Chapter 5

An agent has been convicted of a crime punishable by a 1-year imprisonment. Within how many days must the agent notify the department of insurance? 180 days 10 days 30 days 90 days

30 days

All agents licensed in this state must complete how many hours of continuing education specific to law and ethics? 5 4 2 3

4

In the state of Florida, it is illegal for a licensee's commissions from controlled business to exceed what percentage of the total in a given year? 20% 50% 35% 60%

50%

In the state of Florida, it is illegal for a licensee's commissions from controlled business to exceed what percentage of the total in a given year? 50% 20% 60% 35%

50%

Which of the following is NOT a responsibility of the Office of Insurance Regulation? Enforcing the Insurance Code Instituting legal proceedings Enacting new insurance laws Issuing certificates of authority

Enacting new insurance laws

Which of the following is NOT a responsibility of the Office of Insurance Regulation? Issuing certificates of authority Enforcing the Insurance Code Enacting new insurance laws Instituting legal proceedings

Enacting new insurance laws

Under what circumstances can an agent's appointment be transferred to another person? When another person works for the same appointing insurer If the agent's license has been temporarily suspended Under no circumstances With the Commissioner's written approval

Under no circumstances

If an agent does not notify the insurer of an address change, what is the maximum penalty that can be imposed for a one-time offense? $180 $1,500 $500 $250

$250

Under special circumstances, continuing education requirements may be extended beyond the 2-year period for a maximum period of 9 months. 6 months. 12 months. 3 months.

12 months

Which of the following is true regarding producer appointments? A producer only needs one appointment for all the insurers the producer represents. A producer can only have one appointment. A producer is not required to have an appointment with an insurer. A producer may hold several appointments at one time.

A producer may hold several appointments at one time.

Which of the following would be required to be licensed as an insurance producer? A salaried employee who advertises and solicits insurance A person whose activities are limited to producing insurance advertisements A salaried full-time employee who furnishes information for group insurance An insurance company director who performs executive, administrative and managerial duties

A salaried employee who advertises and solicits insurance

Which of the following is another term for an authorized insurer? Admitted Certified Licensed Legal

Admitted

Which of the following would NOT be a violation of state insurance regulations? Agent D collects premiums due on policies and deposits the funds in his own personal account. Agent A uses her license to write only insurance for herself and her immediate family. Agent C uses her license to write only business other than controlled. Agent B charges his clients a consulting fee, in addition to the premium for placing a policy.

Agent C uses her license to write only business other than controlled.

What is reinsurance? An agreement between a ceding insurer an assuming insurer An agreement between an originating insurer and a ceding insurer An agreement between an insurer and an insured An agreement between a domestic insurer and a foreign insurer

An agreement between a ceding insurer an assuming insurer

How often must domestic insurance companies be examined by the Chief Financial Officer in Florida? Every 2 years Not more frequently than every 3 years Annually At least every 5 years

At least every 5 years

An insurer that holds a Certificate of Authority in the state in which it transacts business is considered a/an Certified insurer. Self-insurer. Local insurer. Authorized insurer.

Authorized insurer.

Which of the following must an insurer obtain in order to transact insurance within a given state? Insurer's license Business entity license Certificate of authority Producer's certificate

Certificate of authority

A producer who fails to separate premium monies from his own personal funds is guilty of Theft. Commingling. Embezzlement. Larceny.

Commingling

What term best describes the act of withholding material information that would be crucial to an underwriting decision? Concealment Leading Breach of warranty Withholding

Concealment

Applications to an insurer must include all of the following information, EXCEPT Name of the agent Credit history report License identification number of the agent Name of the insurer

Credit history report

Applications to an insurer must include all of the following information, EXCEPT Name of the insurer Credit history report Name of the agent License identification number of the agent

Credit history report

If a licensee changes his or her residence address, within how many days must the department be notified? 45 15 30 The department only needs to be notified if an individual's business address changes.

30

All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT An offer to share in commissions generated by the sale. An offer of employment. Dividends from a mutual insurer. Stocks, securities, or bonds.

Dividends from a mutual insurer.

An agent's client needs additional insurance which the agent's own insurer cannot provide. The agent has to solicit additional coverage from another authorized insurer. This coverage is known as Excess. Rejected. Controlled business. Authorized.

Excess.

Failure of a licensee to maintain an appointment with an insurance company within 48 months after the date the license became effective will result in A monetary fine by the Department of Insurance. Expiration of the license. A penalty of up to 6 months in jail. A monetary fine by the insurance company.

Expiration of the license.

Which of the following authorities grants and revokes licenses? National Association of Insurance Commissioners (NAIC) Federal Insurance Bureau Department of Financial Services Guaranty Association

Federal Insurance Bureau

he inclusion of the Life and Health Guaranty Association in an advertisement by an insurer is Forbidden. Encouraged. Allowable, provided that the insurer pay the association an advertising fee. Mandatory.

Forbidden.

In insurance transactions, fiduciary responsibility means Handling insurer funds in a trust capacity. Commingling premiums with agent's personal funds. Maintaining a good credit record. Being liable with respect to payment of claims.

Handling insurer funds in a trust capacity.

Which of the following entities protects policy-owners, insureds, and beneficiaries under insurance contracts when insurers fail to perform contractual obligations due to financial impairment? The State Department of Insurance Consumer Protection Agency Insurance Guaranty Association The NAIC

Insurance Guaranty Association

Which of the following entities protects policyowners, insureds, and beneficiaries under insurance contracts when insurers fail to perform contractual obligations due to financial impairment? Consumer Protection Agency The NAIC Insurance Guaranty Association The State Department of Insurance

Insurance Guaranty Association

Which of the following is NOT true regarding a Certificate of Authority? It may be necessary for transacting business in a specific state. It is equivalent to an insurance license. It is issued to group insurance participants. It is issued by the state department of insurance.

