Life Insurance Chapter 11 Exam
Advertising gifts not to exceed ___ are allowed to be given by an agent to a prospective client.
$25
A life policy loan in FL cannot charge a fixed rate of interest higher than what?
10%
What percentage of eligible persons must a policy cover in a noncontributory group?
100%
What is the minimum age at which a person can sign a life insurance application?
15 years
An insurance company can contest a life insurance contract due to application fraud within how many years?
2 years
How many hours of continuing education must a newly licensed agent complete every 2 years?
24
Agents that have been licensed for less than six years must complete __ hours of continuing education every two years.
24 hours
Within how many days must a licensee notify the Department of Financial Services of a change in address?
30 days
A group plan was recently terminated. In Florida, how many days are covered individuals guaranteed coverage after a group plan's termination?
31 days
How many days does an insurance company have to reject a reinstatement application before it is automatically reinstated?
45 days
A licensed agent must be appointed by an insurance company to solicit insurance in Florida. The agent's license will terminate if a certain period of time elapses without being appointed. How long is this period of time? *12 months *24 months *36 months *48 months
48 months or 4 years
Florida requires that an insurance agent must complete __ hours of continuing education on the subject of law and ethics every two years.
5 hours
In Florida, what is the max percentage of controlled business an agent may produce?
50%
An example of false advertising would be *Paid testimonials from celebrity endorsements *An insurer exaggerating its dividends in a magazine advertisement *An agent spending more than $25 on marketing gifts for a client *An insurer advertising in an insurance trade journal
An insurer exaggerating its dividends in a magazine advertisement
All of the following are Nonforfeiture Options EXCEPT: -Cash Surrender Option -Extended Term Option -Reduced Paid up Option -Automatic Premium Loan Option
Automatic Premium Loan Option
When is it acceptable to share commissions with another agent?
Both agents must be licensed for the same lines of insurance
How can an agent-in-charge have more than one location?
Only if the agent-in-charge is present when insurance activity occurs
K is an agent who made an improper sale of an annuity to a client. Which of the following corrective actions would the Department of Financial Services likely order K to take?
Pay monetary restitution to the client
According to FL Life Insurance replacement laws, a policyowner must be provided with a written Comparison and Summary Statement when its requested by:
Policyowner
If a policyowner does not pay the premium by the due date, the
Policyowner can make the premium payment during the grace period.
What is the purpose of the Insurance Guaranty Fund Association?
Protects policyowners against insolvent insurance companies
According to FL law, group life insurance conversion privileges must NOT what?
Require evidence of insurability
Which of these is NOT a legal entity for selling life insurance in FL? -Independent agency system -Risk management advisers -Career agency system -Personal producing general agency
Risk Management Advisers
A mutual insurance company and a stock insurance company have one main difference between them. What is this major contrast?
Stock company is owned by its shareholders. Mutual company is owned by its policyholders
Who owns a stock company?
Stockholders/Shareholders
Which of the following factors is NOT considered when the Department of Financial Services determines if an agents home is an insurance agency? -Listing the address on the agent's business cards -Business solicitation is done at this location -Clients are met at this location -The amount of premium collected at this location
The amount of premium collected at this location
During the application process, What is the agents primary responsibility?
The insurance company
W gave W's age as 50 when W purchased a Life policy. At the time of W's death seven years later, the company discovered W's true age at issue had been 59. What would the normal procedure be under the misstatement of age provision in regard to the payment of the death claim?
The proceeds would be reduced based on whatever the premium would have been if purchased at age 59.
Which of the following activities will NOT result in the suspension of an agent's license? -Making malicious and false statements about an insurer -Replacing an insurance policy from one insurer to another based on misrepresentation -Working for a foreign insurer -Misrepresenting any fact about an insurance policy
Working for a foreign insurer
During the course of an insurance transaction, if an agent makes a false or incomplete statement, he/she could be guilty of what?
Misrepresentation
Which Unfair Trade Practice involves an agent telling a prospective client that a policy's dividends are guaranteed? *Coercion *Fraud *Misrepresentation *Sliding
Misrepresentation
What is a stock life insurance company that issues both participating and nonparticipating policies is doing business on?
Mixed Plan
What are adjustable rates for life policy loans in Florida based on?
