2-15
The maximum rate of interest on a life insurance policy loan in Florida is:
10 % simple
In Florida the free-look period for life insurance contracts is:
14 days
Life insurance sold in Florida covers suicide after:
2 years
MEDICARE
A federal program of health insurance for persons 65 years of age and older
Stock Insurance Company
A private organization organized and incorporated under state laws for the purpose of making a profit for its stockholders (shareholders). Also referred to as a nonparticipating company.
Both contracting parties take a chance, and if the risk never occurs, no claim will be paid. This is what?
ALEATORY
A Reinsurer is a company that
ASSUMES a portion of the risk from another insurer
Misstatement of age can result in:
Adjustment of premiums or death benefits
Other Methods of Selling Insurance
An insurer using direct selling and mass marketing methods deals directly with consumers by selling its policies through vending machines, advertisements, or salaried sales representatives. No agent or broker is involved. Also includes Internet, newspaper, magazine, radio, and television ads. Provide exposure to large groups of consumers, often using direct selling methods with occasional follow-up by agents.
Counteroffer
An offeree's response to an offer in which the offeree rejects the original offer and at the same time makes a new offer.
In Florida , properly licensed and appointed agents may act as brokers in insurance transactions, in which case they may legally represent
Applicant and Insured
All of the following elements are required of a contract EXCEPT:
Assignment
Transfer of ownership of a life insurance policy is facilitated by:
Assignment provision
Under an Accidental Death and Dismemberment (AD&D) policy, insurable interst must exist at which of the following times?
At the inception of the policy
Implied Authority
Authority that is not expressed or written into the contract, but which the agent is assumed to have in order to transact the business of insurance for the principal.
What documents must be given to the insurance applicant at the time of application? Agents license and identification documents
Buyers guide and policy summary
Which of the following is true about a void contract?
CANNOT BE ENFORCE BY NEITHER PARTY
Which of the following is not a characteristic of an insurable risk?
CATASTROPHIC
Insurance policies are offered on a "take it or leave it" basis and referred to as which of the following types of contracts?
Contracts of Adhesion
The repeal of the Glass-Stegall Act allows for: Anti-trust action
Cross lines of financial service
2001 Patriot Act
Determine money laundering and detecting terrorism
The term "aleatory" refers to:
Exchange of unequal values
Federal Trade Commission (FTC) directly supervises all insurance marketing activities
FALSE
Reinsurer usually deal with policyholder/ owner
FALSE
Which of the following laws requires and insurer to notify an applicant in writing that an investigative consumer report may be made on the applicant?
Fair Credit Reporting Act (Insurance Information and Privacy Protection Act)
How does a insurer prove its competency ?
Holding a COA (cert. of Author.)
All of the following are concepts are associated with Utmost Good Faith, except?
INSURABLE INTEREST
Waiver in an insurance contract applies to the:
INSURER
1970 Fair Credit Reporting Act
In an attempt to protect an individual's right to privacy, the federal government passed the Fair Credit Reporting Act, which is the authority that requires fair and accurate reporting of information about consumers, including applications for insurance. 3 day to report that report were obtain 5 days if insurer request
1959 Intervention by the SEC
In this instance, the issue was variable annuities: Is a variable annuity an insurance product that should be regulated by the states or a securities product that should be regulated federally by the Securities and Exchange Commission (SEC)? The Supreme Court ruled that federal securities laws applied to insurers that issued variable annuities and, thus, required these insurers to conform to both SEC and state regulation. The SEC also regulates variable life insurance.
In an insurance transaction, licensed agents legally represent which of the following
Insurer
The provision in a life insurance policy that sets forth the company's basic promise to pay benefits upon the insured's death is called?
Insuring clause
What effect will a policy loan on a life insurance policy have at the time of insured's death?
Loan amount and interst and deducted before benefits are paid
What was accomplished by the enactment of Public Law 15, the McCarran-Ferguson Act?
Made it clear that continued regulation of insurance by the states was in the public's best interest Next »
Competent Parties
Minors, mentally incompetent, persons under influence of drugs or alcohol do not have legal capacity.
Owner of store is worried that staff is stealing inventory since she not paying, what kind of Hazard is described ?
Moral
Fraternal Benefit Societies
Must be nonprofit, have a lodge system, and offer insurance to its members only' SOCIAL, CHARITABLE, BENEVOLENT ACTIVITES
Participating policies are sold by:
Mutual companies
OASDI
Old Age, Survivor, and Disability Insurance; Social Security legislation since 1937 that provides federal benefits for certain individuals and their families, funded by the FICA tax.
Offer and Acceptance
One party must make an offer and the other party must accept the offer
Examples of risk avoidance except
Paying insurance prem.
Tornado is a type is an example of
Peril ( cause)
The NAIC strives to do what?
Preserve state rather than federal regulaion of the insurance industry
The PRIMARY purpose of Medicaid is to:
Provide Medical Expense coverage to persons meeting certain minimum income requirements
An agent refunds a portion of his commission to his client as an inducement to purchase an insurance policy. This is called:
REBATING
When the insured makes a statement in the application, and they believe it to be true, this is known as what?
