Overhead D) Cafeteria

A) Disability Buy Sell A Disability Buy-Sell agreement operates in much the same way as a Life Insurance Buy-Sell agreement; however, in this case, the plan sets forth the terms for selling and buying a partner's or stock owner's share of a business in the ever she becomes disabled and is no longer able to participate in the business

Insurance which provides an individual with a stated amount of periodic income in the event he or she cannot work due to a disabling illness or accident is defined as: A) Disability Income Insurance B) Medicare Insurance C) Medicaid Supplement Insurance D) Major Medical Health Insurance

A) Disability Income Insurance Disability Income insurance is designed to provide an individual with a stated amount of periodic income in the event she cannot work due to a disabling illness or accident. Statistics prove that the probability of disability greatly exceeds the probability of death during an individual's working years

The time immediately following the start of a disability when benefits are not payable is defined as the: A) Elimination Period B) Probationary Period C) Waiver of Premium D) Benefit Period

A) Elimination Period Similar in concept to a Deductible, the Elimination Period is the time immediately following the start of a disability when benefits are not payable. Elimination Periods eliminate claims for short-term disabilities for which the insured can usually manage without financial hardship and save the insurance company from the expense of processing and settling small claims

The Social Security program is funded by payroll taxes through the: A) Federal Insurance Contribution Act (FICA) B) Federal Government C) State Government D) Federal Insurance Funding Act (FIFA)

A) Federal Insurance Contribution Act (FICA) It is important to note that a basic condition for coverage is that a person must work; OASDI is funded by a payroll tax (called the FICA tax) and eligibility for benefits is contingent upon a person contributing to the system during his or her working years

This fund is the amount of cash that is required at death to pay for a deceased breadwinner's last illness expenses, funeral cost, unpaid taxes, legal fees, and court costs: A) Final Expense Fund B) Housing Fund C) Monthly Income Fund D) Dependency Period

A) Final Expense Fund A Final Expense Fund is the amount of cash that is required (and should be on hand) at death to pay for a deceased breadwinner's last illness and funeral costs, outstanding debts, federal and state death taxes, and any other unpaid taxes, legal fees, court costs, executor's fees, and so on (Life, Health and Variable Contracts Study Manual, page 261).

Each employee at ABC Company is offered a $50,000 life insurance policy. This would be defined as a(n): A) Flat Benefit B) Schedule Benefit C) Salary Benefit D) Pension Benefit

A) Flat Benefit A flat benefit schedule provides the same amount of life insurance to all employees, regardless of their earnings or position. Flat benefit schedules are most frequently used where the employer wants to provide only a small amount of insurance to its employees

Which of the following is funded with pre-tax employee contributions called salary reductions? A) Flexible Spending Account B) Health Reimbursement Account C) Health Savings Account D) None of the Choices Provided

A) Flexible Spending Account The Flexible Spending Account is a Cafeteria Plan

Eloise deposits $2,000 into a Variable Annuity account. If the cost of one Accumulation Unit is $500, how many Accumulation Units will be assigned to the account? A) Four B) Two C) Five D) Not enough information

A) Four Premiums paid into the company, less a deduction for expenses, are converted to Accumulation Units and credited to the individual's account. For example, if that person's net premium contribution is $125 and the cost of one Accumulation Unit is $125, the net contribution buys one Accumulation Unit. If the net contribution to an individual account is $200 and the cost of one Accumulation Unit is $100, two Accumulation Units are assigned to the individual's account. Fractional Units also may be assigned as necessary

The following are standard/required provisions for group life insurance policies in Florida, EXCEPT: A) Fourteen day grace period for the payment of any premium B) Incontestability, except for nonpayment of premium after it has been in force for 2 years C) A provision setting forth the conditions, if any, under which the insurer reserves the right to require evidence of individual insurability D) A provision specifying an equitable adjustment of premiums and/or benefits in the event the age of a person has been misstated.

A) Fourteen day grace period for the payment of any premium A group life insurance policy shall provide that the policyholder is entitled to a grace period of 31 days for the payment of any premium except the first

A provision providing the policy owner with the right to review the policy and return it for a full refund within a specified period is defined as: A) Free Look B) Cancellable C) Non-Cancellable D) Refund

A) Free Look Florida mandates that health insurance policies contain a free-look provision permitting policy owners 10 days in which to examine their new policies at no obligation. If they decide not to keep their policies, they may return them within the prescribed time limit and receive full refunds of premiums paid. However, for Medicare supplement and long-term care policies, Florida requires a 30-day free look

When a master contract insures a number of people under one contract and the group is underwritten as a whole, not as individuals, is a feature of: A) Group Insurance B) Term Insurance C) Universal Insurance D) Whole life Insurance

A) Group Insurance The basic principle of group insurance is that it provides insurance coverage for a number of people under a single master contract or master policy. Because a group policy insures a group of people, it is the group - not each individual - that must meet the underwriting requirements of the insuring company

Which of the following offers the lowest cost and is the most popular product of Group Life Insurance? A) Group Term Life Insurance B) Group Universal Life Insurance C) Group Whole Life Insurance D) Group Variable Life Insurance

A) Group Term Life Insurance Most group life plans are term plans, which use annual renewable term (ART) insurance as the underlying policy. The prevalent use of ART insurance is another reason why the cost of group insurance is fairly low

Under Group Health insurance, the master contract is between: A) Insurance Company and Employer B) Insurance Company and Employee C) Employer and Employee D) Insurance Company and Group

A) Insurance Company and Employer Like Group Life, Group Health is a plan of insurance that an employer (or other eligible group sponsor) provides for its employees. The contract for coverage is between the insurance company and the employer, and a master policy is issued to the employer

A broad statement listing the conditions under which benefits will be paid is defined as the: A) Insuring Clause B) Conversion Privilege C) Consideration Clause D) Illegal Occupation Clause

A) Insuring Clause Generally, the insuring clause is a broad statement on the first page of the health policy, stipulating conditions under which benefits are to be paid

This policy pays benefits for treatment of a specific risk or disease: A) Limited Risk Policy B) Hospital Fixed Rate C) Comprehensive Major Medical D) Nurses' Expense

A) Limited Risk Policy Policies that provide medical expense coverage for specific kinds of illnesses are known as limited risk or dread disease policies. They are available primarily due to the high costs associated with certain illnesses, such as cancer or heart disease

Insurance which covers a broad range of medical, personal and environmental services designed to assist individuals who have lost their ability to remain completely independent in the community is defined as: A) Long Term Care Insurance B) Medicare Supplement Policy C) Medicaid Supplement Policy D) Medigap Supplement Policy

A) Long Term Care Insurance You'll often see nursing home care referred to as Long Term Care. However, Long Term Care (LTC) refers to a broad range of medical, personal, and environmental services designed to assist individuals who have lost their ability to remain completely independent in the community

Business where the application is taken and the policy delivered by mail is defined as: A) Mail Order Insurance B) Domestic Insurance C) Fraternal Insurance D) Admitted Insurance

A) Mail Order Insurance A Mail Order Insurance Company is one that operates principally by mail without personal agent solicitation of prospects. Florida law prohibits unauthorized mail order insurers from soliciting in Florida. The transaction of insurance, including the application for insurance, must be taken by and the policy delivered through a licensed and appointed Florida agent

To control cost and provide health care services efficiently is defined as: A) Managed Care B) Medical Cost Management C) Medical Expenses D) Coinsurance

A) Managed Care Managed Care Organizations (MCOs) achieve these results because they integrate the financing and delivery of health care services to contain and control costs and to provide health care and services as efficiently as possible

Defined as protection to cover the cost of hospital care, surgical expenses, physician expenses and other medical treatment: A) Medical Expense Insurance B) Disability C) Accidental Death and Dismemberment D) Hospitalization

A) Medical Expense Insurance Medical Expense insurance provides financial protection against the cost of medical care by reimbursing the insured, fully or in part, for these costs. It includes many kinds of plans that cover hospital care, surgical expenses, physician expenses, medical treatment programs, outpatient care, and the like

Insurance which provides hospital and medical expense insurance protection to those aged 65 and older is defined as: A) Medicare B) Medicaid C) Medicare Advantage D) State Workers Compensation Programs

A) Medicare Medicare provides hospital and medical expense insurance protection to those aged 65 and older, to those of any age who suffer from chronic kidney disease, or to those who are receiving Social Security disability benefits

This is designed to insure against a certain level of large, unpredictable losses, above and beyond the self-insured level: A) Minimum Premium Plan B) Multiple Employer Trust C) Multiple Employer Welfare Arrangement D) Maximum Premium Plan

A) Minimum Premium Plan To bolster a Self-Insured plan, some groups adopt a Minimum Premium plan (MPP). These plans are designed to insure against a certain level of large, unpredictable losses, above and beyond the self-insured level

The expected number of accidents and illnesses that may occur and how long a disability will last is a health insurance premium factor defined as: A) Morbidity Rates B) Risk Factors C) Interest D) Expense

A) Morbidity Rates Whereas Mortality Rates show the average number of persons within a larger group of people who can be expected to die within a given year at a given age, morbidity rate indicate the average number at various ages who can be expected to become disabled each year due to accident or sickness (

Which factor has the greatest effect on life insurance premium calculations? A) Mortality B) Expense C) Interest D) Taxes

A) Mortality Mortality is the average number of deaths that will occur each year in each group

The prediction of the average number of deaths that will occur each year, based on statistics, is defined as: A) Mortality Factor B) Interest Factor C) Fear Factor D) Expense Factor

A) Mortality Factor

A type of Multiple Employer Trust that is self-funded is defined as a: A) Multiple Employer Welfare Arrangement B) Multiple Employer Student Trust C) Multiple Employer Public Service Trust D) Multiple Employer Union Trust

A) Multiple Employer Welfare Arrangement A Multiple Employer Welfare Arrangement (MEWA) is a type of MET for union employees that is self-funded and has tax-exempt status.

These plans are not qualified for favorable tax treatments: A) Non-Qualified B) Qualified C) Defined Contribution D) Unidentified Contribution

A) Non-Qualified If a plan does not meet the specific requirements set forth by the federal government, it is termed a nonqualified plan and, thus, is not eligible for favorable tax treatment

PPO services: A) Operate on a fee-for-service basis B) Operate on a prepaid basis C) Never require a deductible D) Stress preventative care

A) Operate on a fee-for-service basis Unlike HMOs, Preferred Provider Organizations usually operate on a fee-for-service-rendered basis, not on a prepaid basis

A policy which permits the insurer to terminate the coverage on a specific date and the premiums can be increased is defined as: A) Optionally Renewable B) Cancellable C) Conditionally Renewable D) Non-Cancellable

A) Optionally Renewable The renewability provision in an Optionally Renewable Policy gives the insurer the option to terminate the policy on a date specified in the contract. Furthermore, this provision allows the insurer to increase the premium for any class of optionally renewable insureds

Medicare coverage provided for inpatient hospitalization, post hospital skilled facility care and home care is covered under Medicare: A) Part A B) Part B C) Part C D) Part D

A) Part A Medicare Part A provides coverage for inpatient hospitalization, post-hospital skilled facility care, and home care. For the first 60 days of hospitalization during any one benefit period, Medicare pays for all covered services, except for an initial deductible ($1,216 in 2014). Covered services include semi-private rooms, nursing services, and other inpatient hospital services

When each partner is required to purchase a Life Insurance policy on each of the other partners it is defined as: A) Partnership Cross-Purchase Plan B) Entity Purchase Buy -Sell Plan C) Partnership Buy- Sell Plan D) Cross-Purchase Plan

A) Partnership Cross-Purchase Plan Under the Cross-Purchase Buy-Sell plan, which is the more common approach to a buyout, the partners individually agree to purchase the interest of a deceased partner, and the executor of the deceased partner's estate is directed to sell the interest to the surviving partners. The partnership itself is not a party to the agreement

Which of the following improves the pension system? A) Pension Protection Act of 2006 B) SIMPLE plan C) Keogh Plans (HR-10s) D) Salary Reduction SEP (SARSEP) plans

A) Pension Protection Act of 2006 The Pension Protection Act of 2006 embodied the most sweeping reform of America's pension laws in over 30 years. It improves the pension system and increases opportunities to fund retirement plans

A distribution in which policy proceeds are paid only to the beneficiaries who are living and have been named in the policy is defined as: A) Per Capita B) Per Stirpes C) Uniform Simultaneous Death D) Facility-of-Payment

A) Per Capita he Per Capita beneficiary claims in his own right

This sum is equal to the maximum amount an AD&D policy will pay: A) Principal Sum B) Capital Sum C) Accidental Injury D) Limited Sum

A) Principal Sum The Principal Sum under an AD&D policy is the amount payable as a death benefit. It is the amount of insurance purchased - $10,000, $25,000, $50,000, $100,000, or more. The Principal Sum represents the maximum amount the policy will pay

The period which excludes pre-existing sickness from coverage is defined as the: A) Probationary Period B) Elimination Period C) Benefit period D) Residual Period

A) Probationary Period The Probationary Period specified in a Disability Insurance Policy is the period of time that must elapse following the effective date of the policy before benefits are payable. It is a one-time-only period that begins on the policy's effective date and ends 15 or 30 days after the policy has been in force. The purpose of the Probationary Period is to exclude preexisting sicknesses from coverage and provide a guidepost in borderline cases when there is a question as to whether an insured became ill before or after the effective date of the policy

Which of the following Annuities, which have met government regulations and contributions, are tax deferred to the owner? A) Qualified B) Structure Settlement C) Variable D) Non-Qualified

A) Qualified A Qualified Plan is a tax-deferred arrangement established by an employer to provide retirement benefits for employees. The plan is qualified by reason of having met government requirements. A Qualified Annuity is an Annuity purchased as part of a Tax-Qualified Individual or Employer-Sponsored Retirement plan, such as an individual retirement account (IRA), a tax-sheltered annuity (TSA) or other IRS-recognized Plans

