Practice exam
24. A medical examination is NEVER required as part of the application process for which type of policy? (a) Major Medical Insurance (b) Disability Income Insurance (c) Accidental Death and Dismemberment Insurance (d) Comprehensive Medical Insurance
(c) Accidental Death and Dismemberment Insurance (c) Accidental Death and Dismemberment Insurance
96. Which of the following would not be classified as a Limited Risk Policy?
(c) Basic medical policy
74. Which renewability provision allows the company to cancel a policy under certain conditions?
(c) Conditionally renewable
Which of the following individual insurance needs is sometimes overlooked in the needs analysis process?
(c) Disability income insurance
16. If an agent loses an appointment for transacting health insurance, his qualifications for the health portion of his license will remain valid for how many months?
(d) 48 months
67. Andrea, age 27, is advised by her agent to purchase life insurance to cover a 20-year, $50,000 amortized business-improvement loan. Which of the following plans would adequately protect her at the minimum premium outlay?
(d) A $50,000 Decreasing Term policy for 20 years
60. A contract by which the dollar values exchanged may not be equal is what kind of contract?
(d) Aleatory contract
44. Which of the following would not be cause for revocation or suspension of an Agent's
(d) Attaining a license for the sole purpose of handling uncontrolled business
61. What is the name of a plan, usually funded by life insurance, to purchase a deceased partner's share of a business?
(d) Buy and sell agreement
The specified dollar amount that an HMO subscriber must pay for certain covered health care services is referred to as the
(d) Co-payment
19. Which of the following would NOT be cause to suspend or revoke an agent's license? (a) Demonstrating incompetence to transact business as an insurance agent (b) Unlawfully rebating or attempting to unlawfully rebate (c) Misrepresenting policy contracts
(d) Converting an insured's term insurance to permanent insurance
The association that is set up by each state to protect consumers if an insurer becomes insolvent is referred to as the
(d) Guaranty Association
56. In which type of whole life insurance does the face amount automatically increase as the Consumer Price Index (CPI) increases?
(d) Indexed Whole Life
49. When an insured must obtain the beneficiary's consent to take a loan against the life insurance policy, the original designation is said to be
(d) Irrevocable
All of the following statements about group credit life insurance are correct except which one? (a) It is life insurance on the life of a debtor (b) Policy proceeds are paid to the creditor (c) The length of the loan period and the decreasing insurance amount must match the declining loan balance
(d) Level term insurance may be used
An applicant submitted an application for a life insurance policy without the premium. The applicant was killed in an automobile accident after the policy was issued but before it was delivered. Which of the following is CORRECT?
(d) No benefit would be paid.
Which type of policy generally would require the most comprehensive underwriting?
(d) Noncancelable and Guaranteed Renewable Disability Income
If an insurer determines that an insured lawfully owns or possesses a firearm, the insurer may
(d) Not discriminate in any way.
A change of occupation provision in a disability income policy allows the insurer to do which of the following if an insured changes to a more hazardous job?
(d) Policy benefits will be reduced to an amount the premium would have purchased originally, based on the more hazardous occupation.
. Which of the following statements regarding the Medical Information Bureau (MIB) is NOT correct?
(d) The MIB will disclose medical information directly to the applicant upon request.
John Q Agent persuades a prospect to lapse an existing policy in order to purchase a new policy. Which of the following statements is CORRECT?
(d) The agent is guilty of twisting.
What happens in a partnership when there is no agreement between the partners and one of the partners dies?
(d) The partnership is dissolved, so this terminates the surviving partner's authority to act for the partnership except to wind up the firm's affairs
65. Which of the following statements regarding business continuation plans is CORRECT?
(d) The premium for Business Overhead Insurance is tax-deductible, however the benefits are treated as taxable income.