Moody's Corporate Bond Index
Which type of insurance company allows their policyowners to elect a governing body?
Mutual Company
Which of the following professional organizations has its code of ethics incorporated into Florida Law?
National Association of Insurance and Financial Advisors (NAIFA)
Which of the following is NOT an unfair settlement practice? -Failing to acknowledge and act promptly with respect to an insurance claim -Compelling an insured to initiate a lawsuit by offering less on an insurance claim -Failing to accept or deny a claim within reasonable time after proof of loss is submitted -Needing written documentation of claim details
Needing written documentation of claim details
According to FL law, a Group Life insurance policy requires a minimum of how many insureds?
No minimum
What documents must an agent submit to the replacing insurance company during the replacement of an existing life insurance policy?
Notice to existing and replacing insurers of intentions to replace
In FL, agents are allowed to engage in rebating if?
Offered to all insureds in the same actuarial class
What is an example of rebating?
Offering a client something of value not stated in the contract in exchange for their business.
Under Florida law, a variable annuity policyowner must be notified of the accumulated value of the contract how many times?
Once each year
In order for a domestic foreign, or alien insurance company to conduct business, it must be authorized by whom?
The state where they are conducting business
Group Life policies in Florida are required to contain a conversion privilege that allows for a conversion?
To an individual policy for a stated period of time
An example of an unfair claims settlement practice is what?
Turning down a claim without providing the basis of denial.
An agent who makes misleading statements that lead to the termination of an existing insurance policy so that a new policy with another insurer can be taken out has committed
Twisting
What does twisting mean?
Twisting involves an agent using misrepresentation to convince a policyowner to cancel their current policy so that they can purchase a new life insurance policy so that they can purchase a new life insurance policy with another company
What can a life insurance policyowner may sell their policy to an ____ in order to receive a percentage of the policy's face value
Viatical Settlement Provider
When can The Financial Services Commission may hold hearings?
for any reason deemed necessary
Convincing a prospective insured to buy an insurance policy based on exaggerations is called?
Misrepresentation
Defamation occurs when an agent makes a false statement intended to
Malign or maliciously attack another insurer
According to Florida law, an additional lapse notice must be issued after the standard grace period has expired for policyowner age
64 years or older
How is a foreign insurance company doing business in Florida formed?
A company that was formed under the laws of another state
In Florida, deceptive advertising is considered to be
A form of misrepresentation
What is Florida's definition of Life insurance replacement?
A transaction in which a new policy is bought and an old policy is terminated.
Stock Insurance Company
A type of insurance company owned by stockholders/shareholders.
All of the following will result in the suspension of an agent's license EXCEPT: -Intentionally misrepresentation -Acting with fiduciary responsibility -Forging a name on an insurance application -Being convicted of a felony
Acting with fiduciary responsibility
Which of the following employer tasks does a Professional Employer Organization normally handle?
Administration Tasks
Insurance companies that are organized in countries outside the US are referred to as:
Alien
What type of insurance company is domiciled in England, but conducts business in FL?
Alien
J owns a business and has a Group Life policy covering her employees. J decides to cancel the policy by letting it lapse on the renewal date. What action must be taken?
All of the employees must be notified of cancellation by the insurance company or through J
Which of the following is considered to be misrepresentation? -Replacing an existing policy with a new one -An agent guaranteeing a policy's dividends -Sharing commissions with other licensed agents -Representing a foreign insurer
An agent guaranteeing dividends
What is an example of an unfair trade practice?
An agent making a material misrepresentation to the insured
All of the following entries are classified under the four principal areas of Florida insurance law EXCEPT: -An agent's commission -Policyowner's rights -Policy provisions -An agent's licensing requirements
An agent's commission
Which of the following situation does not apply to the Florida Replacement Rule? -An existing policy is reissued with a reduction in cash value -A new policy issued while an existing one is surrendered -An existing policy is subject to extensive borrowing -An existing policyholder purchases an additional policy from the same insurer
An existing policyholder purchases an additional policy from the same insurer
A variable life insurance agent must be licensed and appointed as a life and variable contract agent, as well as an what?
Broker Dealer
What can an agent provide to help a prospective client understand and purchase the most appropriate product?
Buyer's Guide
According to Florida's rules on disclosure, a life insurance applicant is expected to be provided with what?