This is defined as protecting past increases and limiting any drop in the cash value from prior levels: A) Ratcheting B) Floor C) Spread D) Participation Rate

A) Ratcheting This guarantees that past increases in accumulated cash value (e.g., from previous years) will not be lost. Suppose the stock index drops 10%. If the contract is ratcheted year to year, it may guarantee that the values will not go down due to the drop in stock index. The ratcheting effectively sets the previous value as a minimum floor, which limits the drop in values; sometimes it precludes all drops, allowing only gains

Under Medical Expense insurance, which contract pays benefits of actual expenses? A) Reimbursement Contract B) Fixed Rate Contract C) Benefit Contract D) Stop Loss Contract

A) Reimbursement Contract Medical Expense plans typically pay benefits as a reimbursement of actual expenses, although some benefits are paid at a fixed rate, regardless of the actual loss

The scale that assigns a set of points to each surgical procedure and a dollar amount conversion factor: A) Relative Value Scale B) Corridor Value Scale C) Flat Value Scale D) Fixed Value Scale

A) Relative Value Scale The Relative Value Scale is similar to the Surgical Schedule Method, except that instead of a flat dollar amount being assigned to every surgical procedure, a set of points is assigned... The policy will carry a stated dollar-per-point amount, known as the Conversion Factor, to determine the benefit

Provides the policyholder with the right to change the beneficiary and remain in control of the contract. This is defined as a(n): A) Revocable Beneficiary B) Irrevocable Beneficiary C) Tertiary Beneficiary D) Primary Beneficiary

A) Revocable Beneficiary The Revocable Beneficiary has no vested claim on the policy or its proceeds as long as the insured is living

A policyowner assigns benefit payments from the insurer directly to the health care provider. This is defined as: A) Right of Assignment B) Reimbursement Approach C) Service Provider D) Right of Reimbursement

A) Right of Assignment The Right of Assignment built into most commercial health policies lets policyowners assign benefit payments from the insurer directly to the health care provider, thus relieving the policyowner of first having to pay the medical care provider

This rider provides for the payment of additional income when the insured is eligible for Social Insurance benefits, but those benefits have not yet begun. This is defined as: A) Social Security B) Waiver of Premium C) Guaranteed Insurability D) Cost of Living Adjustment

A) Social Security The Social Security rider, sometimes called the Social Insurance Substitute rider, provides for the payment of additional income when the insured is eligible for social insurance benefits but those benefits have not yet begun, have been denied, or have begun in an amount less than the benefit amount of the rider

This program was designed to provide a basic floor of protection to supplement a personal life insurance plan: A) Social Security B) OASDI Benefits C) Disability D) Survivor Benefits

A) Social Security The Social Security system provides a basic floor of protection to all working Americans against the financial problems brought on by death, disability, and aging. Social Security augments but does not replace a sound personal insurance plan

This plan enables an employer and employee to share premium payments toward the purpose of insurance on the employee's life: A) Split-Dollar B) Salary Continuation C) Funding Medium D) Buy-Sell

A) Split-Dollar Split-Dollar insurance plans enable an employer and any employee of the employer's choosing to share premium payments toward the purchase of insurance on the employee's life

This program provides benefits due to work related illness, injuries or death regardless if there is negligence of the employer or employee: A) State Workers Compensation B) Multiple Employer Trust C) Minimum Premium Plan D) State Joint Underwriting

A) State Workers Compensation All states have Workers' Compensation laws, which were enacted to provide mandatory benefits to employees for work-related injuries, illness, or death. Employers are responsible for providing Workers' Compensation benefits to their employees and do so by purchasing coverage through state programs, private insurers, or by self-insuring

All of the following are true regarding the Chief Financial Officer EXCEPT: A) The Chief Financial Officer is appointed by the Governor. B) The Chief Financial Officer is a member of the Financial Services Commission C) The Chief Financial Officer, the Financial Services Commission, and the Commissioner of the OIR administer the insurance laws of Florida. D) The Chief Financial Officer serves as head of the Department of Financial Services.

A) The Chief Financial Officer is appointed by the Governor. The Chief Financial Officer is an independently elected official and a member of the Governor's cabinet

All of the following are true regarding HMO laws and rules EXCEPT: A) The HMO operates solely as a closed panel. B) The HMO contract is the arrangement between the subscriber and the HMO. C) The provider is any physician, hospital or health care services contracted to treat the subscriber. D) A Co-Payment is the amount the subscriber will pay on each visit to a provider.

A) The HMO operates solely as a closed panel. A Health Maintenance contract is the term used to delineate the arrangement between the subscriber or group of subscribers and the HMO... Provider is any physician, hospital, organization, or other person or institution that furnishes health care services and is licensed or otherwise authorized to practice in Florida... Co-payment is the specified dollar amount that the HMO subscriber must pay for certain covered health care services

The Consideration Clause states: A) The amount and frequency of premium payments, the effective date, terms of the contract and the insured's right to renew. B) The conditions under which benefits will be paid. C) The date children are no longer covered and the conditions that qualifies a dependent for benefits. D) Any provision will conform to the state laws.

A) The amount and frequency of premium payments, the effective date, terms of the contract and the insured's right to renew. The Consideration Clause states the amount and frequency of premium payments... Frequently, the consideration clause also lists the effective date of the contract and defines the initial term of the policy. In addition, it may specify the insured's right to renew the policy

Capitation is defined as: A) The amount of the premium that is given to the doctor for treating the subscriber. B) The amount the subscriber will pay on each visit to a provider. C) The HMO cannot pay their liabilities. D) The arrangement between the subscriber and the HMO.

A) The amount of the premium that is given to the doctor for treating the subscriber. Capitation is the fixed amount paid by the HMO to a health care physician or provider in exchange for the medical services rendered by that provider

Reinstatement of a contract occurs when: A) The delinquent premium is accepted by the company. B) The premium is paid prior to the grace period. C) Policy is permanently cancelled. D) The grace period has expired.

A) The delinquent premium is accepted by the company. Under certain conditions, a policy that has lapsed may be reinstated. Reinstatement is automatic if the delinquent premium is accepted by the company or its authorized agent and the company does not require an application for reinstatement

Which statement about the Dependency Period is true? A) The income needs are greatest while the children are growing up. B) Social Security Benefits are not considered during the blackout period. C) Social Security provides income for the surviving spouse until each child is 18 years of age. D) Social Security benefits for the surviving spouse stops when the youngest child reaches age 18.

A) The income needs are greatest while the children are growing up. The need for family income is greatest while the children are growing up. When a bread-winner dies, a surviving spouse with small children usually will be eligible for Social Security benefits. However, as we have seen, Social Security benefits, while helpful, generally will not meet the total family need

Which statement is NOT true about Deferred Compensation Plans? A) The plan can be Qualified. B) The plan is Nonqualified. C) Benefits can be offered for select employees. D) Only Non-Qualified plans receive favorable tax treatment.

A) The plan can be Qualified. A Deferred Compensation plan is an example of a Nonqualified plan... Because it is nonqualified, a company can pick and choose who among its employees and owners may participate in the plan, without regard to years of service, salary levels, or any other criteria. A nonqualified plan allows a business to provide proportionate benefits for officers, executives, and other highly paid employees; a qualified plan is not nearly as flexible

The value of one Accumulation Unit is found by dividing the company's Variable Annuity Account by: A) The total number of accumulation units outstanding B) The total number of accumulation accounts C) The total number of outstanding policies D) The total number of accumulation units from the previous year

A) The total number of accumulation units outstanding The value of one Accumulation Unit is found by dividing the total value of the company's VA fund by the total number of Accumulation Units outstanding. Thus, if a company had $20 million in its Variable Annuity Account and a total of four million accumulation units outstanding, the value of one accumulation unit would be $5

Each year the HMO is required to file a report concerning all activities within: A) Three months of the fiscal year end B) Three months prior to the fiscal year end C) One month of the fiscal year end D) One month prior to the fiscal year end

A) Three months of the fiscal year end Each HMO is required to file a report of its activities within three months of the end of each fiscal year. The office may require reports more frequently if it is deemed necessary

A provision that explains that the insurer must pay claims immediately when they have received the required information is defined as: A) Time of Payment of Claim B) Claim Payment C) Proof of Loss D) Notice of Claim

A) Time of Payment of Claim The Time of Payment of Claims provision provides for immediate payment of the claim after the insurer receives notification and proof of loss

What kinds of groups are eligible for Group Insurance coverage? A) Trade Associations B) Blanket C) Group Credit D) Multiple Employer Trust

A) Trade Associations Insurable Groups typically fall into one of the following categories: Single-Employer, Multiple-Employer, Labor Unions, Trade Associations, Creditor/Debtor or Fraternal Organizations

Defined as replacing an existing life insurance policy without providing full disclosure: A) Twisting B) Replacement C) Sliding D) Misrepresentation

A) Twisting Twisting is a Misrepresentation made by an insurance agent to induce a policyholder to lapse a policy in order to switch insurance companies. It involves the failure to disclose all relevant facts

The insurer can contest the validity of a claim for Misrepresentation or fraud if it is within which of the following timeframes: A) Two-year Contestable Period B) Three-year Contestable Period C) Lifetime of the Policy D) Ten-year Contestable Period

A) Two-year Contestable Period A policy may be contested for Misrepresentation or fraud by the applicant in obtaining the policy provided this is done within the contestable period. All policies provide that they shall be incontestable after a certain period, usually two years

A risk selection that helps the insurer decide if an applicant is insurable is defined as: A) Underwriting B) Proper Solicitation C) Conditional Receipt D) Application Receipt

A) Underwriting Underwriting is another term for risk selection (

Benefits will be paid as if the insured died last. This is known as the: A) Uniform Simultaneous Death Act B) Spendthrift Trust Act C) Classification of Beneficiaries D) Revocable Beneficiary

A) Uniform Simultaneous Death Act Defined as a law in the state on how to pay benefits if the insured and the beneficiary die in the same accident

This Annuity was designed to overcome the purchasing power shortcomings and to offer income that will fluctuate with investment performance: A) Variable Annuity B) Accumulation Annuity C) Fixed Annuity D) Variable Whole Life

A) Variable Annuity The Variable Annuity was developed to overcome the "purchasing power" shortcomings of fixed annuities. This is accomplished by the payment of annuity income that fluctuates with changes in the investment performance of a portfolio of Equities

Prior to retirement, Ellen has terminated her employment with XYZ Company. Which of the following will protect Ellen's rights to her benefits? A) Vesting Schedule B) Deferred Compensation Schedule C) Simplified Employee Pension D) Defined Benefit Plan

A) Vesting Schedule Vesting means the right employees have to their retirement funds; benefits that have "vested" belong to each employee even if the employee terminates employment prior to retirement

Which of the following permits the terminally ill to sell their contract to another party and receive the payment tax-free? A) Viatical Settlement B) Fixed Period C) Accelerated Death D) Life Income

A) Viatical Settlement Insureds receive anywhere from 50-80% of the policy's face value

This clause is defined as the legal statement signed by the company officer and applicant noting that a specific condition is not covered: A) Waiver for Impairments B) Conversion Privilege C) Cancellation D) Illegal Occupation

A) Waiver for Impairments A waiver is dated and bears the signature of an officer of the company and, in many cases, the applicant. This is usually called an impairment rider

The Exclusion Ratio: A) When income is taken will designate what amount is tax-free B) Designed to overcome the purchasing power shortcomings C) Designed to help the investor understand the risk D) Applies the same amount of money in each and every contribution

A) When income is taken will designate what amount is tax-free The exclusion ratio is the ratio the aggregate premiums paid by the annuitant bears to the expected return over the annuitant's lifetime. This ratio is applied to each payment to determine the tax-free portion. The balance is included in gross income

A Noncontributory plan designates that the employer: A) Will pay 100% of the premium B) Require 50% of employees be covered under the plan C) Pay 75% of employee medical costs D) Will pay part of the premium cost

A) Will pay 100% of the premium If the employer pays the entire premium, the plan is Noncontributory; if the employees share a portion of the premium, it is Contributory. Most Noncontributory group health plans require 100% participation by eligible members, whereas Contributory group health plans often require participation by 75% of eligible members

Which is not a primary factor in computing the basic premium for life insurance? A) Interest B) Mortality C) Expense D) Age

Age Age is considered an "Other Premium Factor"

Under Social Security, the death benefit offers a lump sum amount payable to the surviving spouse or eligible children for a maximum of: A) $225 B) $255 C) $275 D) $155

B) $255 Social Security provides a one-time lump-sum death benefit to a deceased worker's surviving spouse or children. The amount of this benefit is equal to three times the worker's PIA, up to a maximum of $255

This provides the insured with time to review the Life Insurance Policy and return for a full refund if requested: A) 20-day Free Look B) 14-day Free Look C) 08-day Free Look D) Full Refund

B) 14-day Free Look An insurance company is required to provide to each prospective purchaser a "Buyers Guide" and a policy summary prior to accepting an initial premium unless the policy being applied for has a provision for unconditional refund for a period of at least 15 days or unless the policy summary contains an offer of such an unconditional refund, in which event the Buyer's Guide and policy summary must be delivered with the policy or prior to delivery of the policy

Jeremy owns a motorcycle shop and is self-employed. The FICA tax rate for Jeremy is: A) 7.65% B) 15.30% C) 7.0% D) 13.65%

B) 15.30% The tax rate for self-employed persons is the total of the employer and employee rates, or 15.30% (may also see it written as 15.3%)

The Cancellation Provision requires the insurer to notify the insured with written notice how many days prior to cancellation? A) 35 B) 45 C) 55 D) 65