For health insurance purposes, consideration is considered to be
(d) The premium payment and the application
54. An agreement which, for a reason satisfactory to the court, may be set aside by one of the parties to the contract is called a
(d) Voidable Contract
Susan Lopez buys an Immediate Annuity with 10 Years Certain, which provides $500 per month income. She dies after receiving payments for 7 years. If the beneficiary lives 5 more years, the beneficiary will receive:Susan Lopez buys an Immediate Annuity with 10 Years Certain, which provides $500 per month income. She dies after receiving payments for 7 years. If the beneficiary lives 5 more years, the beneficiary will receive:
18,000
93. A Mortality Table shows the number of deaths that may occur at each age level, including all of the following, EXCEPT: (d) 105
(a) 0 (b) 20 (c) 100
69. The Outline of Coverage delivered with a health insurance policy must contain all of the following information EXCEPT (c) A summary of benefits paid for similar policies for the period of 12 months immediately preceding the policy date.
(a) A description of the principal benefits and coverage provided in the policy. (b) A summary statement of the principal exclusions and limitations or reductions contained in the policy. (d) A summary statement of the renewal and cancellation provisions of the policy.
91. Regarding variable contracts which of the following statements is INCORRECT? (d) A prospectus must be provided at the time of interview or upon delivery of the policy.
(a) A variable insurance sales presentation cannot be conducted unless it is preceded or accompanied by a prospectus. (b) An agent must hold a life license and a NASD registered representative's license. (c) They are considered securities contracts as well as insurance contracts.
Concerning accidental means vs. accidental results provisions in an accident policy, which of the following statements is NOT true? (d) Accidental means requires that only the resulting injury itself must be unintentional, not the cause.
(a) Accidental results is a more liberal definition than accidental means. (b) Accidental results will pay regardless of the cause of the accident. (c) Accidental means is a very strict definition compared to accidental results.
13. All of the following terms are frequently used to describe insurance companies and their site of incorporation EXCEPT: (c) Home-based
(a) Alien (b) Foreign (d) Domestic
Underwriting techniques commonly used by insurers in issuing policies to applicants who do not measure up to a standard rating include all of the following EXCEPT: (b) Averaging total risks pending.
(a) Attaching an exclusion rider or waiver to a policy. (c) Charging an extra premium. (d) Limiting the type of policy.
62. Most life insurance policies contain restrictions that exclude from coverage certain types of risks. Which of the following would NOT be a common exclusion? (d) Death resulting from murder
(a) Death as a result of war (b) Death as a result of a hazardous occupation or hobby (c) Death resulting from the insured committing a felony
72. Concerning defamation, all of the following statements are correct, EXCEPT: (c) The code of ethics does not consider false statements unless they are in writing.
(a) Defamation is unethical. (b) It includes false statements, both oral and written. (d) Defamation includes derogatory statements made to injure any person engaged in the business of life insurance.
30. Which of the following would NOT be considered an unfair trade practice? (c) Policy replacement
(a) False advertising (b) Unfair discrimination (d) Misrepresentation
Which of the following may NOT be imposed by the Chief Financial Officer as penalties for a violation of the Insurance Law? (c) Imprisonment
(a) Fine (b) Suspension of License (d) Revocation of License
57. All of the following statements regarding types of insurers are correct EXCEPT: (b) Reinsurers usually deal with group policyowners.
(a) Fraternal benefit societies must be nonprofit organizations. (c) Mutual insurance companies are "owned" by their policyowners. (d) Stock insurance companies seek a profit for their shareholders.
66. Regarding binding receipts, all of the following provisions generally apply EXCEPT: (d) The applicant is covered at the time of application for the amount of insurance applied for-but usually not to exceed a maximum of $500,000 under all outstanding receipts.
(a) If a medical examination is required, temporary coverage does not begin until the examination has been completed. (b) The applicant must pay in advance at least one month's premium. (c) There must be no material misrepresentations in the application, and the death must not result from suicide.
63. All of the following statements regarding insurable interest are correct EXCEPT: (c) Insurable interest must exist at the time of claim.
(a) Insurable interest must exist between the applicant and the individual being insured. (b) Insurable interest does not have to exist for the life of the policy. (d) Insurable interest must exist at the inception of the policy.
