Chapter 11 life insurance test
In the state of Florida, a required grace period is how many days?
30 days
If an employee is accepted into a group insurance plan, which status will the employee have?
Certificate holder
An insured received a new life insurance policy 5 days ago, but after a closer inspection of the policy provisions, decided to return it to the insurer. What provision would allow the insured to return the policy fr a full premium?
Free look
What kind of policy does NOT typically require proof of insurance?
Group insurance
Regulations for annuity recommendations would apply when a consumer is at least what age?
65 years old ( A senior consumer is a person of age 65 or older)
Who does the secondary notice provision protect?
Elderly Insureds
What is another term for a secondary notice?
Secondary addressee
An individual wants to purchase a life insurance policy. his agent asks if the transaction will involve replacing any existing life insurance policies. if the customer replies "yes", which of the following best describes the agents next step?
The agent must provide a replacement notice to the applicant (In a replacement transaction, an agent must present to the applicant a notice regarding replacement that is signed by both the applicant and the agent)
Which statement is NOT true regarding a policy summary? A) It must include the policy summary was prepared B) It must combined with a sales illustration C) It is generally given to applicants before acceptance of the initial premium D) It must include the generic name of the basic policy and each rider
It must be combined with a sales illustration ( The policy summary must be a separate document. It cannot be combined with a sales illustration)
Who does the secondary addressee provision protect?
The insured over the age of 64 ( coverage must be in force for a minimum of 1 year)
*An annuity contract is issued to a senior consumer over the age of 65. what is the maximum surrender charge for a withdrawal of money allowed on this annuity?
10% (An annuity contract is issued to a senior consumer age 65 or older may not contain a surrender or deferred sales charge for withdrawal of money from an annuity exceeding 10% of the amount withdrawn
In order for debtor group to qualify for group life insurance what is the minimum number of participants joining the plan each year be?
100 ( Life insurance policies can be issuedto debtor groups if the group of eligible debtors is receiving new entrants at the rate of at least 100 person a year)
When a group policy terminates, every individual insured under the policy will be entitled to have an individual policy if the insured has been insured by the group policy for at least how many years prior to policy termination?
5 years ( When a group policy terminates, every individual insured under the policy at the date of such termination who has been so insured for at least 5 years prior to such termination date will be entitled to have issued to him the insurer and individual policy of life insurance)
In life policies issued in this state., insurers are permitted to charge interest during the policy grace period for the number of days elapsing before the premium is paid. What is the maximum annual interest rate?
8% ( The time that may elapse between a premium's due date and eventual payment is called the grace period. Insurers may impose interest charges not to exceed 8% per year for the number of days elapsing before the premium is paid)
Who does the secondary notice provision protect?
Elderly insureds ( The secondary notice provision protects elderly insureds, and prevents the policy from lapsing for nonpayment of premiums after the grace period without the insurer notifying the policy-owner and the designated secondary addressee of the impending lapse in coverage)
What kind of policy issues certificates of insurance to insureds?
Group insurance ( Individuals covered by group life insurance do not receive a policy, but receive a certificate of insurance from the master policy)
Under what conditions will proof of insurability NOT be required of an employee wanting to enroll in a group insurance plan?
If the employee enrolls within a certain time period
Certificates of coverage are issued to?
Participants in a group plan
A customer with an existing life insurance contract is considering exchanging it for a newer contract. What Florida insurance regulation should the customer's insurance agent consult?
The Florida replacement rule (The Florida replacement rule established the procedures followed when a prospective life insurance buyer replaces and existing insurance contract with new insurance)
Which of the following dates must be contained in a policy summary?
The date the summary was prepared (A policy summary must contain the date that the summary was prepared)
When must an agent send an existing insurer a copy of the replacement notice?
immediately
Licensed life insurance agents are expected to be familiar with which of the following laws? A) Florida life insurance solicitation laws B) Florida life insurance replacement laws C) Code of ethics of Florida association of insurance and financial advisers D) All of the above
All of the above (While the other laws may have particular significance, an agent should be generally aware of all insurance laws)
What term best describes the benefits of a life insurance policy that the policy-owner does not automatically relinquish even if the policy lapses?
Non-forfeiture values ( Non-forfeiture values are the benefits of a life insurance policy that the policy-owner does not forfeit(lose) even if the policy lapses)
What provision protects elderly insureds?
Secondary notice
All of the following are correct about life insurance policy loan interest rate EXCEPT A) An adjustable rate of interest can be charged B) An insurance company may charge a fixed rate up to 10% C) A policy will be terminated if the loan and accrued interest exceed the loan value D) There are n restrictions or limitations on policy loan rates
There are no restrictions or limitations on policy loan rates ( A life insurance company can charge a fixed rate of not more than 10% annual interest on policy loans)
What is the purpose of a disclosure statement in life insurance policies?
To explain features and benefits of a proposed policy to the consumer (disclosure statements will help the applicants to make more informed and educated decisions about their choice in insurance)
How will a life insurance beneficiary designation naming a spouse be changed by divorce?
The beneficiary designation will be voided (If a former spouse of the policy-owner is designated as the life insurance policy beneficiary, the beneficiary designation will be void at the time the policy-owner's marriage is legally dissolved(divorce) or declared invalid by the course order if the designation was made prior to the divorce)
An agent delivers a life insurance policy to the proposed insured. The insured makes a decision not to accept the policy. The insured may return the policy for a full refund of premium within how many days?