B) 45 Though prohibited in a number of states, the provision for cancellation gives the company the right to cancel the policy at any time with 45 days written notice to the insured

Under an Individual Retirement Plan, taxes and penalties are assessed if the funds are taken out prior to age: A) 69 1/2 B) 59 ½ C) 71 D) 72

B) 59 ½ With few exceptions, any distribution from a Traditional IRA before age 59 ½ will have adverse tax consequences. In addition to income tax, the taxable amount of the withdrawal will be subject to a 10% penalty (similar to that imposed on early withdrawals from Deferred Annuities)

A 10% penalty will be imposed by the IRS for anyone who removes funds from their Annuity prior to age: A) 69 ½ B) 59 ½ C) 56 ½ D) 62 ½

B) 59 ½ In addition, to discourage early withdrawal from annuities, a 10% penalty tax is imposed on withdrawals from a deferred annuity made before age 59 ½

In addition to any other penalties provided in the Insurance Code, an insurance agent who knowingly represents or aids an unauthorized insurer is guilty of: A) A misdemeanor of the first degree B) A felony of the third degree C) A felony of the second degree D) A misdemeanor of the third degree

B) A felony of the third degree The agent would also be liable to the insured for the full amount of the claim or loss if the unauthorized insurer fails to pay

What should agents obtain from the insured showing that the policyowner has remained in reasonably good health from the time the policyowner signed the applicaion until receiving the policy? A) A signed statement attesting to the insured's death. B) A signed statement attesting to the insured's continued good health. C) A signed statement attesting to the insured's unfavorable health. D) None of the Choices Provided

B) A signed statement attesting to the insured's continued good health. Prior to leaving the policy, the agent should collect premium and obtain this signed statement from the insured

Benefit payments requiring that only the injury resulting from the accident must be intentional is defined as: A) Accidental Means B) Accidental Result C) Capital Sum D) Accidental Cause

B) Accidental Result If Ted, the insured under an AD&D policy, intentionally jumps from the roof of his house after fixing his antenna (instead of climbing down the ladder) and so severely injures his leg that it must be amputated, he would be paid the appropriate percentage of the capital sum only if his policy used the results: definition

All of the following are true regarding Life Insurance and the Insured's Estate EXCEPT? A) The value of insurance covering the insured is included in the insured's gross estate for federal state tax purposes. B) Accumulated policy dividends are not exempt from income tax. C) State death taxes must also be payable. D) None of the Choices Provided

B) Accumulated policy dividends are not exempt from income tax. Accumulated dividends are exempt from income tax, but also included in the insured's gross estate for federal estate tax purposes

Which condition CANNOT legally be excluded on a Long Term Policy in Florida? A) Alcoholism B) Alzheimer's C) Attempted suicide D) A preexisting condition

B) Alzheimer's Mental or nervous disorders can be excluded, however, this does not permit exclusion or limitation of benefits on the basis of Alzheimer's disease

Which of the following provides income for a guaranteed period of time by liquidating a sum of money? A) Annuitant B) Annuity C) Funding Method D) Payout Period

B) Annuity An annuity is a mathematical concept that is quite simple in its most basic application. Start with a lump sum of money, pay it out in equal installments over a period of time until the original fund is exhausted... is simply a vehicle for liquidating a sum of money

A definition of Total Disability requiring the insured to be unable to perform any occupation which he or she is reasonably suited by reason of education, training or experience is defined as: A) Own Occupation B) Any Occupation C) Partial Disability D) Full Disability

B) Any Occupation The "Any Occupation" definition of Total Disability requires the insured to be unable to perform any occupation for which he is reasonably suited by reason of education, training, or experience in order to qualify for disability income benefits

Ellen has met her health insurance deductible, but is still responsible for paying 20% of her medical care and the insurance company is responsible for paying 80%. This is defined as: A) Deductible Split B) Coinsurance C) Managed Care D) Medical Cost

B) Coinsurance Coinsurance is another important means of sharing the cost of medical care between the insured and the insurer

Group Insurance plans that require employees to pay a portion of the premium are defined as: A) Monetary B) Contributory C) Non-Contributory D) Stock

B) Contributory If the plan is Contributory, the employee must authorize payroll deductions for the employee's share of premium payments

Frank is eligible for only limited survivor benefits under Social Security. His worker status is: A) Partially Insured B) Currently Insured C) Fully Insured D) Completely Insured

B) Currently Insured A currently insured status qualifies a worker for a limited range of survivor benefits

To harm the reputation of a person, orally or in writing, is defined as: A) Fraud B) Defamation C) Rebating D) Calling them a pastry

B) Defamation Defamation is defined as knowingly making, publishing, disseminating, or circulating, directly or indirectly, or aiding, abetting, or encouraging the making, publishing, disseminating, or circulating of, any oral or written statement, or any pamphlet, circular, article, or literature, that is false or maliciously critical of, or derogatory to, any person and that is calculated to injure such person

A plan that replaces lost income due to illness or injury is defined as: A) Medical Expense B) Disability C) Accidental Death and Dismemberment D) Hospitalization

B) Disability Disability Income insurance is designed to provide a replacement income when wages are lost due to a disability. As such, it does not cover the medical expenses associated with a disability; rather, it provides the disabled insured with a guaranteed flow of periodic income payments while she is disabled

This defines that a person is qualified for Social Security benefits: A) Allowance B) Eligibility C) Coverage D) OASDI Benefits

B) Eligibility Eligibility for benefits is based on a person's insured status, which can be described as either fully insured or currently insured

A Deferred Compensation plan is funded by the: A) Employer B) Employee C) Life Insurance D) Government

B) Employee Salary continuation, however, is an additional fringe benefit, rather than a "salary reduction" type plan. In simple terms, the employee funds the Deferred Compensation plan; the employer funds the Salary Continuation plan

The insured entered the hospital and their health plan paid $100 per day for a 10-day hospitalization. This is considered a(n): A) Reimbursement plan B) Fixed Rate plan C) HMO plan D) PPO plan

B) Fixed Rate plan Assume Dana owns a medical expense policy that provides a fixed rate of $100 per day for each day of hospitalization. She is hospitalized for 10 days, incurring medical expenses of $10,000. Her policy will provide benefits of $1,000: 10 days at $100 per day. Medical Expense policies that pay a fixed rate provide the insured with a stated benefit amount for each day he is confined to a hospital as an inpatient. The money may be used by the insured for any purpose

The purpose of this Act is to promote the availability of health insurance coverage to small employers and to improve the overall fairness and efficiency of the small group health insurance market: A) Florida Viatical Settlement Act B) Florida Employee Health Care Access Act C) Healthcare Reform Act D) Florida Health Insurance Coverage Continuation Act

B) Florida Employee Health Care Access Act

As a result of HIPAA, all Long Term Care Policies sold today must be: A) Conditionally Renewable B) Guaranteed Renewable C) Cancellable D) Non-Cancellable

B) Guaranteed Renewable As a result of the 1996 Health Insurance Portability and Accountability Act, all long-term care policies are sold today must be guaranteed renewable. This means the insurance company cannot cancel the policy and must renew coverage each year, as long as premiums are paid. A guaranteed renewable policy allows the insurer to raise premiums but only for entire classes of insured

An act which requires certain provisions for a long term care plan to qualify for tax exempt treatment is defined as: A) Long Term Care Act B) HIPAA C) NAIC D) HIPPA

B) HIPAA In addition, as a result of the passage of the Health Insurance Portability and Accountability Act (HIPAA) of 1996, al LTC policies must now contain certain provisions in order that their benefits qualify for tax-exempt treatment. These provisions include, for example, a definition of the types of services offered by the plan and when an individual becomes eligible for benefits under the plan

To decide if a loss has actually occurred is the responsibility of the: A) Health Underwriter B) Health Claims Examiner C) The Medical Claims Board D) The Insured's Physician

B) Health Claims Examiner The health claims examiner must also decide if, in fact, a loss has actually occurred

With this cash fund, a surviving family can pay the mortgage or rental cost: A) Final Expense Fund B) Housing Fund C) Monthly Income Fund D) Dependency Period

B) Housing Fund With this cash fund, a surviving family can, for example, pay off the mortgage or continue mortgage payments. If the family rents its home, the need may be for a monthly amount that will continue rental payments for a certain number of years

The Variable Annuity was created to overcome the problem of: A) Scarcity B) Inflation C) Rising costs associated with Fixed Annuities D) Stock Market Decline

B) Inflation The question of protection against inflation arose; it was noted that someone who retired with a given amount of income (say, $200 per month) would find that after a decade or so of inflation, the real purchasing power of that income would diminish. Attention then turned to solving the problem, and the solution was the birth of the variable annuity

Approaches to medical cost management are all of the following EXCEPT: A) Pre-certification B) Inpatient surgery benefits only C) Mandatory second opinions D) Case management

B) Inpatient surgery benefits only There are four general approaches insurers use for cost management: mandatory second opinions, pre-certification review, ambulatory surgery, and case management

What is the beneficiary designation that can only be changed with the beneficiary's written agreement? A) Revocable Beneficiary B) Irrevocable Beneficiary C) Per Stirpes D) Husband of the Insured

B) Irrevocable Beneficiary Irrevocable Clauses can be Absolute or Reversionary

Judy has just purchased insurance to provide benefits for accidental death or injury only while she is driving in her automobile. This policy is defined as: A) Special Risk Policy B) Limited Risk Policy C) Accidental Means D) Accidental Result

B) Limited Risk Policy Limited Risk Policies set forth a specific risk and provide benefits to cover death or dismemberment due to that risk. For example, an Aviation Policy provides benefits for Accidental Death or Dismemberment if death or injury results from an aviation accident during a specified trip. An Automobile Policy provides benefits for accidental death or injury while riding in a car. Travel accident covers most kinds of travel accidents, but only for a specified period of time, such as one year

A state plan that offers health care benefits for the needy of any age is defined as: A) Medicare B) Medicaid C) State Workers Compensation D) Self-Insurance

B) Medicaid Medicaid is Title XIX of the Social Security Act, added to the Social Security program in 1965. Its purpose is to provide matching federal funds to states for their medical public assistance plans to help needy persons, regardless of age

Government-funded and means tested, this is designed to provide healthcare to poor people of all ages: A) Medicare B) Medicaid C) Medicare Advantage D) State Workers Compensation Programs

B) Medicaid Medicaid is a government-funded, means-tested program designed to provide health care to poor people of all ages. The goal of Medicaid is to offer medical assistance to those whose income and resources are insufficient to meet the costs of necessary medical care. Individuals claiming benefits must prove they do not have the ability or means to pay for their own medical care

A trust that is set up for small businesses to offer life, health, and disability benefits is defined as: A) Minimum Premium Plan B) Multiple Employer Trust C) Multiple Employer Welfare Arrangement D) Maximum Premium Plan

B) Multiple Employer Trust METs can provide a single type of insurance (e.g., health insurance) or a wide range of coverages (e.g., life, medical expense, and disability income insurance)

A company that is not approved to perform business activities in the state is defined as: A) Admitted B) Non-admitted C) Fraternal D) Domestic

B) Non-admitted The public should be aware that a Non-admitted insurance company does not come under the jurisdiction of the Florida Office of Insurance Regulation with regard to examination of its financial soundness, nor the examination and approval of types of coverages offered, nor of its advertising through the mail

All of the following are characteristics of Health insurance EXCEPT: A) Contains Renewability Provisions B) Offers Multiple Payment Options C) May be issued as Participating or Nonparticipating D) Claims Examiner Evaluates Losses

B) Offers Multiple Payment Options

Medicare coverage provided for physician services, diagnostic tests, physical and occupational therapy and medical supplies is covered under Medicare: A) Part A B) Part B C) Part C D) Part D

B) Part B For those who desire, additional coverage is available under Medicare Part B for physician services, diagnostic tests, physical and occupational therapy, medical supplies, and the like. Part B participants are required to pay a monthly premium and are responsible for an annual deductible

Funds that each state requires to be set aside for future claims are defined as: A) Cash Values B) Policy Reserves C) Viatical Settlements D) Accelerated Benefits

B) Policy Reserves The amount which, when added to the present value of future net premiums, will equal the present value of future claims

The insured is denied certain benefits because the medical condition existed before the insurance coverage was issued. The exclusion is based on: A) Stop Loss Feature B) Pre-Existing Conditions Clause C) Non-Covered Expense Provision D) None of the Choices Provided

B) Pre-Existing Conditions Clause Another feature characteristic of most Major Medical policies is the exclusion for preexisting conditions. For individual plans, a preexisting condition is an illness or physical condition that existed before the policy's effective date and one that the applicant did not disclose on the application

Medical treatments that were received before the effective date of the group coverage are defined as: A) Limited Conditions B) Pre-existing Conditions C) Conversion Privileges D) Group Health Treatments

B) Pre-existing Conditions The exclusion for preexisting conditions is now limited to conditions for which medical advice or treatment was recommended or received within the 6 month period ending on the enrollment date

When a new employee must wait a stated period of days before becoming insured is defined as the: A) Waiting Period B) Probationary Period C) Contestable Period D) Incontestable Period

B) Probationary Period A probationary period may be required for new employees, which means they must wait a certain period of time (usually one to six months) before they can enroll in the plan

A plan in which contributions are tied to the profits of the company is defined as a(n): A) Stock Bonus B) Profit Sharing C) Money-Purchase D) Defined Benefit

B) Profit Sharing Profit Sharing plans are maintained by the employer

This plan meets the requirements for favorable tax treatments: A) Non-Qualified B) Qualified C) Defined Contribution D) Unidentified Contribution

B) Qualified Qualified plans are those that, by design or by definition, meet certain requirements established by the federal government and, consequently, receive favorable tax treatment (

When the insured has a medical treatment, pays the provider, and then files with the insurer to receive payment, it is defined as: A) Right of Assignment B) Reimbursement Approach C) Service Provider D) Right of Reimbursement

B) Reimbursement Approach Commercial insurance companies function on the Reimbursement Approach; that is, policyowners obtain medical treatment from whatever source they feel is most appropriate and, per the terms of their policy, submit their charges to their insurer for reimbursement

A representation of ownership in the company is defined as: A) Interest B) Stock C) Exclusion Ratio D) Annuity

B) Stock Common Stocks represent ownership in the companies that issue them. They promise no fixed rate of return on investment. If the company prospers, its share of Common Stock will increase in value; if the company does not prosper, its share will generally decrease in value and may even become worthless

Under Social Security, a surviving spouse of a fully insured deceased worker is entitled to a monthly life income is the: A) Calculated benefits B) Surviving Spouse's benefit C) Child's benefit D) Parent's benefits

B) Surviving Spouse's benefit Benefits begin at age 65, or 60 if the surviving spouse elects reduced benefits

The interest earned on an Annuity is: A) Tax-Free B) Taxable C) Tax-Deferred D) Treated as the Principle

B) Taxable Annuity benefit payments are a combination of principal and interest. Accordingly, they are taxed in a manner consistent with other types of income: the portion of the benefit payments that represents a return of principal (i.e., the contributions made by the annuitant) are not taxed; the portion representing interest earned on the declining principle is taxed. The result, over the benefit payment period, is a tax-free return of the annuitant's investment and the taxing of the balance

Co-payment is defined as: A) The amount of the premium that is given to the doctor for treating the subscriber. B) The amount the subscriber will pay on each visit to a provider. C) The HMO cannot pay their liabilities. D) The arrangement between the subscriber and the HMO.