All of the following are causes of loss that would NOT be covered by a typical health insurance contract EXCEPT (c) Expenses associated with treatment of injury or sickness.
(a) Intentional self-inflicted injury. (b) Mental disorders. (d) Losses due to preexisting conditions.
95. General approaches insurers use for cost management include which of the following?
(a) Mandatory second opinions (b) Precertification review (c) Ambulatory surgery (d) All of the above
If an agent pleads guilty or nolo contendere to a crime punishable by imprisonment of one year or more, they must report in writing to the Department of Financial Services within how many days?
(c) 30 days
When an agent has a change of email address or telephone number, Florida Law requires that they notify the Department of Financial Services within how many days?
(c) 30 days
If a licensee loses an appointment for any line of business, his or her qualifications for that portion of his or her license will remain valid for:
(c) 48 months
How many days long is the benefit period deductible under Medicare Part A?
(c) 60 days
Written proof of loss, whether on the carrier's form or not, must be filed with the carrier within how long from the date of loss?
(c) 90 days
An insured suffers an injury that does not qualify for monthly Disability Income benefits but may make the insured eligible for:
(c) A non-disabling injury benefit.
48. Elsie Smith, age 65, decides not to roll over her bank CDs. Instead she uses that money to purchase a Straight Life Annuity. Her main objective probably is to provide
(b) an income that she cannot outlive.
An employee paid $2,500 in social security taxes last year. How much did the employer have to pay on that employee's behalf?
(c) $2,500
Which of the following employees of a self-funded individual would have to be covered under a Keogh plan?
(c) 21-year-old employee who has worked 30 hours per week since the start of the business two years ago.
99. Which of the following statements regarding Medicare Part B is NOT correct? (d) Medicare Part B will pay 100% of covered reasonable charges, following an annual deductible.
(a) Medicare Part B participants are responsible for an annual deductible. (b) Medicare Part B will pay 80% of covered reasonable charges. (c) Medicare Part B is financed by monthly premiums from participants and by tax revenues.
31. Which of the following statements about an adjustable life insurance policy is NOT correct? (b) The policyowner determines the face amount, period of protection, premium amount, and premium-paying period
(a) Policy adjustments are not retroactive (c) Premiums may be increased or decreased by the policyowner (d) The face amount may be increased (usually subject to evidence of insurability) or decreased
52. Examples of defamation include all of the following EXCEPT: (c) Knowingly making false statements on an application for an insurance policy for the purpose of obtaining a fee.
(a) Publishing a pamphlet that provides misleading financial information on other insurance companies with the intent of damaging their image with clients. (b) Telling derogatory information to a prospect about another insurance company with the intent of damaging the reputation of that company. (d) Circulating false information printed from the Internet for the purpose of damaging the character of another insurance agent.
17. Which of the following is NOT a standard life insurance policy nonforfeiture option? (c) One-year term insurance option
(a) Reduced paid-up (permanent) insurance option (b) Extended term insurance option (d) Cash surrender option
Benefits that are available under the Social Security Act include which of the following? (d) All of the above
(a) Survivor's (b) Disability (c) Retirement (d) All of the above
Which one of the following statements concerning group credit life insurance is FALSE? (b) The insured's beneficiary receives the benefit and pays off the loan
(a) The amount of insurance must match the balance of the loan (c) The debtor pays the premium (d) The creditor is the beneficiary
Which of the following statements regarding family plan policies is NOT correct? (b) The children's coverage may be converted to whole life with evidence of insurability
(a) The insurance on the spouse may be term or whole life (c) Coverage for the children is usually level term that terminates at a stated age (d) The primary insured is provided whole life insurance and may be either parent
Which one of the following statements concerning the insuring clause is INCORRECT? (c) It lists the exclusions for which benefits will not be paid
(a) The insuring clause is typically undersigned by the president and secretary of the insurance company (b) Basically, it is the company's promise to pay benefits (d) It is found on the first page of a policy
Regarding the "elimination period" commonly found in disability income policies, which of the following statements is INCORRECT? (c) Elimination period is another term for Probationary period.