14
In Florida, life insurance policies are annuities have a special____ day free-look period
14 day free look period
The minimum age for entering into a life insurance or an annuity contract is what?
15
Which of the following insurance products will be subject to the regulation on life insurance solicitation?
A term life policy (The regulation on the life insurance solicitation does not apply to the sale of annuities, credit life and group life insurance, variable life insurance policies, and life insurance policies issued in connection with pension and welfare plans that are subject to ERISA)
When replacing life insurances, the duties of the replacing insurance company include all of the following EXCEPT? A) Requiring from the agent with the application a copy of the notice regarding replacement B) Sending to the existing insurer a copy of the notice regarding replacement immediately C) Providing to each purchaser a buyers guide and policy summary D) Maintaining a copy of the notice regarding replacement and all sales proposals used for at least 5 years
Maintaining a copy of the notice regarding replacement and all sales proposals used for at least 5 years ( Replacing insurers must maintain copies of the notice regarding replacement and all sales proposals used for at least -3- years [not 5] or until the conclusion of the next regular audit by the insurance department, whichever is later)
Can a group that is formed for the sole purpose of obtaining group insurance qualify for group coverage?
No, the group must be formed for a purpose other than obtaining group insurance. ( there are 2 types of groups eligible for group coverage: Employer's sponsored, and association sponsored)
Which of the following documents must be provided to the policy-owner or applicant during policy replacement?
Notice regarding replacement (During a policy replacement, the replacing producer must present to the applicant a notice regarding replacement that is signed by both the applicant and the producer)
During replacement of life insurance, a replacing insurer must do which of the following?
Obtain a list of all life insurance policies that will be replaced ( The replacing insurance company must require from the producer a list of the applicant's life insurance or annuity contracts to be replaced and a copy of the replacement notice provided to the applicant, and send each existing insurance company a written communication advising of the proposed replacement)
Which of the following is among the regulations set fourth by the Florida replacement rule?
Providing a written comparison and summary statement (The Florida replacement rules established that, when replacing life insurance contracts with new contracts, the agent is required to give the applicant a written comparison and summary statement at the request of the policyholder)
If an employer decides to change its life insurance policy to a similar one with a different insurer, which of the following describes the extent that replacement regulations will be exercised?
Replacement regulations will not apply to this situation ( If a new life insurance policy is provided under group life insurance policy covering employees or members of an association, replacement regulations no NOT apply)
Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance?
Replacement rule ( Anytime a new policy is issued that replaces or modifies existing insurance, a replacement form must be submitted to the ceding company)
coverage for persons ages 64 and older that has been in force for at least 1 year cannot lapse for nonpayment of premium after expiration of the grace period without the insurer notifying the policy holder and a specified?
Secondary addressee
An employer offers group life insurance to its employees for the amount of $10,000. Which of the following is true?
The cost of coverage is a deductible expense by the employer ( The cost of coverage paid by the employer in excess of $50,000 is taxed to the employee)
Under a group plan, certificates of insurance must include all the following except A) the group policy number B) A description of the insurance protection C) The name of the insured D) The name of the writing agent
The name of the writing agent ( Certificate of insurance for group plan requires the policy number, description of insurance protection and the name of the insured. The name of the writing agent is not a requirement)
A person insured under a group life insurance policy can make an assignment of all or any part of the incidents of ownership conferred on the insured by the policy or by law, to any of the following EXCEPT? A) a lender B) A family member C) The beneficiary D) The policyholder
The policyholder (Any person insured under a group life insurance policy can make to any person, other than the policyholder, an assignment of all or any part of the incidents of ownership conferred on the insured by the policy or by law, including the right to exercise the conversion privilege and the right to name a beneficiary)
If a life insurer holds the proceeds of any policy it issues, which of the following is true?
The proceeds may be exempt from any creditor's claims against a beneficiary other than the policy owner ( A life insurer may hold the proceeds of a policy it issues, provided the insured agrees. These proceeds may be exempt from any creditor's claims against a beneficiary other than the policy owner)
How long must insurers maintain records of the information collected from senior consumers and other information used in making recommendations that were the basis for insurance transactions?
for 5 years after the insurance transaction is completed by the insurer (Insurers must maintain records of the information collected from senior consumers and other information used in making recommendations that were the basis for insurance transactions for 5 years after the insurance transaction is completed by the insurer)
All advertisements are the responsibility of the
insurer ( The insurer whose policies are advertised is responsible for all of its advertisements, regardless of who wrote , created, presented, or distributed them)
An employee will be taxed on the cost of group life insurance paid by the employer if the amount of coverage exceeds
$50,000 (The cost of coverage paid by the employer in excess of $50,000 is taxed to the employee)
When does the free-look period begin on a life insurance policy?
When the policy is delivered to the insured
All of the following information about a customer must be used in determining annuity suitability EXCEPT? A) tax status B) Financial experience C) Annual income D) Beneficiary's age
Beneficiary's age ( To ensure suitability of annuity products, producers must obtain relevant information about the consumer's age, income, financial, status, tax status, financial experience and objectives. beneficiaries age is not a suitable factor)
If a claim is made on a policy during the grace period, an insurer is allowed to deduct the overdue premium and to charge interest. What is the maximum allowed interest rate?
8% ( The time that may elapse between a premium's due days and its eventual payment is called the grace period. if a claim is made on a policy during one of these grace periods, an insurer may deduct the amount of premium due and up to 8% of interest per year from the settlement)