B) The amount the subscriber will pay on each visit to a provider. Co-payment is the specified dollar amount that the HMO subscriber must pay for certain covered health care services. These amounts are typically small and must be approved by the Office of Insurance Regulation

Which signature is NOT required on the insurance application? A) The policyowner B) The beneficiary C) The agent D) The proposed insured

B) The beneficiary Hide Feedback If a policywoner is to be a firm or corporation, one or more partners or officers, other than the proposed insured, generally must sign the application

This contract is dually regulated by the Department of Insurance and the Security and Exchange Commission: A) Variable Whole Life B) Variable Annuity C) Accumulation Annuity D) Fixed Annuity

B) Variable Annuity Government regulation of Annuities business takes place in two spheres. Although the United States had reserved insurance regulation as a matter for the states, Variable Annuities raised the question of whether a VA is an insurance contract or a security, similar to shares in a mutual fund. The Supreme Court in 1959 held that federal law applied to insurers selling VA contracts. Thus, these insurers are subject to federal regulation by the SEC and the state's Office of Insurance Regulation

The Contributory Plan designates that the employer: A) Pays 100% of employee medical costs. B) Will pay part of the premium cost and the employee will have the balance deducted from their pay. C) Require all employees be covered under the plan. D) Pays 75% of employee medical costs.

B) Will pay part of the premium cost and the employee will have the balance deducted from their pay. If the employer pays the entire premium, the plan is Noncontributory; if the employees share a portion of the premium, it is Contributory

Policy loan interest on a Life Insurance Policy can be all of the following EXCEPT: A) 8% B) 10% C) 15% D) Variable rate based on the bond index

C) 15% An insurance company can charge a fixed rate of up to 10% annual interest subject to restrictions. The insurance company can also use an adjustable rate of interest with the limit based on the average monthly published interest rate determined by Moody's Corporate Bond Index

Jeremy, who has no health insurance, incurs $10,000 in medical expenses this year. Assuming his gross adjusted income is $30,000, how much of these expenses can he deduct from his income taxes? A) 0 B) $10,000 C) $7,000 D) $6,500

C) $7,000 Incurred medical expenses that are reimbursed by insurance may not be deducted from an individual's federal income tax. Furthermore, incurred medical expenses that are not reimbursed by insurance may only be deducted to the extent they exceed 10% of the insured's adjusted gross income. For example, an individual who has an adjusted gross income of $35,000 would be able to deduct only the amount of unreimbursed medical expenses over $3,500

If an insurer elects to discontinue offering all health insurance coverage in the individual market in Florida, the insurer must provide notice at least: A) 120 days prior to the date of nonrenewal B) 60 days prior to the date of nonrenewal C) 180 days prior to the date of nonrenewal D) 90 days prior to the date of nonrenewal

C) 180 days prior to the date of nonrenewal When the insurer discontinues all individual health insurance policies in the state the insurer may not write individual health insurance coverage in Florida for the next 5 years.

Home health benefits under Part A are limited to how many service days per benefit period? A) 10 B) 15 C) 20 D) 25

C) 20 Home health benefits provide intermediate care or physical, occupational, or speech therapy in a home setting

A licensee must complete how many hours of continuing education every two years? A) 5 B) 20 C) 24 D) 10

C) 24 A licensee must complete a total of 24 hours of continuing education every two years which must include a five hour law and ethics update course specific to the license held by the licensee and 19 hours of elective continuing education courses

What is a Conversion Provision? A) A provision allowing an individual to convert insurance for money. B) A provision allowing an individual to add family to their insurance. C) A provision allowing individual insured members to convert to an individual plan without evidence of insurability. D) A provision allowing an individual to convert from a term life policy to a permanent life policy.

C) A provision allowing individual insured members to convert to an individual plan without evidence of insurability. In Florida, Group Life policies must contain a conversion provision that allows individual insured members to convert to an individual plan without evidence of insurability, if their employment is terminated.

The following statements are true regarding assumed interest rate (AIR) EXCEPT: A) AIR is an arbitrary rate of return set by the insurer. B) AIR plays the role of an "artificial zero". C) AIR applies to all the values of a variable product. D) AIR serves as additional expense load for the benefit of the insurer.

C) AIR applies to all the values of a variable product. The AIR does not apply to all the values of a variable product. For variable life, it applies to the death benefit but not the cash value. With a variable annuity, it applies to the annuity unit value and payouts but not to the accumulation value

A plan which only covers losses due to an accident is defined as: A) Medical Expense B) Disability C) Accidental Death and Dismemberment D) Hospitalization

C) Accidental Death and Dismemberment Accidental Death and Dismemberment insurance, commonly referred to as AD&D insurance, is the purest form of accident insurance, providing the insured with a lump-sum benefit amount in the event of accidental death or dismemberment under accidental circumstances. Typically, AD&D coverage is part of a group insurance plan

Any changes made on a life insurance application must be initialed by the: A) Life Insurance Company B) Underwriter C) Applicant D) Sales Agent

C) Applicant The company may rescind or cancel the contract due to incomplete or incorrect information

The Roth IRA is unique in that they provide for: A) Flexible Premium Fixed Deferred Annuity B) Tax Deductible Contributions C) Back-End Benefits D) Reduced Withdrawal Age

C) Back-End Benefits Roth IRAs are unique in that they provide for back-end benefits. No deduction can be taken for contributions made to a Roth, but the earnings on those contributions are entirely tax-free when they are withdrawn

Which of the following factors result in group insurance having lower costs than individual plans? A) Lower Administration Expenses B) Lower Selling Expenses C) Both A&B D) Increased Advertising

C) Both A&B Benefit for benefit, the cost of insuring an individual under a group health plan is less than the cost of insurance under an individual plan. This is because the administrative and selling expenses involved with group plans are far less

Which of the following is an authorized investment under a Section 457 Plan? A) Life Insurance B) Annuities C) Both Life Insurance and Annuities D) None of the Choices Provided

C) Both Life Insurance and Annuities If a plan is eligible under Section 457, amounts deferred will not be included in gross income until they are actually received or made available

How are HMO's self-contained and self-funded? A) Based on dues or fees from their subscribers. B) Contract for excess insurance or administrative services provided by insurance companies. C) Both of the Choices Provided. D) None of the Choices Provided.

C) Both of the Choices Provided. Health Maintenance Organizations may be self-contained and self-funded based on dues or fees from their subscribers, or they may contract for excess insurance or administrative services provide by insurance companies

These plans provide the employee with the ability to pick and choose benefits: A) COBRA B) Pension C) Cafeteria D) Business Overhead

C) Cafeteria As its name implies, Cafeteria Plans (also known as Section 125 plans) are benefit arrangements in which employees can pick and choose from a menu of benefits, thus tailoring their benefits package to their specific needs

Jessie, a Life Insurance Agent, is writing an application for Barney, a long time policyholder. Jessie will take the value from Barney's existing contract and move the value into the new contract with the same insurer. Jessie knows that Barney may have a tax penalty and the new policy will have added cost, but she would like the commission that comes along with this new policy. Which of the following best defines this situation? A) Twisting B) Misrepresenting C) Churning D) Admitted

C) Churning Churning is defined as the practice by which policy values in an existing Life Insurance Policy or Contracts Contract are used to purchase another policy or contract with that same insurer for the purpose of earning additional premiums or commissions under any of the following conditions: (1) without an objectively reasonable basis for believing that the new policy will result in an actual and demonstrable benefit, (2) in a deceptive or misleading manner, (3) without informing the applicant that the policy value of the existing policy will be used to purchase the new policy, or (4) without informing the applicant that the new policy will not be a paid-up policy or that additional premiums will be due

The Miscellaneous Expense Benefit in a basic Hospital Expense policy normally will cover: A) Physicians bedside visits B) Specialists C) Drugs administered in a hospital D) Hospital room and board

C) Drugs administered in a hospital In addition to room and board, basic hospital expense policies cover hospital "extras" or miscellaneous charges, up to a specified limit. Covered miscellaneous expenses include drugs, x-rays, anesthesia, lab fees, dressings, use of the operating room, and supplies

This set guidelines to protect the rights of the worker and must be followed to be eligible for favorable tax treatment: A) Qualified B) Defined Contribution C) ERISA D) Profit Sharing Plan

C) ERISA The purpose of ERISA is to protect the rights of workers covered under an employer-sponsored plan. Before the passage of ERISA, workers had few guarantees to assure them that they would receive the pension benefit they thought they had earned

Illegal Occupation is a provision the permits the insurer to deny claims if the loss is due to a: A) Felony B) Illegal Occupation C) Felony and Illegal Occupation D) Specified Loss

C) Felony and Illegal Occupation The illegal occupation provision specifies that the insurer is not liable for losses attributed to the insured's commission of, or being connected with, a felony or participation in any illegal occupation

The Office of Insurance Regulation must examine each domestic insurer not less frequently than once every: A) Year B) Two years C) Five years D) Three years

C) Five years The Office of Insurance Regulation may examine each insurer as often as may be warranted and must examine each domestic insurer not less frequently than once every five years

This Annuity guarantees the Principal and a minimum interest rate: A) Variable Annuity B) Accumulation Annuity C) Fixed Annuity D) Variable Whole Life

C) Fixed Annuity A Fixed Annuity guarantees a fixed minimum dollar amount for each annuity payment, and it guarantees the Principal and minimum interest rate.

This Association is a non-profit legal entity and its purpose is to protect policyowners, insureds, beneficiaries, annuitant, payees, and assignees of insurance policies and contracts against the failure of an insurer due to impairment or insolvency: A) National Association of Insurance and Financial Advisors B) National Association of Health Underwriters C) Florida Life and Health Insurance Guaranty Association D) National Association of Insurance Commissioners

C) Florida Life and Health Insurance Guaranty Association All life, health, and annuity insurers are members of the association as a condition of their authority to transact insurance in Florida

Judy is eligible for full retirement and survivor benefits under Social Security. Her worker status is: A) Partially Insured B) Currently Insured C) Fully Insured D) Completely Insured

C) Fully Insured Being fully insured entitles a worker and the worker's family to full retirement and survivor (that is, death) benefits

The Salary Continuation plan is all of the following EXCEPT: A) An additional fringe benefit. B) A way to defer a current raise or bonus. C) Funded by the employee. D) Can be set up between a business and an independent contractor.

C) Funded by the employee. Salary Continuation, however, is an additional fringe benefit, rather than a "salary reduction" type plan. In simple terms, the employee funds the Deferred Compensation plan; the employer funds the Salary Continuation plan

In which of the following situations would a Facility-of-Payment Provision be applicable? A) Living Named Beneficiary B) Adult Named Beneficiary C) Funeral Expenses Paid by External Party D) None of the Choices Provided

C) Funeral Expenses Paid by External Party Facility-of-Payment is available if costs were incurred by another party for the deceased insured's final medical or funeral expenses

Life Insurance which provides benefits for people who borrow money from a bank, lienholder, finance company or credit union is defined as: A) Multiple Employer Trust B) Blanket C) Group Credit D) Financial

C) Group Credit Group credit life insurance is another form of group insurance. A type of decreasing term insurance, it is issued by insurance companies to creditors to cover the lives of debtors in the amounts of their respective loans. Typically, it is provided through commercial banks, savings and loan associations, finance companies, credit unions, retailers

All of the following are listed on an insurance application EXCEPT: A) Medical History B) Name of the Insured C) Guaranteed Health Amendment D) The amount of Insurance

C) Guaranteed Health Amendment There are three basic parts to a typical life insurance application: I - General; II - Medical; III -Agent's Report

Which Annuity offers interest that is tied to a specific equity or stock index? A) Variable Annuity B) Fixed Annuity C) Indexed Annuity D) Stock Annuity

C) Indexed Annuity A fairly recent innovation, Indexed Annuities (IA) are a type of fixed annuity that offer the potential for higher credited rates of return than their traditional counterparts but also guarantee the owner's principal. The interest credited to an IA is tied to increases in a specific equity or stock index

Which income option can Lisa select now to provide interest only income, while keeping the principal intact? A) Fixed Period B) Delayed Benefit C) Interest Only D) Fixed Amount

C) Interest Only The proceeds themselves are then paid out at the end of the specified period, either in cash or one of the other settlement options (

Which of the following benefits are NOT provided under Social Security? A) Retirement B) Death C) Maternity D) Disability

C) Maternity The Social Security system provides a basic floor of protection to all working Americans against the financial problems brought on by death, disability, and aging

Benefits for small employers who have joined to offer benefits for their employees, often on a self-insured basis, are defined as: A) Minimum Premium Plan B) Multiple Employer Trust C) Multiple Employer Welfare Arrangement D) Maximum Premium Plan

C) Multiple Employer Welfare Arrangement A Multiple Employer Welfare Arrangement (MEWA) is a type of MET. It consists of small employers who have joined to provide health benefits for their employees, often on a self-insured basis

Tasha names her church as the beneficiary of her $350,000 life insurance policy. When Tasha passes away, who is responsible for the income taxes payable on the lump-sum proceeds received by the church? A) Her Beneficiaries B) Her Estate C) No income tax is payable on the death proceeds D) Her estate pays the taxes

C) No income tax is payable on the death proceeds Proceeds payable at death to a beneficiary are not subject to federal income tax

Which is correct about Major Medical Expense plans? A) They are always comprehensive stand-alone plans B) Benefit Periods are 30, 60 or 90 days C) Offers broad coverage under one policy D) Is offered on a group basis, but not individual

C) Offers broad coverage under one policy It offers broad coverage under one policy, typically paying benefits for hospital room and board, hospital extras, nursing services in hospital or at home, blood, oxygen, prosthetic devices, surgery, physicians' fees, ambulance services, dental as a result of accidental injury, and more

All of the following are true regarding an HMO EXCEPT: A) The member pays a premium for the HMO services. B) Members are encouraged to seek preventative care. C) Only Government employees are eligible for an HMO. D) The state of Florida regulates HMO requirements.