It is issued to group insurance participants.

In which of the following situations is it legal to limit coverage based on marital status? Divorce within the last six months of applying for insurance Legal separation during the application process It is never legal to limit coverage based on marital status. Excessive number of divorces, as defined by the Insurance Code

It is never legal to limit coverage based on marital status.

On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. The company is guilty of Unfair claim practice. Concealment. Misrepresentation. Rebating.

Misrepresentation.

In accordance with the Code of Ethics, agents must provide a completed application to The prospective insured and the insurer. The Florida Insurance Guaranty Association and the Director. The soliciting agent and the insured. The Director and the insurer.

The Prospective Insured and the insurer.

On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are Guaranteed. Taxable as ordinary income. Paid at a fixed rate every year. Not taxable since the IRS treats them as a return of a portion of the premium paid.

Not taxable since the IRS treats them as a return of a portion of the premium paid.

Pertaining to insurance, which of the following is an example of a producer's fiduciary responsibility? Helping insureds to file claims Promptly forwarding premiums to the insurance company Performing reviews of insured's coverage Offering additional coverage to insureds

Promptly forwarding premiums to the insurance company

When an insurer terminates an agent's appointment, the insurer must do all of the following EXCEPT Provide a 60-day advance notice to the agent. Make sure that the agent's contract rights are not violated. File a written notice with the department of insurance within 30 days of termination. Provide a 30-day advance notice to the Commissioner.

Provide a 30-day advance notice to the Commissioner.

All of the following are true regarding rebates EXCEPT Rebates are only allowed if specifically stated in the policy. Rebates are allowed if it is in the best interest of the client. Dividends are not considered to be rebates. Rebating can be anything of monetary value given as an inducement to purchase insurance.

Rebates are allowed if it is in the best interest of the client.

Any inducement offered to the insured in the sale of an insurance policy that is not specified in the policy is an unlawful practice known as Coercion. Twisting. False advertising. Rebating.

Rebating.

What method do insurers use to protect themselves against catastrophic losses? Reinsurance Risk management Indemnity Pro rata liability

Reinsurance

Which of the following statements is INCORRECT? Replacing insurance policies for the purpose of making commissions is legal. Misrepresenting the true nature or facts of a policy or its benefit in order to induce a policyholder to surrender one policy and replace it with another is illegal. Discrimination in rates, premiums, policy benefits, etc. for persons within the same class or with the same life expectancy is illegal. It is illegal to be involved in any activity of boycott, coercion, or intimidation that is intended to restrict fair trade or to create a monopoly.

Replacing insurance policies for the purpose of making commissions is legal.

An insurance agent X has been found guilty of a felony and was sentenced to 3 years in prison. What would be the appropriate plan of action? Do nothing Immediately turn in his license Appeal to a higher court Send a written notification to the department of insurance

Send a written notification to the department of insurance

An agent's appointment has been denied. Which of the following is true? State taxes may be refunded upon a written request. No refunds will be issued. Appointment fees will be refunded. All application fees will be refunded.

State taxes may be refunded upon a written request.

Which of the following is an example of a producer being involved in an unfair trade practice of rebating? Telling a client that his first premium will be waived if he purchases the insurance policy today Making deceptive statements about a competitor Inducing the insured to drop a policy in favor of another one when it is not in the insured's best interest Charging a client a higher premium for the same policy as another client in the same insuring class

Telling a client that his first premium will be waived if he purchases the insurance policy today

What are the 2 offices of the Financial Services Commission? The Office of Financial Regulation and the Office of Insurance Regulation The Legislative Office and the State Court Office The Office of Insurance Regulation and the NAIC The Department of Insurance and the Department of Finance

The Office of Financial Regulation and the Office of Insurance Regulation

If a person accumulates more continuing education hours than is necessary to fulfill the requirements for a 2-year period, which of the following will occur? Nothing will happen; the hours will not be reimbursed or deducted from the next period's hours. The extra hours may be continued into the next period. The extra hours will not count toward the next period's requirements. The extra hours will be reimbursed monetarily.

The extra hours may be continued into the next period.

When an insurer appoints an agent, The agent must represent the insurer's clients. That appointment is for life. The agent may not be appointed by other insurers. The insurer is bound by the agent's acts.

The insurer is bound by the agent's acts.

An individual applies for a life policy. Two years ago he suffered a head injury from an accident, so he cannot remember parts of his past, but is otherwise competent. He has also been hospitalized for drug abuse, but does not remember this when applying for insurance. The insurer issues the policy and learns of his history one year later. What will probably happen? The policy will not be affected. The insurer will sue the insured for committing fraud. Because the insured is currently not a drug user, his policy will not be affected. The policy will be voided.

The policy will not be affected.

In accordance with the Code of Ethics, agents must provide a completed application to The prospective insured and the insurer. The Director and the insurer. The Florida Insurance Guaranty Association and the Director. The soliciting agent and the insured.

The prospective insured and the insurer.

Which of the following is an example of a producer's fiduciary duty? The trust that a client places in the producer in regard to handling premiums. The obligation to tell the truth to the best of one's knowledge An obligation to state every known fact about the policy the producer is selling. A duty to base all transactions upon the principle of Utmost Good Faith.

The trust that a client places in the producer in regard to handling premiums.

An agent transacts business for Insurer A and Insurer B, both selling life insurance, and for Insurer C, selling health insurance. How many appointments must the agent hold? Only one - for any of the insurers No appointments are required. Three - one for each insurer Two - one for life and one for health

Three - one for each insurer