Buyer's Guide and Policy Summary
The insurer must provide a prospective buyer with a(n)
Buyer's Guide and Policy Summary
What is an individual covered under a Group Life Insurance Policy is considered to be?
Certificate Holder
One definition of replacement is the act of replacing an existing insurance policy with another. What is Replacement?
Closely regulated and requires full disclosure
As a condition for a loan, a bank requires the borrower to purchase credit insurance from a specific company. What is the bank guilty of?
Coercion
In FL, which of the following is considered an Unfair Trade Practice? -Replacement -Coercion -Aleatory -Subrogation
Coercion
J is an agent who recently told a claimant that his rights might be impaired if he does not complete a release form within a specified time. What could this agent be found guilty of?
Coercion
Which of the following is an example of Unfair Trade Practice -Shared Commissions -Fiduciary -Replacement -Coercion
Coercion
The policy summary contains specific information on all of the following, EXCEPT: -Provisions -Benefits -Commission -Coverage
Commission
An applicant who pays the initial premium at the time of application is typically given a:
Condition Receipt
According to Florida law, which of the following information does NOT need to be obtained by an agent recommending an annuity purchase?
Martial Status
All of the following are eligibility requirements for an association group EXCEPT: -Group must have been in existence for two years -Contributory plans require a minimum of 25 participants -Group must hold regular meetings at least on an annual basis -Must have been organized for some reason other than to obtain group insurance
Contributory plans require a minimum of 25 participants
When does Florida's 14-day free-look period for life insurance policies begins.
Date of delivery
Which of the following unfair trade practices involves an agent who makes malicious statements about another person's financial condition?
Defamation
What two entitles regulate variable annuities?
Department of Financial Services and Securities Exchange Commissions
In Florida, an insurer domiciled and incorporated in this state is called an
Domestic Company
What is it called when an insurance company incorporated under the laws of the state in which its home office is located?
Domestic Company
An example of an unfair claim practice would be:
Failing to effectuate prompt, fair and equitable settlements of a claim.
T is an agent an when hired, is reminded that he has responsibility to handle clients funds in an honest and ethical manner. This responsibility is referred to as
Fiduciary Responsibility
Which of the following is NOT a consequence for placing business with an unauthorized insurer? -Third degree felony -First degree misdemeanor -Insurance license revoked -Responsible for unpaid claims
First degree misdemeanor
In Florida, when agents recommend changes be made for existing coverage the agent must follow established procedures. The name of this rule is called what?
Florida Replacement Rule
Which organization was established to provide funds to protect an insured in the event of an insurer's insolvency?
Florida's Insurance Guaranty Fund Association
In FL, an insurer licensed to conduct business in FL but domiciled in New Jersey is called?
Foreign Company
Which of the following employees may NOT be excluded from a group life plan?
Full-time employees after the probationary period
How is the Insurance Guaranty Fund Association Funded? -An entity that assists in underwriting large insurance policies -Funded by admitted insurance companies through assessments -Funded by the state government -Administered by the Federal Government
Funded by admitted insurance companies through assessments
All of these are prerequisite for becoming a licensed agent EXCEPT: -Complete a pre-licensing course -Resident of FL -Be at least 18 years or older -Graduate from high school
Graduate from high school
What is a standard provision of the conversion privileges in a Group Life Policy?
Group Life coverage can be converted to an individual policy at regular rates on an attained age basis
What would be an accurate definition for controlled business?
Insurance business that is written on the agents own life property or interests
Which of the following situations are NOT subject to Florida life insurance laws? -Insurance companies day to day operations -Insurance companies life policy replacement requirements -Insurance companies setting of life insurance policy rates -Insurance companies guidelines for paying a life insurance claim
Insurance companies day to day operations
In Florida, an element of an insurance transaction would be what?
Issuing an insurance contract
According to Florida law, which of the following statements accurately describes an admitted mail order insurance company?
It may solicit insurance business by mail without the assistance of a licensed agent.
Who is a mutual insurance company owned by?
Its policyholders
If an agent would like to sell Variable annuities, which state examination must the agent pass?
Life and Variable Contracts
What is the main reason for regulating the insurance industry?
Maintain the solvency of insurance companies.