C) Only Government employees are eligible for an HMO. Each member of the group pays a premium - a fixed sum per month - whether or not the person uses the services of the HMO. By having the services prepaid, the individual is encouraged to see a doctor early so that preventive measures may be taken... Florida law covers all aspects of HMO operations

A benefit amount based on the proportion of income actually lost due to a partial disability is defined as: A) Cost of Living B) Waiver of Premium C) Residual Amount D) Benefit Period

C) Residual Amount A Residual Amount benefit is based on the proportion of income actually lost due to the partial disability, taking into account the fact that the insured is able to work and earn some income

An IRA set up for a nonworking spouse is a: A) Additional Personal IRA B) Rollover IRA C) Spousal IRA D) Marriage IRA

C) Spousal IRA Persons eligible to set up IRAs for themselves may create a separate spousal IRA for a nonworking spouse and contribute up to the annual maximum to the spousal account, even if the working spouse is in an employer-sponsored plan

Disability Benefits are considered: A) Taxable B) Managed Care C) Tax-Free D) Medical Expenses

C) Tax-Free Premiums paid for personal Disability Income insurance are not deductible by the individual insured, but the disability benefits are tax free to the recipient

Which beneficiary stands third in line to receive the proceeds of a life insurance policy, in cases where all primary and secondary beneficiaries predecease the insured? A) Primary B) Secondary C) Tertiary D) Succession

C) Tertiary This may also be written as Tertiary (Contingent) Beneficiaries

Insolvency is defined as: A) The amount of the premium that is given to the doctor for treating the subscriber. B) The amount the subscriber will pay on each visit to a provider. C) The HMO is not able to pay their liabilities. D) The arrangement between the subscriber and the HMO.

C) The HMO is not able to pay their liabilities. This means that all the assets of the HMO, if made immediately available, would not be enough to discharge all of its liabilities; the HMO is unable to pay its debts as they occur in the ordinary course of business

The Medical Information Bureau is supported by insurance companies to accomplish all of the following EXCEPT: A) The MIB helps hold down cost of life insurance. B) It supplies home office underwriters with information about past problems of the applicant. C) The information is available to any insurance company for a fee. D) Information from companies is reported in the form of code numbers.

C) The information is available to any insurance company for a fee. The information is available to member companies only (

All of the following are true EXCEPT: A) A nongrandfathered health plan is subject to all the federal PPACA requirements. B) Florida law requires coverage for medically necessary equipment, supplies and services used to treat diabetes when the patient's physician certifies they are medically necessary. C) The law requires that treatment by optometrist, podiatrist and chiropractors within the scope of their licenses, will only be covered up to 50%. D) Medicare Supplement coverage is to provide benefits to cover the deductibles and non-covered expenses not covered by Medicare.

C) The law requires that treatment by optometrist, podiatrist and chiropractors within the scope of their licenses, will only be covered up to 50%. The law requires medical expense policies to provide for payment to an optometrist or a podiatrist for procedures specified in the policy that are within the scope of their respective professional licenses

This rider exempts the policyowner from paying the policy's premiums during periods of Total Disability. This is defined as: A) Probationary Period B) Residual C) Waiver of Premium D) Cost of Living Adjustment Rider

C) Waiver of Premium A Waiver of Premium rider generally is included with Guaranteed Renewable and Non-Cancellable Individual Disability Income Policies. It is a valuable provision because it exempts the policyowner from paying the policy's premiums during periods of total disability

A tangible amount that represents the additional funds paid in the early years of a whole life policy is defined as: A) Policy Reserves B) Accelerated Benefits C) Cash Values D) Viatical Settlements

Cash Values The unused cash value funds belong to the policyowner

Conversion of Group Life insurance permits all of the following EXCEPT: A) Conversion to an individual plan B) Conversion with evidence of insurability C) Conversion at attained age D) Conversion within 31 days following termination of employment

Conversion with evidence of insurability When the employee leaves employment the contract permits them to convert the group coverage to an individual plan without evidence of insurability

In order to qualify for Social Security benefits the employee must accrue credits, which are earned based on: A) Earnings B) Tax-Deferred Income C) Joint Earnings D) Time Worked

Earnings A person's insured status - currently or fully - is based on that person's accrued credits

Which of the following is not a Grace Period option for a Health Insurance Policy? A) 7 days for weekly premium policies B) 10 days for monthly premiums C) 31 days for all other D) 15 days for all other

D) 15 days for all other The law provides that there must be a Grace Period of not less than seven days on weekly premium policies, 10 days for monthly premium policies, and 31 days for all others

Which of the following is EXCLUDED in a Long Term Care Insurance Policy? A) Dementia B) Parkinson's Disease C) Alzheimer's Disease D) Alcohol Treatment

D) Alcohol Treatment While organic cognitive disorders, such as Alzheimer's disease, senile dementia, and Parkinson's disease, are almost always included in long-term care insurance policies, the following are excluded from most long-term care insurance policies: drug and alcohol dependency, acts of war, self-inflicted injuries, and nonorganic mental conditions

Policies that provide medical expense coverage for specific kinds of illnesses are known as: A) Limited risk policies B) Critical illness policies C) Dread disease policies D) All choices provided

D) All choices provided Limited risk, critical illness and dread disease policies are different names for the same type policy. They are available primarily due to the high costs associated with certain illnesses, such as cancer or heart disease and will frequently pay a single, lump-sum amount to help defray medical costs

In regards to HIPAA Disclosures, if the insurer needs to share the client's medical information, which of the following will occur? A) The applicant must be given full notice of the insurer's practices with respect to the treatment of this information. B) Notice of the applicant's right to maintain privacy. C) An opportunity to refuse permission for the dissemination of the information. D) All of the Choices Provided

D) All of the Choices Provided ALL medical information is to remain confidential, and the agent and insurer must protect the applican't privacy. The disclosures are a way to keep client's aware of what is happening

Which of the following information must be gathered from an annuity applicant in order to determine the suitability of the sale? A) Age, annual income, financial situation, financial resources used for funding the annuity B) Tax status, risk tolerance, liquidity needs, liquidity net worth C) Financial experience, objectives, time horizon and intended use of the annuity D) All of the Choices Provided

D) All of the Choices Provided All choices including existing assets are considered reasonably appropriate to determine the annuity suitability of a recommendation made to the consumer

Which of the following is a nonforfeiture option that must be included in Florida life insurance policies? A) Extended term life insurance B) Reduced paid-up life insurance C) Cash surrender value D) All of the Choices Provided

D) All of the Choices Provided All choices must be provided in life insurance policies delivered in Florida

What is considered an insurance transaction? A) Inducement to purchase insurance B) Preliminary negotiations toward the sale of insurance C) Effectuation of a contract of insurance D) All of the Choices Provided

D) All of the Choices Provided Also, transaction of matters subsequent to effectuation of a contract of insurance and arising out of it

Which of the following activities could result in the denial, suspension, revocation, or refusal to renew or continue an agent's license? A) A felony charge B) Violating the code of ethics C) Failure to pay child support D) All of the Choices Provided

D) All of the Choices Provided Denial, suspension, revocation, or refusal to renew or continue license or appointment can also occur for violation of the insurance code or any law applicable to the business of insurance or any order or rule of the department, commission, or office; failure to pay money belonging to the insurer, engaging in unfair methods of competition or in unfair or deceptive practices; willful overinsurance; and knowingly aiding or abetting any person in the violation of the insurance code or any law applicable to the business of insurance or any order or rule of the department, commission, or office

Which of the following can be named as a Beneficiary? A) Trust B) Charities C) Estate D) All of the Choices Provided

D) All of the Choices Provided Insurable Interest is always a priority when naming beneficiaries

The replacing insurer is required to maintain copies of which of the following documents for three years or until conclusion of the next regular examination of the insurer, whichever is later? A) Notice to Applicant Regarding Replacement B) Comparative Information Forms C) Sales Proposals Used, together with a Replacement Register D) All of the Choices Provided

D) All of the Choices Provided Sales proposals should be cross-indexed by replacing agent and existing insurer

The purpose of the Buyer's Guide is to: A) Improve the ability of the buyer to evaluate the relative costs of similar plans B) Improve the buyer's understanding of the basic features of the policy C) Improve the buyer's ability to select the most appropriate plan D) All of the Choices Provided

D) All of the Choices Provided The insurer must provide each prospective purchaser a Buyer's Guide prior to accepting the initial premium unless the policy provides an unconditional refund for at least 14 days. Then, it must be provided before or with the delivery of the policy

All are true about Conditional Receipts EXCEPT: A) They are contingent upon conditions that exist at the time the application is signed. B) The insurer conditionally assumes the risk from a specific date. C) There is no coverage if the application is rejected. D) All of the Choices Provided are True.

D) All of the Choices Provided are True. There are two types of Conditional Receipts: Insurability and Approval

Which of the following relationships carry insurable interest? A) An individual has an interest in his or her life. B) Business partners have insurable interest in each other. C) A creditor has an insurable interest in the life of a debtor. D) All of the Choices Provided.

D) All of the Choices Provided.

In order to transact business in the state of Florida, the HMO must obtain all of the following: A) A Certificate of Authority from the Office of Insurance Regulation. B) A valid Health Care Provider Certificate from the Agency for Health Care Administration. C) A deposit of $10,000 provided by the Rehabilitation Administration Expense Fund. D) All of the Choices Provided.

D) All of the Choices Provided. An HMO must obtain a Certificate of Authority from the Office of Insurance Regulation. The office will not issue a certificate unless the HMO first receives a valid Health Care Provider Certificate form the Agency for Health Care Administration of Florida and has met the other requirements set forth in Florida statures... Before final approval, the HMO must also pay all required fees, make a deposit of $10,000 to the Rehabilitation Administration Expense Fund and become a member of the Florida Health Maintenance Organization Consumer Assistance Plan

All of the following are Unfair Trade Practices EXCEPT: A) Any actions where the agent misrepresents an HMO contract B) Agent involvement in defamation C) False claims; obtaining money dishonestly D) Any action by the agent to protect the interest of the insured

D) Any action by the agent to protect the interest of the insured With regard to HMOs, activities that are deemed to be "Unfair Trade Practices" under Florida law are: Misrepresentation and false advertising of HMO contracts, defamation, false claims or obtaining money dishonestly

Surgery is covered under a hospital expense plan. The schedule could be all of the following EXCEPT: A) Reasonable and Customary B) Relative Value Scale C) Scheduled in the Policy D) Basic Physician Surgical Expense

D) Basic Physician Surgical Expense There are three different approaches used by insurers in providing this type of coverage and determining the benefits payable. These are the Surgical Schedule Approach, the Reasonable and Customary Approach, and the Relative Value Scale Approach

Life Insurance which covers participants of an activity only during a specific time is defined as: A) Group Credit B) Franchise C) Partial D) Blanket

D) Blanket Blanket life insurance covers a group of people exposed to a common hazard... In fact, individuals may be covered for only a few hours at a time

The business needs for Health insurance include employee benefit plans that provide all of the following EXCEPT: A) Life Insurance B) Pensions C) Vacation Pay D) COBRA

D) COBRA While the term Employee Benefit plan can encompass a wide variety of benefit offerings - life insurance, a pension or profit-sharing plan, vacation pay, deferred compensation arrangements, funeral leave, sick time - it is rare when it does not include some kind of provision for health insurance or health benefits

A policy which can be cancelled at any time by the insurer and premiums can be increased is defined as: A) Partially Cancellable B) Optionally Renewable C) Conditionally Renewable D) Cancellable

D) Cancellable The renewability provision in a cancellable policy allows the insurer to cancel or terminate the policy at any time, simply by providing written notification to the insured and refunding any advance premium that has been paid. Cancellable policies also allow the insurer to increase premiums

Which of the following is NOT an Unfair Claims Practice? A) Attempting to settle claims on the basis of an application. B) Making a material misrepresentation to an insured or any other person. C) Failing to adopt and implement standards for the proper investigation of claims. D) Clearly explaining the nature of requested information.