(a) The period of time immediately following the onset of a covered disability during which no benefits are payable. (b) The elimination period can be compared to a deductible. (d) The longer the elimination period, the lower the premium for comparable disability benefits.
36. All of the following statements describe minimum standards that apply to policies designated as Medicare Supplement Insurance EXCEPT: (d) If the policy excludes coverage for preexisting conditions, the exclusion cannot exist for longer than on year.
(a) The policy must cover all expenses not covered by Medicare Part A from the 61st to the 90th day. (b) The policy must automatically adjust its benefits to reflect statutory changes in Medicare. (c) The policy must supplement both Part A and Part B of Medicare.
Which of the following statements regarding life insurance premiums is NOT correct? (b) Interest is charged on all unpaid premiums during the grace period.
(a) Usually, the grace period for neglecting to pay the premium is 30 days. (c) A premium is the legal consideration needed to effectuate a life insurance policy. (d) Premiums which are paid quarterly or semiannually are higher than those paid annually.
All of the following are examples of perils EXCEPT (c) reckless driving
(a) fire (b) accidents (d) disease
98. All of the following activities by an agent may result in the suspension or revocation of an agent's license EXCEPT: (c) representing an authorized insurance entity
(a) misrepresenting policy contracts (b) committing fraud or any dishonest practice (d) twisting
39. An individual has two group health insurance plans, both of which have Coordination of Benefits (COB) provisions. A claim occurred with eligible expenses of $1,000. Each policy would normally have paid $800. How much would the secondary policy pay?
(b) $200
Upon resignation of employment, how many days would an employee typically have to convert group life insurance to an individual policy?
(b) 31
9. James was terminated by his employer. Under the group insurance conversion privilege, how long does he have to convert his coverage to an individual policy without evidence of insurability?
(b) 31 days
88. John's annuity value is $1,200, and the current value of an accumulation unit is $3. How many accumulation units does John have?
(b) 400
83. Which term correctly describes an insurance company that has been organized outside the United States or its possessions?
(b) Alien
Which of the following statements regarding the Medical Information Bureau (MIB) is NOT correct? (d) The MIB will disclose medical information directly to the applicant upon request.
(b) Applicants for life insurance must be notified in writing that the insurance company may make a brief report on their health to the MIB. (c) An applicant's medical information is available from the MIB to member companies only and may be used only for underwriting and claims purposes.
25. Insurance laws covering twisting and rebating:
(b) Apply to both life and health insurance.
Insurance laws covering twisting and rebating
(b) Apply to both life and health insurance.
An Association Group that meets the requirements for group life insurance is classified as
(b) As a natural group
Which of the following statements concerning qualified/nonqualified retirement plans is INCORRECT? (a) Qualified plans receive favorable tax treatment. (c) Nonqualified plans do not receive favorable tax treatment. (d) Qualified plans meet certain requirements established by the federal government.
(b) Both qualified and nonqualified plans receive the same tax treatment.
If an applicant for a life insurance policy is found to be a substandard risk, the insurance company is most likely to
(b) Charge an extra premium
The two authorities can impose penalties for violation of state insurance laws are the
(b) Chief Financial Officer and the courts
Which type of assignment may be used in connection with life insurance policies to cover a loan?
(b) Collateral
One characteristic of insurance contracts is that both the policyowner and the insurer must know all material facts and relevant information about each other. What legal term describes this type of contract?
(b) Contract of utmost good faith
The difference between the insurability and approval types of conditional receipts is when the
(b) Coverage goes into effect(b) Coverage goes into effect
The type of life insurance issued on a term basis to protect creditors in a loan transaction is known as:
(b) Credit Life Insurance
45. John's agent stops by every week to collect the premium for John's policy. What kind of insurance does John have?
(b) Debit Life Insurance
78. Which of the following statements is TRUE regarding disability income policies?
(b) Disability Income Insurance provides protection against the economic death of a wage earner.