REPRESENTATION
Lapsed life insurance policies may be reinstated by virtue of:
Reinstatement provision
Life insurance policy dividends are:
Return of part of the premium paid
Installing storm shutters on your home is an example of:
Risk reduction
advertising code
Rules established by the National Association of Insurance Commissioners (NAIC) to regulate insurance advertising.
The purpose of the Medical Information Bureau (MIB) is to:
Share medical data among member companies
SMI
Supplemental medical insurance (Medicare)
After 2 years, the insured assigns ownership to the investors, who make the premium payments and will receive the death benefit when the insured dies
TRUE
NAIC has standing committees that work regularly to examine various aspects of the insurance industry
TRUE
An agent who deposits the insureds premium into his own personal checking account has violated what?
The Fiduciary Rules
Which of the following statements pertaining to the Medical Information Bureau is CORRECT?
The MIB provides assistance in the underwriting process
Apparent Authority
The appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created.
Express Authority
The authority granted to an agent by means of the agent's written contract.
An agent takes an application from a customer and does not collect any premium. If the policy is issued by the insurer, when is the policy actually effective?
The date the agent delivers the policy and collects the premium and a statement of continued good health
A married insured has an Accidental Death and Dismemberment (AD&D) policy that names his brother as the primary beneficiary and his son as the contingent beneficiary. If the insured and his brother ar both killed instantly in a train accident, the policy proceeds would be paid to which of the following?
The insured's son
All the following information is provided to the certificate holder on a group life policy EXCEPT?
The name and license ID of the insurance agent who took the application
Subrogation
The transfer to the insurance from insured to insurer
1945-The McCarran-Ferguson Act (Public Law 15)
This law made it clear that the states' continued regulation of insurance was in the public's best interest.
The term "Competent" as applied to an insurer means all of the following, except?
Unauthorized
The Social Secutiry program provides all of the following benefits EXCEPT?
Workers compensation
warranty
a guarantee that a product meets certain standards of quality
Risk Retention Group
a mutual insurance company formed to insure people in the same business, occupation, or profession
Reinsurer
a specialized branch of the insurance industry because they insure insurers
special features of insurance contracts
aleatory, adhension, unilateral, conditional and valued or indemnity and utmost good faith
Buyer's Guide and Policy Summary
an insurer must provide these to any prospective purchaser upon request or prior to accepting the applicant's initial premium or premium deposit unless there is a 14 day free-look provision.
Consideration
applicant in exchange for the insurers promise to pay
producers are expected to adhere to al of the following standard t protect consumers and promote consumers and promote suitable sales except :
assessing prospects financial ability to pay commissions
Easter egg
business, trust, estates
National Association of Insurance Commissioners (NAIC)
encourage uniformity is state insurance laws and regulations preserve state regulations of the insurance business
Self-Insurers
establishes a self-funded plan to cover potential losses instead of transferring the risk to an insurance company
Agent Authority
express, implied, apparent
Concealment
fraudulent failure to disclose a material fact
The Entire Contract Provision in a life insurance policy states that all of the following constitute the entire contract, except:
future changes to the policy
An appointment is defined as what?
he authority given by an insurer to transact insurance or adjust claims
Pure risk are
insurable ( loss no gain )
Accelerated Benefits Provision allows:
insured to receive portion of death benefits while alive
Mutual Insurance Company
issues participating policies and is owned by the policyholders who receive non-taxable dividends as a return of unused premium
which of the following insurance concept founded on the ability to predict # of frequency disability and deaths within a certain group during a specific time?
law of large #
Insurance Producers
license agen who sells insurance
Element of Insurable Risk
loss must be due to chance loss must be measurable loss exposure randomly and large selected loss CAN NOT BE CATASTROPHIC
unfair trade practice acts
misrepresentation and false advertising; tie-in sales; rebating; other deceptive practices
General law of contracts
offer and acceptance consideration legal purpose competent parties
Medicaid
program that provides medical benefits for low-income persons.
State Guaranty Association
protect policy owners in the event of any insurance company going out of business, becoming insolvent, or the in ability to pay claims
1999 Financial Services Modernization Act
repealed the Glass Steagall Act. Under this new legislation, commercial banks, investment banks, retail brokerages, and insurance companies can now enter each other's lines of business.
All of the following are common exclusions in a life insurance policy in Florida, except:
scuba diving
Legal Purpose
the object of the contract and the reason the parties enter into the agreement must be legal.
Insurable Interest
the person applying for the policy must be at risk of suffering a significant loss if the insured dies
Stranger-Originated Life Insurance (STOLI)
transactions are life insurance arrangements where investors persuade individuals (typically seniors) to take out new life insurance.
Buying insurance is one of the most effective ways of
transferring risk
Risk can be best defined as
uncertainty regarding financial loss
Adjustment of premiums or death benefits Next »
void
Utmost Good Faith
warranty, representation, concealment