D) Clearly explaining the nature of requested information. The following are defined as Unfair Claims Practices: Attempting to settle claims on the basis of an application, when serving as a binder or intended to become a part of the policy, or any other material document which was altered without notice to, or knowledge or consent of, the insured; Making a material misrepresentation to an insured or any other person having an interest in the proceeds payable under such contract or policy on less favorable terms that those provided in, and contemplated by, such contract or policy; failing to adopt and implement standards for the proper investigation of claims

By offering health insurance to employees, the employer contributes to all of the following EXCEPT: A) Morale and productivity B) A tax deduction for the employer C) Enhances the employer's image D) Coinsurance Limits

D) Coinsurance Limits By providing its employees with a plan for health insurance, an employer derives a number of benefits: The plan contributes to employee morale and productivity; the employer can obtain a tax deduction for the cost of contributing to the plan; the plan enhances the employer's image in both public and employee relations

All of these statements constitute Insurable Interest EXCEPT: A) An individual has insurable interest in themselves. B) A husband has insurable interest in their spouse. C) Business partners have insurable interest in each other. D) Creditors and debtors have interest in each other.

D) Creditors and debtors have interest in each other. An insurable interest exists when the death of the insured would have a clear financial impact on the policyowner

Which of the following is NOT a typical type of Long Term Care coverage? A) Adult Day Care B) Respite Care C) Continuing Care D) Custodial Care

D) Custodial Care Broadly speaking, the kinds of services and support associated with long-term care are provided at three kinds of locations: institutional care, home-based care, and community care. Within each of these broad levels are many types of care, and or all of which may be covered by a long-term care insurance policy. Typical types of coverages are explained in the following: Home and Community-Based Services, Adult Day Care, Respite Care, Continuing Care

A category of plans that establishes some specific benefit at retirement is defined as a(n): A) Defined Contribution Plan B) Profit Sharing Plan C) Money-Purchase Plan D) Defined Benefit Plan

D) Defined Benefit Plan In contrast to a Defined Contribution plan that sets up predetermined contributions, a Defined Benefit plan establishes a definite future benefit, pre-determined by a specific formula

The period following the death of a breadwinner during which the children are living at home is defined as the: A) Final Expense Period B) Housing Period C) Monthly Income Period D) Dependency Period

D) Dependency Period The Dependency Period refers to that period following the death of a breadwinner during which the children are living at home. The need for the family income is greatest while the children are growing up

The types of groups eligible for Group Life Insurance under Florida law include all of the following EXCEPT: A) Employer-Employee B) Labor Unions C) Association D) Domestic Services

D) Domestic Services Under Florida law, the eligible groups are the following: employer-employee group, labor union group, trustee group, debtor group, association group, credit union members, dependent group

Services offered through an HMO include all of the following EXCEPT: A) Surgical B) Dental C) Laboratory D) Electrolysis

D) Electrolysis According to Florida law, comprehensive health care services means "services, medical equipment and supplies furnished by a provider, which may include, but are not limited to: medical, surgical, and dental care; ...laboratory and ambulance services"

Which of the following offers a guaranteed rate of return and the investment risk is on the insurance company? A) Variable Annuity B) Indexed Annuity C) Investment Annuity D) Fixed Annuity

D) Fixed Annuity Fixed annuities provide a guaranteed rate of return. During the period in which the annuitant is making payments to fund the annuity (the accumulation period), the insurer invests these payments in conservative, long-term securities (typically stock bonds).

A Group Life plan in which the employer pays for the term portion and the employee pays for the whole life is a(n): A) Group Ordinary B) Group Universal Life C) Group Get-Along D) Group Paid-Up

D) Group Paid-Up With group paid-up plans, a combination of term and whole life insurance is used. Usually the employer pays for the term portion of the plan and employee contributions are used to purchase units of single-premium whole life.

This option will pay guaranteed income for life to the beneficiary even if the principal amount is depleted: A) Accelerated Benefits B) Fixed Amount C) Fixed Period D) Life Income

D) Life Income Income will continue as long as the beneficiary is alive

Deductibles offered with a comprehensive Major Medical plan may be all of the following EXCEPT: A) Flat B) Corridor C) Integrated D) Limited

D) Limited Depending on the type of Major Medical policy, the deductible may be one of three kinds: Flat, Corridor, or Integrated

Defined as making false or fraudulent statements by the agent, solicitor, physician, applicant, or any other person when applying for life insurance, and is punishable by law is: A) Twisting B) Replacement C) Sliding D) Misrepresentation

D) Misrepresentation Misrepresentation includes misrepresenting the benefits, advantages, conditions, or terms of any policy, dividends to be received; misleading as to financial condition of any person or legal reserve system; misrepresentation for the purpose of inducing the lapse, forfeiture, exchange, conversion or surrender of any insurance policy

Benefits to employers with a small number of employees is: A) Medicare B) Medicaid C) Worker's Compensation D) Multiple Employer Trust

D) Multiple Employer Trust A method of marketing group benefits to employers who have a small number of employees is the Multiple Employer Trust (MET)

Which statement is NOT true regarding Medicare Supplement Insurance? A) Must be guaranteed renewable B) Cannot duplicate benefits provided by Medicare C) May not exclude benefits for a preexisting condition D) Multiple Medicare Supplement policies may be sold to an individual

D) Multiple Medicare Supplement policies may be sold to an individual Medicare supplement insurance may not be issued or sold to an individual if the sale of Medicare supplement coverage will provide an individual more than one Medicare supplement policy

Which of the following risk is NOT reviewed by a health insurance underwriter? A) Age B) History C) Hobbies D) Number of people in the household

D) Number of people in the household Additional health insurance risk factors include the applicant's age, sex, medical and family history, and avocations

In regards to Disability Income Benefits, off-the-job injuries would be covered by which of the following policy? A) Occupational B) Nonoccupational C) Own Occupation D) Occupational and Nonoccupational

D) Occupational and Nonoccupational A Nonoccupational policy may be written that only covers disabling injuries that occur off-the-job, whereas an Occupational policy would cover disability benefits for both job related and non-job related injuries.

All of the following are true regarding a Prospectus EXCEPT: A) Must be given when selling the Variable Annuity. B) The Prospectus is prepared and furnished by the insurance company. C) The Prospectus is reviewed by the SEC. D) Only listed materials need approval of the SEC.

D) Only listed materials need approval of the SEC. Before selling a Variable Life Insurance Policy or Variable Annuity, the agent must furnish the prospect with a Prospectus. This document is prepared and furnished by the insurance company and reviewed by the SEC

A definition of Total Disability requiring that the insured be unable to work at his or her own occupation as a result of an accident or sickness is defined as: A) Elimination Period B) Any Occupation C) Full Occupation D) Own Occupation

D) Own Occupation The "Own Occupation" definition of Total Disability requires that the insured be unable to work at her own occupation as a result of an accident or sickness

A Health Service Organization which undertakes to provide, arranges for, or provides access to a limited health service, such as ambulance, vision, podiatric, chiropractic, dental, etc. is defined as a(n): A) HMO B) EPO C) PPO D) PLHSO

D) PLHSO A PLHSO is any person, corporation, partnership, or any other entity that, in return for a prepayment, undertakes to provide or arrange for, or provide access to, the provision of a limited health service to enrollees through an exclusive panel of providers for the following services: Ambulance, dental, vision, mental health, substance abuse, chiropractic, podiatric care, pharmaceutical

Group Basic Medical Expense Plans cover all of the following EXCEPT: A) Hospital B) Surgical C) Physician's Expenses D) Plastic Surgery

D) Plastic Surgery The three standard forms of Basic Medical Expense insurance - hospital, surgical, and physicians' expenses - are available for group insurance

All of the following risks are reviewed by health underwriters EXCEPT: A) Physical Condition B) Moral Hazards C) Occupation D) Prior Education

D) Prior Education Many factors are reviewed in underwriting health insurance policies. Three of the most important factors are physical condition, moral hazards, and occupation

Which is NOT a technique used by insurance companies in issuing health insurance to substandard risks? A) Attaching an exclusion rider to a policy B) Charging an extra premium C) Limiting the type of benefits D) Reducing the agent's commissions

D) Reducing the agent's commissions Besides outright rejection, there are three techniques commonly used by insurers in issuing health insurance policies to substandard risks: Attaching an exclusion (or impairment) rider or waiver to a policy; charging an extra premium; limiting the type of policy

Under Group Life Insurance, which of the following are NOT considered a benefit? A) Earnings B) Employment Position C) Flat D) Schedule

D) Schedule Most employers will establish benefit schedules according to earnings, employment position, or as a flat benefit

This plan was designed for small businesses to overcome the administrative and cost burdens with qualified plans: A) Keogh B) Salary Reduction SEP C) Savings Incentive Match Plan D) Simplified Employee Pensions

D) Simplified Employee Pensions Another type of qualified plan suited for the small employer is the Simplified Employee Pension (SEP) plan. Due to the many administrative burdens and the costs involved with establishing a Qualified Defined Contribution or Defined Benefit plan as well as maintaining compliance with ERISA, many small businesses have been reluctant to set up retirement plans for their employees. SEPs were introduced in 1978 specifically for small businesses to overcome these cost, compliance, and administrative hurdles

A plan, similar to COBRA, that is for groups of less than 20 employees and the existing health benefits may be continued for 18 months with payment of the full monthly premium, plus an additional charge is defined as: A) HMO B) COBRA C) Health Service Organization D) The Florida Health Insurance Coverage Continuation Act

D) The Florida Health Insurance Coverage Continuation Act The purpose and intent of the Florida Health Insurance Coverage Continuation Act ("Mini-COBRA) is to ensure continued access to affordable health insurance coverage for employees of small employers and their dependents not currently protected by COBRA.

All of the following statements regarding Business Overhead Insurance are correct EXCEPT: A) Reimburses fixed expenses while the owner is disabled. B) Benefits are taxable and premiums are tax deductible. C) The benefits covered are expenses such as rent, employee salaries, utilities, and leased equipment. D) The benefits are used for the owner's salary.

D) The benefits are used for the owner's salary. Business Overhead Expense Policies do not include any compensation for the disabled owner; they are designed to help the day-to-day operation of his business continue during the period of disability

All of the following are true regarding Group Health Underwriting EXCEPT: A) The group as a whole is reviewed not each individual B) The group is accepted or rejected based on the risk of all employees C) The insurer can reject the employee based on health history D) The insurer cannot reject the employee based on health history

D) The insurer cannot reject the employee based on health history If the member is found to represent too great a risk, the insurer often retains the right to reject the member from participating in the plan or at least charge an increased premium (or exclude coverage for the specified condition)

What is the minimum number of members required for group life coverage in Florida? A) 50 B) 100 C) 25 D) There is no minimum

D) There is no minimum There is no minimum number of members (lives) required for a group policy in Florida so long as the organization is one that is eligible for group life insurance

Which of the following is NOT a benefit of Key Person Life Insurance? A) It compensates the business for any financial loss of a valuable employee. B) The cash value is a reserve fund that may be used. C) Proceeds can be used to pay off loans. D) Unfavorable Tax Treatment.

D) Unfavorable Tax Treatment. Business indemnification - Key-Person insurance indemnifies a business: that is, it compensates a business for any financial loss caused by the death of a valuable key person... For example, when whole life insurance is purchased, the cash values increase steadily to provide a cash reserve fund for the business, which appears each year as an asset on the company's balance sheet... Key-person life insurance, however, can offset this danger in two ways: as tangible evidence of business character and as a guarantee of loan repayment at the death of the key person

This Provision provides the insurer with the option to pay someone not designated as the beneficiary: A) Per Capita B) Per Stirpes C) Uniform Simultaneous Death D) Facility-of-Payment

Facility-of-Payment Typically found in Industrial policies

Which of the following is written for employer-employee groups, associations, unions, and creditors to provide coverage for a number of individuals under one contract? A) Term Life Insurance B) Industrial Life Insurance C) Adjustable Life Insurance D) Group Life Insurance

Group Life Insurance Remember, in this case underwriting is based on the group, not the individual

All of the following would be considered a Peril EXCEPT: Question 5 options: A) Fire B) Death C) Accident D) Illness

Illness A Peril is the cause of a Risk

Which of the following promises to substitute future economic certainty for uncertainty and to replace the unknown with a sense of security? Question 14 options: A) Insurance B) Hazard C) Risk D) Avoidance

Insurance Insurance replaces uncertainties with guarantees

Which of the following are similar to Viatical Settlements, except the policyowner is not necessarily terminally or chronically ill? A) Life Income Options B) Settlement Options C) Viatical Settlements D) Life Settlements

Life Settlements In fact, many states are reclassifying viatical settlements as a type of life settlement

The sales agent has a very important role in the underwriting process. Which of the following activities should they NOT participate in? A) Good Business B) Professional Standards Correct Response C) Premium Guarantees D) Follow Good Sales Practices

Premium Guarantees The sales agent acts as the field underwriter

in some situations, life insurance premiums are tax deductible. Which listed below is not tax deductible? A) Premiums paid by the employer for group life insurance on the employee. B) Premiums paid on life insurance that is part of an alimony decree. C) Premiums paid on life insurance by a creditor as collateral security. D) Premiums paid on key-person insurance by a corporation.