89. Which of the following policies would accumulate the largest amount of cash by the age of 65?
(b) Endowment at Age 65 policy
Which of the following policies would most likely accumulate the largest amount of cash by the age of 65?
(b) Endowment at Age 65 policy
84. The acts of the agent, within the scope of his or her authority, are the acts of the principal. The authority granted by means of the agent's contract is referred to as
(b) Express authority
A type of group health plan that provides health insurance coverage to members of an association or professional society is called a
(b) Franchise Health plan
John purchased a life insurance policy with a death benefit of $2,000. What type of life insurance did John purchase?
(b) Industrial Life Insurance
The association that is set up by each state to protect consumers if an insurer becomes insolvent is referred to as the
(b) Insurers' Association
8. A Certificate of Authority is
(b) Issued by the Office of Insurance Regulation as a requirement before starting an HMO.
All of the following types of benefits are covered by the Social Security Program EXCEPT: (a) Retirement Benefits (c) Survivors' Income Benefits (d) Disability Income Benefits
(b) Medical Expense Benefits for Workers
Which of the following programs is designed to provide hospital and medical expense insurance protection to those aged 65 and older?
(b) Medicare
Part A of Medicare provides coverage for all of the following EXCEPT (a) Inpatient hospital care (c) Hospice care (d) Skilled nursing facility care
(b) Physicians' services
26. The beneficiary of an Accidental Death and Dismemberment policy receives $10,000 after the insured is killed in an accident. The $10,000 death benefit is referred to as the
(b) Principal sum
Which of the following is NOT an advantage of specifying a named beneficiary of a life insurance policy when the insured is also the policyowner? (a) Proceeds are paid to the person for whom they are intended. (c) Proceeds are not subject to claims of estate creditors. (d) Settlement option values are retained.
(b) Proceeds are not subject to federal estate taxes.
9. Harold W. has decided to set up a fund to pay for potential medical bills. Harold has chosen which of the following methods of handling risk?
(b) Risk retention
23. Investing in the stock market or gambling in Las Vegas is an example of which of the following?
(b) Speculative Risk
An applicant was rejected for life insurance. His request for medical information about himself from the Medical Information Bureau (MIB) would be sent to
(b) The applicant's personal physician
28. How is a policy loan repaid when a beneficiary submits a death claim on the insured?
(b) The loan, plus any interest due, is deducted from the death benefit
35. Which of the following statements concerning a limited-payment policy is CORRECT?
(b) The premium-paying period is shortened without reducing the amount of insurance at maturity
Which of the following is TRUE about endowment policies
(b) They emphasize savings more than other life policies
32. A reinstated health insurance policy covers insured losses immediately when:
(b) They result from accidental injuries.
53. The unethical practice of making misleading representations or fraudulent comparison of any insurance policy for the purpose of inducing a person to lapse, forfeit, surrender, terminate, or convert any insurance policy, or to take out a policy of insurance with another insurer is referred to as
(b) Twisting
The value of a variable annuity separate account fluctuates in relationship to the
(b) Value of the separate account portfolio.
38. In order to have a policy reinstated, the insured
(b) Will have to pay all back premiums, and may be asked to prove insurability
85. An insurance company, which is incorporated in London, England and authorized to do business in Florida, is
(b) an alien company
Regarding variable annuities, which of the following statements is INCORRECT? (a) A variable annuity may be purchased on either a deferred or immediate basis (b) The period of time during which funds accumulate is called the accumulation period (d) During the pay-in period, the investor would be purchasing accumulation units
(c) During the accumulation period the investor would be purchasing annuity units
3. All of the following are recognized as income need periods for survivors in life insurance planning except:
(c) Emergency Period
The policy provision that prevents an insurance company from altering its agreement with a policyowner by referring to documents or other items not contained in the policy is called the
(c) Entire contract provision
Regarding deductibility of life insurance premiums, which of the following is correct?
(c) Generally, premiums paid on both business and personal life insurance are not deductible.