Premiums paid on key-person insurance by a corporation. Premiums paid on business life insurance are typically not deductible

Special questionnaires for information about the applicant may be required, which include all of the following EXCEPT: A) Military B) Aviation C) Foreign Residence D) Prior Residence

Prior Residence The Aviation Questionnaire is most common

Question 6 options: A) Provide economic security against losses B) Guarantee a loss will not occur C) Provide losses on large numbers D) Provide that the insured or beneficiary will pay for the loss

Provide economic security against losses n addition, Insurance protection is provided through an Insurance Policy

Francis wants to name his wife as the beneficiary of his life policy, but he wishes to retain the rights of ownership. Francis should have his wife named as: A) Irrevocable Beneficiary B) Revocable Beneficiary C) Secondary Beneficiary D) Tertiary Beneficiary

Revocable Beneficiary In this case, the policyowner remains the complete owner of the policy

Who is generally responsible for delivering an insurance policy to the new policyowner? A) Issuing Corporation B) Sales Agent C) Underwriter D) Policies are never delivered

Sales Agent Policy delivers is a good time for the agent to further develop a professional relationship with the client and clear up any misunderstandings

A plan in which benefits are in the form of company stock is defined as a(n): Stock Bonus Profit Sharing Money-Purchase Defined Benefit

Stock Bonus A Stock Bonus plan is similar to a Profit-Sharing plan, except that contributions by the employer do not depend of profits, and benefits are distributed in the form of company stock

The value of life insurance proceeds are included in the estate of the insured for federal estate tax purposes when: A) The policy is owned by a charitable organization. B) The policy is owned by the employer. C) The policy is owned by the insured. D) The policy is owned by the bank or loan company.

The policy is owned by the insured. State taxes may also be paid

Under a Noncontributory Group Life insurance program all the following are true EXCEPT: A) The employer pays all of the premium B) The employee pays all of the premium C) All employees are covered D) The employer selects the benefit schedule

The employee pays all of the premium If the plan is noncontributory and the employer pays the entire premium, full participation is the general rule

The Grace Period gives the policyowner a 30-day period from the due date to pay the premium. If death occurs, what if any benefits will be paid? A) No benefits will be paid since the policy premium was not paid on the due date. B) The full-face amount as stated. C) The face amount minus any premiums due. D) Return of all premiums paid to date.

The face amount minus any premiums due. f policy premiums are paid monthly, then the Grace Period is one month, but no less than 30 days

Which of the following is not an element of Insurable Risk? Question 11 options: A) The loss is due to chance B) The loss is measurable C) The loss cannot be predictable D) The loss cannot be catastrophic

The loss cannot be predictable Specific characteristics must be met before a Pure Risk can be insured

For a Pure Risk to be insured, which of the following characteristics must not apply? Question 2 options: A) The loss must be due to chance B) The loss must be measurable C) The loss exposure must be large D) The loss must be catastrophic

The loss must be catastrophic In addition, only Pure Risks are insurable

Which of the following best describes Ethics? A) The moral framework within which decisions are made B) Religious rituals and ceremony C) Government Statutes D) Department of Insurance full disclosure

A) The moral framework within which decisions are made Ethics are standards of conduct and moral judgment

A statement made by an applicant that is guaranteed to be true is defined as a(n): A) Representation B) Warranty C) Concealment D) Misrepresentation

B) Warranty Warranties are presumed to be material because they affect the insurer's decision to accept or reject an applicant

Which of the following rating services uses a Superior rating of A++ to A+? A) Best's Insurance Reports B) Moody's C) Standard and Poor's D) None of the Choices Provided

Best's Insurance Reports The financial strength and stability of an insurance company are two important factors to insurers and insureds

Which of the following professional organizations stress ethical behavior and high professional standards? A) National Association of Insurance and Financial Advisors B) National Association of Health Underwriters C) Both A and B D) None of the Above

Both A and B Also referred to as NAIFA and NAHU

Which of the following losses are associated with health risks? Question 15 options: A) Medical Costs B) Wages C) Loss of Income D) Both Medical Costs and Loss of Income

Both Medical Costs and Loss of Income With health insurance, the loss is not when, but if illness or disability will strike

Which of the following is NOT a Nonforfeiture Option from which policyowers can select? A) Cash Surrender B) Reduced Paid-Up Insurance C) Waiver of Premium D) Extended Term Insurance

C) Waiver of Premium Waiver of Premium is considered a policy rider

Which of the following defines Ordinary Insurance? A) Temporary and Permanent B) Term and Industrial C) Industrial and Permanent D) Group and Industrial

A) Temporary and Permanent Ordinary Life is the principal type of life insurance purchased in the US

An insurance contract where there is an element of chance for both parties, and the dollar values are not equal, is considered a(n): A) Aleatory Contract B) Contract of Adhesion C) Unilateral Contract D) Personal Contract

A) Aleatory Contract An Aleatory contract is conditioned upon the occurrence of an event

In Life Insurance, when must insurable interest exist? A) At the time of the application B) At the time of the claim C) Both Times D) Neither Time

A) At the time of the application One interesting note regarding Insurable Interest is that it does not have to exist throughout the duration of the policy or at the time of a claim

Conducting business in accordance with current rules and laws set by government regulatory agencies and the courts is defined as: A) Compliance B) Ethics C) Market Conduct D) Full Disclosure

A) Compliance Compliance means following the rules

Which of the following is provided to the applicant when the initial premium is paid at the time the application for a policy is signed? A) Conditional B) Ethical C) Mandatory D) Authorized

A) Conditional This means that the applicant and company have formed a Conditional Contract

A clause that specifies the amount and frequency of payments required by the policyowner to keep the policy in force is defined as: A) Consideration B) Incontestable C) Nonforfeiture D) Assignment

A) Consideration Often, the amount and frequency of required premiums are listed on the "Schedule" or "Specifications" page

This rider offers the insured an increase in the death benefit tied to an increase in the Consumer Price Index: A) Cost of Living B) Automatic Premium Loan C) Other Insured D) Accidental Death Benefit

A) Cost of Living Is also referred to as a Cost of Living Adjustment Rider (COLA)

Which of the following statements are correct about agent's authority? A) Expressed authority is written and granted by the agent's contract B) Assumed authority is written and granted in the agents contract C) The company has no interest in agent authority D) Apparent authority is based on the words of the agency manager

A) Expressed authority is written and granted by the agent's contract There are three types of agent authority: Express, Implied, and Apparent

An Insurable Interest is a(n): A) Financial Interest in the Insured B) Ownership Interest in the Policy C) Financial Interest in the Cash Value D) No Specific Interest

A) Financial Interest in the Insured An insurable interest must exist between the applicant and the individual being insured

This rider permits the insured to purchase a stated amount of insurance at specific dates without evidence of insurability: A) Guaranteed Insurability B) Automatic Premium Loan C) Payor D) Accidental Death Benefit

A) Guaranteed Insurability The insurance is available at standard premium rates whether or not the insured is still insurable

Which of the following defines insurance written on the lives of children? A) Juvenile B) Additional Insured C) Multiple Protection D) Family

A) Juvenile Typically, this coverage begins from day one to age 14 or 15

Insurance written on the lives of children is defined as: A) Juvenile Insurance B) Jumping Juvenile C) Family Plan Policy D) Multiple Protection Policy

A) Juvenile Insurance This typically covers age one day to 14 or 15

How insurance companies and producers conduct themselves in accordance to ethical standards and in compliance with rules and laws governing insurance policy sales is defined as: A) Market Conduct B) Compliance C) Full Disclosure D) Insurance Conduct

A) Market Conduct Market Conduct is a combination of ethics and compliance

The association that recommends laws and regulations to encourage uniformity, protection of the consumer, and preserve state regulation is: A) National Association of Insurance Commissioners B) National Association of Insurance and Financial Advisors C) National Association of Health Underwriters D) National Association of Regulations

A) National Association of Insurance Commissioners Also referred to as NAIC

At John's death he designates that his three daughters are to receive the benefits of his insurance policy. If a daughter dies before John, the benefits are to be paid to the deceased daughters' children. This distribution of benefits is defined as: A) Per Stirpes B) Per Capita C) Per Person D) Per Head

A) Per Stirpes Per Capita means "Per Person" or "Per Head"

An action which eliminates the original policy or diminishes its benefits or values is defined as: A) Replacement B) Dividend Misrepresentation C) Vanishing Premiums D) Misrepresentation

A) Replacement Examples of Replacement are policy loans, taking reduced paid up insurance, or withdrawing dividends

A statement made by an applicant that he or she believes to be true is defined as a(n): A) Representation B) Warranty C) Concealment D) Misrepresentation

A) Representation Representations are not a part of the contract

Variable Life Insurance requires the insurer and the agent to conform to the regulations of: A) SEC and Office of Insurance Regulation B) TAMRA C) MEC D) All of the Above

A) SEC and Office of Insurance Regulation in a Variable Life Insurance Policy, the policyowner assumes the investment risk

All of the following regarding Rebating in Florida are true EXCEPT: A) The rebate is available to every insured. B) The rebate schedule must be prominently displayed in public view at the producers' place of business. C) The Rebate schedule must be filed by the agent. D) A free copy of the rebate schedule should be made available to clients.

A) The rebate is available to every insured. The rebate only has to be available to insureds in the same actuarial class

Rejecting an applicant due to his race is referred to as: A) Unfair Discrimination B) Coercion C) Twisting D) Churning

A) Unfair Discrimination Unfair Discrimination is making a distinction in an insurance application function between two different individuals of substantially the same underwriting classification and expectation of life or health

Barry has a financial problem and is unable to pay his insurance premium that is due. Which policy would continue coverage on Barry as long as the cash account is sufficient to pay the mortality and expense costs? A) Universal life B) Endowment life C) Industrial life D) Term life

A) Universal life Universal Life Insurance is characterized by its flexibility

Which of the following beneficiary designations will be questioned by the insurer? A) The spouse of the insured B) Business partners of the insured C) Minor children of the insured D) An adult neighbor of the insured

An adult neighbor of the insured The insurer would have to find that the neighbor has interest in being a beneficiary

Which of the following is characterized by benefit amounts that decrease gradually over the term of protection? A) Pure Term Life Insurance B) Decreasing Term Insurance C) Increasing Term Insurance D) None of the Choices Provided

B) Decreasing Term Insurance An example of Decreasing Term would be a 30-year term policy starting at the face value of $100,000 and gradually decreasing to $0 by the end of the policy term

Jake is married and has three children ranging between three and nine years of age. Which plan would provide protection for all members of his family? A) Family Income Plan B) Family Plan C) Family Maintenance Plan D) Family Endowment Plan

B) Family Plan The Family Plan insures all family members under one policy

Which of the following correctly defines Policy Loan Provision? A) It permits the insurer to withdraw the premium due from the cash value of the contract as a loan. B) It permits the insured to borrow money from the cash value of their policy. C) It is automatically included in term insurance policies only. D) This provision has an additional premium charge based on the insured's age at issue.

B) It permits the insured to borrow money from the cash value of their policy.

Which of the following riders requires the insured to meet all the requirements to qualify for long-term care? A) Cost of Living B) Long-Term Care C) Other Insureds D) Accidental Death Benefit

B) Long-Term Care The long-term care rider income amount will be selected when the life insurance policy is purchased

The Parol Evidence Rule states that when parties put their agreement in writing, all previous verbal statements come together in that writing, and a written contract cannot be changed or modified by: A) Written Evidence B) Oral Evidence C) Contractual Evidence D) None of the Above

B) Oral Evidence Parol Evidence is oral or verbal evidence

The Entire Contract Provision is the policy, application, and other attachments. What is the important function of this provision? A) Permits the insurer to adjust benefits and provisions when they feel it is important and beneficial to the insurer. B) Prohibits the insurer from making changes in the contract after the issue date of the contract. C) Prohibits the insured from making changes in the contract after the issue date. D) States that the entire contract must adhere to any and all company requirements.

B) Prohibits the insurer from making changes in the contract after the issue date of the contract. The contract is typically found at the beginning of the policy

Statements made on the application by the applicant that he or she believes to be true are defined as: A) Warranties B) Representations C) Guaranties D) Material facts

B) Representations Representations help the insurer to decide whether or not to issue a policy

Which of the following regarding Cost of Living (COL) Rider is incorrect? A) Adjustable Life Insurance frequently includes a COL Agreement. B) The COL can also be used with Term, Whole Life, and Universal Insurance policies. C) For standard Whole Life Insurance policies, a COL rider is usually offered as an Increasing Term Insurance Rider. D) The COL guards against eroding effects of inflation.

B) The COL can also be used with Term, Whole Life, and Universal Insurance policies. The COL cannot be used with Universal Life Policies due to the already flexible terms present in a UL

The Recording Method in changing a beneficiary states that the change will occur on: A) The date of the insurance application B) The date the policyowner signs the notice C) The date the company approves the change D) The date the company records the change

B) The date the policyowner signs the notice This is the common method in use today for changing beneficiaries

Which of the following does NOT define Service: A) Educating the client before, during, and after the sale. B) Treating the insurance application with confidentiality. C) Disclosing all information. D) Showing loyalty to prospects and clients.

B) Treating the insurance application with confidentiality. Treating all information with confidentiality is a component of Service

Which of the following is referred to as External Replacement? A) Churning B) Twisting C) Misrepresentation D) Sliding

B) Twisting Twisting involves illegally inducing a person to drop existing insurance to buy similar coverage with another producer or company

A life insurance policy that is a variation of whole life insurance, characterized by considerable flexibility is defined as: A) Variable B) Universal C) Variable Universal D) Term

B) Universal Universal Life allows its policyowners to determine the amount and frequency of premium payments and to adjust the policy face amount up or down to reflect changes in needs

An agreement without legal effect is defined as: A) Voidable Contract B) Void Contract C) Waiver D) Estoppel

B) Void Contract A void contract cannot be enforced by either party

The voluntary giving up of a legal, given right is defined as a(n): A) Estoppel B) Waiver C) Parol Evidence D) Void

B) Waiver If an insurer voluntarily waives a legal right it has under a contract, it cannot later deny a claim based on a violation of that right

Which of the following benefits does the Payor Provision provide? A) Continued protection if the insured is disabled and unable to pay the premiums due. B) Waiver of any premiums due when the adult paying the premium on a child's policy dies or becomes disabled. C) Permits the insurer to borrow from the cash value and pay any premium due while in the insured is ill. D) Permits the child insured to purchase additional insurance without evidence of insurability.