24. Which of the following plans require that that pregnancy-related claims be treated as any other medical expense?
(c) Groups covering 15 or more people
100. Which of the following statements is CORRECT about group life insurance?
(c) If cancelled, the members must be notified
Which of the following terms is used to describe a person's relationship to others that if loss should occur the person would suffer financially?
(c) Insurable interest
If an agent replaces a policy without doing a full and fair comparison for the client, he would be guilty of:
(c) Intimidation
71. The concept used by insurance companies to increase their ability to predict losses accurately is referred to as the
(c) Law of Large Numbers
75. What is the typical premium payment pattern for a "Term to age 70" contract?
(c) Level throughout the period of the contract
The Unfair Trade Practices Act is a
(c) NAIC model legislation.
59. The plan that pays doctors on a fee-for-service basis is a
(c) PPO
68. A collection of health care providers, such as physicians, hospitals and clinics, who offer their services to certain groups at prearranged prices is called a/an
(c) PPO
Which one of the following statements applies to industrial insurance?
(c) Premiums are collected weekly or monthly by the agent.
92. The Free Look Provision
(c) Provides an opportunity to inspect the policy for up to 20 days with the option of returning the policy if the applicant is dissatisfied with it for any reason.
70. When benefits are paid to a policyowner covered under a Hospital Expense policy, the policy is considered to be which of the following?
(c) Reimbursement
42. Which of the following is considered to be churning?
(c) Replacing existing life insurance with a new policy from the same company for the purpose of earning additional commissions.
46. Bill returns to work after a period of total disability but cannot earn as much as he did before the disability, this situation is called which of the following?
(c) Residual disability
Which of the following regulates the separate account in a variable annuity?
(c) SEC
Which of the following conditions would most likely be included in a long-term care insurance policy?
(c) Senile dementia
81. When replacing a life insurance policy, an insurance producer must do which of the following?
(c) Submit a notice to both the applicant and the insurance producer's own company regarding the replacement
90. Which of the following types of life insurance policies is usually used for group life insurance?
(c) Term
80. A Legal Reserve Life Insurance Company is desirable from a policyholder's viewpoint because:
(c) The Legal Reserve is calculated scientifically using proper mortality and interest assumptions to assure the maturity of a policy (issued at any age) in accordance with its terms.
A Legal Reserve Life Insurance Company is desirable from a policyholder's viewpoint because:
(c) The Legal Reserve is calculated scientifically using proper mortality and interest assumptions to assure the maturity of a policy (issued at any age) in accordance with its terms.
37. Mr. and Mrs. X purchased a joint life annuity and a while afterwards Mr. X died. What effect will his death have on the annuity?
(c) The annuity income payments will cease.
Concerning the Guaranteed Insurability Rider, which of the following statements is CORRECT?
(c) The common age range in which guaranteed insurability is available is from 25-40 in three-year intervals
Under the provisions of the Uniform Simultaneous Death Act of Florida who would be presumed to have survived longest if the insured and beneficiary died simultaneously?
(c) The insured would be presumed to have survived. If they died simultaneously, it is presumed that the insured died last. Study Manual Reference:
Which of the following statements about Basic Medical Expense policies is CORRECT?
(c) Under basic coverage, hospital confinement benefits begin with the first day of hospital stay.
How are medical expense insurance premiums to be deducted for income tax purposes?
(c) When premiums are lumped with other medical expenses, the total amount deductible is the amount that exceeds 7.5% of the taxpayer's adjusted gross income.
55. Enterprise Insurance Company has its home office in New Mexico. It is authorized to do business in Florida. Enterprise is considered to be
(c) a foreign company.
Regarding the standardized Medigap plans, insurers may
(c) add names or titles to the existing plan letter designations (A though N).
82. What is the purpose of the Florida Comprehensive Health Association (FCHA)?
b) Coverage for persons who cannot secure coverage any other way. (
77. Which of the following statements regarding policy replacement is CORRECT?
c) When policyowners desire to replace existing policies, agents must strictly follow any replacement regulation in their state.