B) Waiver of any premiums due when the adult paying the premium on a child's policy dies or becomes disabled. This provision is also known as the Death and Disability Payor Benefit

Which contract provides flexibility by "unbundling" or separating the basic components of a life insurance policy? A) Variable life B) Term insurance C) Universal life D) Whole life

C) Universal life The "unbundled" components include the insurance, savings, and expense elements

Identify this policy: "As long as the cash value account is sufficient to pay the monthly mortality and expense costs, the policy continues in force, whether or not the policyowner pays the premium." A) Adjustable Life B) Variable Life C) Universal Life D) Modified Whole Life

C) Universal Life In the event that the cash value account is not sufficient to pay the premiums, the policy will cancel

The Free Look Provision gives a Florida policyowner how many days after policy delivery to return it and receive a full premium refund? A) 15 B) 20 C) 14 D) 0

C) 14 Free Look for Life Insurance Contracts and Annuities is 14 days

What is the waiting period for the Disability Income Rider? A) 90 Days B) Six Months C) 90 Days or Six Months D) 30 Days or Six Months

C) 90 Days or Six Months The waiting period for the Disability Income Rider is the same as the Waiver of Premium

The Variable Universal Life policy blends features of Whole Life, Universal Life, and Variable Life, which include: A) Premium Flexibility B) Cash Value Investment Control C) Both Choices Provided D) None of the Choices Provided

C) Both Choices Provided Death benefit flexibility is also a benefit

In Florida, an agent is required to deliver to the applicant a: A) Life Insurance Buyer's Guide B) Policy Summary C) Both of the Choices Provided D) None of the Choices Provided

C) Both of the Choices Provided These documents are typically delivered before the agent accepts the applicant's initial premium

Interest-Sensitive Whole Life is also known as: A) Guaranteed Minimum Rate B) Pure Endowment C) Current-Assumption Whole Life D) None of the Choices Provided

C) Current-Assumption Whole Life Interest-Sensitive Whole Life is also known as Current-Assumption Whole Life. The policy is characterized by premiums that vary to reflect the insurer's changing assumptions with regard to its death, investment, and expense factors

How often must agents complete at least 24 hours of continuing education classes? A) Every Eight Years B) Every Five Years C) Every Two Years D) On a Yearly Basis

C) Every Two Years An agents license must be appointed within four years to keep it active

Which of the following is designed to insure all family members under one policy? A) Family Income Policy B) Family Maintenance Policy C) Family Plan Policy D) Multiple Protection Policy

C) Family Plan Policy Under a Family Plan, the "bread winner" is placed with permanent insurance and the spouse and children with level or decreasing term

An Insurance Company incorporated in the state of New York and licensed to conduct business in the state of Florida is an example of: A) Domestic insurer B) Alien insurer C) Foreign insurer D) Service insurer

C) Foreign insurer A Foreign Insurer is one who is licensed and doing business in states other than the one in which it is incorporated

Which of the following is not a step in the Organized Sales Presentation? A) The Approach B) Establishing the General Problem C) Identifying the Specific Problem D) The Close

C) Identifying the Specific Problem There are six steps in the Organized Sales Presentation. Identifying the Specific Problem should be written as Establishing the Specific Problem

The authority that is not expressly granted, but which the agent is assumed to have in order to transact the business of the principal is defined as: A) Express B) Apparent C) Implied D) Coherent

C) Implied An agent's actions that may extend beyond the rights and powers explicitly provided in the agency contract is another way to describe Implied Authority

Which beneficiary designation permits the policy owner to change the beneficiary at anytime: A) Reversionary B) Absolute C) Revocable D) Irrevocable

C) Revocable In addition, the policyowner remains the complete owner of the policy

An offer for an insurance contract is made when the applicant submits which of the following? A) The application B) The initial premium and medical exam C) The application with the initial premium D) The medical exam and application

C) The application with the initial premium If an applicant does not submit an initial premium with the application, the applicant is only inviting the insurance company to make the contract offer

Which of the following contracts pays a stated sum, regardless of the actual loss incurred? A) Indemnity B) Conditional C) Valued D) Warranty

C) Valued Life insurance contracts are valued contracts

This law made it clear that the regulation of insurance should be by the States, since it was in the best interest of the public: A) The McCarran-Ferguson Act B) The United States v Southeastern Underwriters Association C) The Federal Trade Commission Act D) The Fair Credit Reporting Act

Correct Answer A) The McCarran-Ferguson Act Also known as Public Law 15

This code specifies certain words and phrases that are considered misleading and are not to be used in advertising of any kind: A) NAIFA B) Unfair Trade C) Marketing D) Advertising

D) Advertising The Advertising Code was developed by the NAIC

Which of the following responsibilities does a producer have when a policy is rated or rejected? A) Personally review the rating or rejection. B) Notify the applicant promptly. C) Explain the rating or rejection to the applicant. D) All of the Choices Provided

D) All of the Choices Provided

In which of the following scenarios is a Replacement appropriate? A) The applicant has been cancer free for over five years. B) The prospective applicant was persuaded into purchasing her current policy, which does not fulfill her needs. C) The applicant now lives in a state that offers a lower premium per $1,000 purchased in life insurance coverage. D) All of the Choices Provided

D) All of the Choices Provided All of the choices would be appropriate for replacement. A. The clients health has improved; B. The purpose is to undo a bad replacement; and C. New policy will reduce coverage cost

As part of the USA Patriot Act, insurers and other financial institutions must: A) Develop new training programs and compliance systems B) Hire anti-money laundering officers C) Share information with other financial institutions and enforcement entities D) All of the Choices Provided

D) All of the Choices Provided As part of this Act, insurers and other financial institutions must develop new compliance systems and training; designate anti-money laundering officers; share information with other financial institutions and enforcement entities; and adopt robust procedures to verify the identity of any person opening an account

Variable Universal Life Insurance blends many features of: A) Whole Life B) Universal Life C) Variable Life D) All of the Choices Provided

D) All of the Choices Provided The key among these features are premium flexibility, cash value investment control, and death benefit flexibility

All of the following are considered a Competent Party EXCEPT: A) Minors B) The mentally infirm C) Those under the influence of alcohol D) All of the above

D) All of the above To be enforceable, a contract must be entered into by competent parties

Which of the following are death benefit options for a Universal Life policy? A) Option One B) Option Two C) Option Three D) Both Option One and Option Two

D) Both Option One and Option Two Universal Life has two death benefit options; Option One and Option Two

Which of the following did Congress pass that allowed commercial banks, investment banks, retail brokerages, and insurance companies to have the ability of entering each other's line of business? A) Glass-Steagall Act B) Fair Credit Reporting Act C) Armstrong Investigation Act D) Financial Services Modernization Act

D) Financial Services Modernization Act This act repealed the Glass-Steagall

A company that offers insurance to their members, are non-profit, have a representative form of government and issue certificates is called a: A) Stock company B) Mutual company C) Reinsurer D) Fraternal Benefit Society

D) Fraternal Benefit Society Fraternal Benefit Societies have existed in the United States for over a century

Which of the following does NOT describe Ethics: A) Standards of Conduct B) Moral Judgment C) High Standards D) Group Performance

D) Group Performance Ethics provides standards by which individuals can measure their performance

All of the following statements regarding insurable interest are true EXCEPT: A) Applicants have insurable interest in themselves B) Insurable interest means there is a financial loss due to death or disability C) Insurable interest must exist at the inception of the contract D) Insurers do not need to verify insurable interest

D) Insurers do not need to verify insurable interest Insurers have a legal liability to confirm insurable interest and obtain the insured's consent

Which of the following occurs if the buyer of an insurance policy receives any part of the producers commission or anything else of significant value as an inducement to purchase a policy? A) Dividend Misrepresentation B) Vanishing Premiums C) Compliance D) Rebating

D) Rebating There are specific guidelines for Florida agents who practice Rebating

An insured listed his wife as the primary beneficiary and selected that she is to receive a monthly income for life at his death. The company is notified that the deceased has an outstanding loan and the finance company request that the monthly benefits be sent to them. The insurer will not send the installment payment to the finance company based on which of the below listed provisions? A) Facility-of-Payment B) Order of Succession C) Assignment of Benefits D) Spendthrift Trust Clause

D) Spendthrift Trust Clause The Spendthrift Clause does not apply to proceeds paid in one lump sums

All of the following are considered basic types of Hazards EXCEPT: Question 12 options: A) Physical B) Moral C) Morale D) Pure

Pure A Hazard is any factor that gives rise to a Peril

The Supreme Court ruling that the business of insurance is subject to federal laws and shifted the regulatory control to the Federal Government was: A) The Armstrong Investigation B) The McCarran-Ferguson Act C) The Fair Credit Reporting Act D) The United States v Southeastern Underwriters Association

D) The United States v Southeastern Underwriters Association Also known as Paul v. Virginia

Under the Assignment Provision, there are two types of assignments. Which of the following regarding these is incorrect? A) There are two types of assignments: Absolute and Collateral. B) Under the Absolute Assignment, the transfer is complete and irrevocable. C) A Collateral Assignment is one in which the policy is assigned to a creditor as security, or collateral, for a debt. D) Under the Absolute Assignment, the assignee shares control with the insurer over the policy.

D) Under the Absolute Assignment, the assignee shares control with the insurer over the policy. The assignee has full control in an Absolute Assignment

In Florida, an agent's license is perpetual unless which of the following occur? A) License is Suspended B) License is Revoked C) License is Withdrawn D) License is Suspended or Revoked

D) License is Suspended or Revoked Perpetual is defined as never ending or changing

Policies distinguished by premiums that are lower than typical whole life premiums during the first few years (usually 5) and then higher than typical thereafter, are defined as: A) Modified Whole Life B) Graded Premium Whole Life C) Enhanced Whole Life D) Indexed Whole Life

Modified Whole Life The purpose of Modified Whole Life Policies is to make the initial purchase of permanent insurance easier and more attractive, but the promise of an improved financial position in the future

This document contains information about the nature and purpose of the insurance plan, the separate account, and the risk involved: A) Securities Contracts B) Life Insurers Buyers Guide C) Option One D) None of the Choices Provided

None of the Choices Provided This is the definition of a Prospectus

Whole Life Insurance is designed to: A) Provide protection during a period of time like 20 years or to age 65 B) Endow at age 65 with payment of the face amount to the insured C) Have income payments to the insured during an illness D) Offer protection to age 100

Offer protection to age 100 Whole Life Insurance is known as permanent or cash value insurance

A Pure Risk is: Question 4 options: A) A chance of gain or profit B) Only a chance of loss C) Not insurable D) None of the above

Only a chance of loss There is never a possibility of gain or profit with a Pure Risk

Universal Life Insurance offers two death benefit options. Under which option does the death benefit equal the face amount (pure insurance), plus the cash values (level term plus increasing cash values)? A) Option One B) Option Two C) Both of the Choices Provided D) None of the Choices Provided

Option Two This is the definition for Option Two. Under Option One, the policyowner may designate a specified amount of insurance. The death benefit equals the cash values, plus the remaining pure insurance

A Stock Insurance Company is: A) Owned by and makes a profit for its stockholders B) Owned by and makes a profit for its policyholders C) Owned by and makes a profit for the beneficiaries D) Owned by and makes a profit for its employees

Owned by and makes a profit for its stockholders Stockholders may or may not be policyholders

A Mutual Company: A) Pays dividends to policyholders B) Pays dividends to shareholders C) Pays dividends to company owners D) Does not pay dividends on contracts

Pays dividends to policyholders Mutual Companies do not have stockholders

The Fifth Dividend Option provides additional protection or benefits by purchasing one-year term insurance equal to the: A) Contract Face Amount B) Consumer Price Index C) Accidental Death Benefit D) Policy Cash Value

Policy Cash Value This provision allows for any excess dividend portions to be applied under any of the other regular options

Rating services provide all of the following EXCEPT: A) Financial strength of insurance companies B) Claims paying ability of insurance companies C) Stability of insurance companies D) Ratings of insurance agents and their agencies

Ratings of insurance agents and their agencies It is recommend that insurance buyers purchase policies from companies with a rating of A++ to A-

This provision permits the policyowner the right to pay the premiums due and bring a lapsed policy back into benefit: A) Consideration B) Reinstatement C) Nonforfeiture D) Assignment

Reinstatement There is a limited amount of time in which policies may be reinstated after lapse. The period is typically three years, but may go as high as seven

Confronting a Risk by setting up a fund to pay for losses that occur is considered: Question 7 options: A) Risk Retention B) Risk Reduction C) Risk Transference D) Risk Avoidance

Risk Retention One way of handling a retained risk is self-insurance

When a Risk is transferred from an individual to a group it is defined as: Question 13 options: A) Risk Transference B) Law of Large Numbers C) Risk Avoidance D) Risk Reduction

Risk Transference Insurance is the most common method of transferring risk

The most effective way to handle a Risk is through: A) Risk Avoidance B) Risk Attention C) Risk Transference D) Risk Reduction

Risk Transference With Risk Transference, the loss is borne by another party

Jeremy buys his wife a $15,000 sapphire necklace that is kept in a safe deposit box at their credit union when she is not wearing it. This is an example of: Question 8 options: A) Risk retention B) Risk reduction C) Risk transference D) Risk avoidance

Risk reduction Risk reduction is lessening the possibility of loss

Which of the following involves the chance of both loss and gain? Question 10 options: A) Pure Risk B) Speculative Risk C) Defined Risk D) Risk Reduction

Speculative Risk Gambling is a good example of Speculative Risk

The larger the group the more certain the prediction's of loss that may occur describes:

The Law of Large Numbers The Law of Large Numbers relies on morbidity and mortality statistics