FL statutes, rules and regulations pertinent to life insurance--Chapter 11-Practice Questions

Group Life If an employee is accepted into a group insurance plan, which status will the employee have? ACertificate holder BPolicyholder CCo-owner DDependent

A Certificate holder In group insurance, plan participants (insureds) do not receive a policy. Instead, they receive certificates of insurance, indicating that they are covered by the policy.

Secondary Addressee 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 for a full premium refund? AFree look BWaiver of premium CProbationary period DGrace period

A Free look The free-look provision generally allows an insured a specified number of days from the delivery date of the policy to look over a new policy and return it for a full premium refund if dissatisfied for any reason. For life policies and annuities in Florida, that time period is extended to 14 days.

Group Life What kind of policy issues certificates of insurance to insureds? AGroup insurance BIndividual insurance CNonqualified annuity DAny insurance

A Group insurance ! Individuals covered by group life insurance do not receive a policy, but receive a certificate of insurance from the master policy.

Group Life Certificates of coverage are issued to AParticipants in a group plan. BOwners of a group plan. CIndividual life insurance policyholders. DThe employer.

A Participants in a group plan. Instead of a policy, the participants under a group plan are issued certificates of insurance as evidence that they have coverage. This certificate normally consists of a laminated plastic card and a booklet summarizing the coverage of the master policy.

Prohibited Practices and Penalties Which of the following is among the regulations set forth by the Florida Replacement Rule? AProviding a written comparison and summary statement BExplaining the procedures used when proposing insurance CDefining appropriate and inappropriate business behavior DReturning property to its original state, before the time of loss

A Providing a written comparison and summary statement The Florida Replacement Rule 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.

Nonforfeiture Options 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? AReplacement regulations will not apply in this situation. BSpecial corporate replacement regulations will apply. CThe type of life insurance policy obtained will determine which replacement regulations will be required. DThe number of employees covered by the policy will determine which replacement regulations will be required.

A Replacement regulations will not apply in this situation. If a new life insurance policy is provided under a group life insurance policy covering employees or members of an association, replacement regulations do not apply.

Marketing Practices 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? AThe Florida Replacement Rule BThe Code of Ethics of the Florida Association of Insurance and Financial Advisers CThe Florida Life Insurance Solicitation Law DThe Florida Insurance Guaranty Association

A The Florida Replacement Rule Correct! The Florida Replacement Rule established the procedures followed when a prospective life insurance buyer replaces an existing insurance contract with new insurance.

Group Life What kind of policy does NOT typically require proof of insurability? AGroup insurance BVariable universal life CTerm insurance DIndividual insurance

A. Group insurance Individual life insurance is written on a single life. The rate and coverage is based upon the underwriting of that individual. Group life insurance is written as a master policy, issued to the sponsoring organization, covering the lives of more than one individual member of that group. In group insurance, individual participants typically do not need to provide proof of insurability.

Policy or Contract Replacement During replacement of life insurance, a replacing insurer must do which of the following? AObtain a list of all life insurance policies that will be replaced BGuarantee a replacement for each existing policy CDesignate a new producer for a replaced policy DSend a copy of the Notice Regarding Replacement to the Department of Insurance

A. 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 policies 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.

Prohibited Practices and Penalties During replacement of life insurance, a replacing insurer must do which of the following? AObtain a list of all life insurance policies that will be replaced BGuarantee a replacement for each existing policy CDesignate a new producer for a replaced policy DSend a copy of the Notice Regarding Replacement to the Department of Insurance

A. 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 policies 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.

Free-Look Period Which of the following is among the regulations set forth by the Florida Replacement Rule? AProviding a written comparison and summary statement BExplaining the procedures used when proposing insurance CDefining appropriate and inappropriate business behavior DReturning property to its original state, before the time of loss

A. Providing a written comparison and summary statement The Florida Replacement Rule 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.

Prohibited Provisions How will a life insurance beneficiary designation naming a spouse be changed by divorce? AThe beneficiary designation will be voided. BThere will be no change. CThe beneficiary will be changed to revocable. DInsurer's own policy rules will determine the result.

A. The beneficiary designation will be voided. If a former spouse of the policyowner is designated as the life insurance policy beneficiary, the beneficiary designation will be void at the time the policyowner's marriage is legally dissolved (divorce) or declared invalid by court order if the designation was made prior to the divorce.

Policy Summary Which of the following dates must be contained in a policy summary? AThe date the summary was prepared BThe date the application was signed CThe date that the policy was issued DThe date that the producer was licensed

A. The date the summary was prepared ! A policy summary must contain the date that the summary was prepared.

Policy Summary All advertisements are the responsibility of the AInsurer. BSoliciting agent. CAdvertising agency. DDepartment of Insurance.

A.Insurer. The insurer whose policies are advertised is responsible for all its advertisements, regardless of who wrote, created, presented, or distributed them.

Nonforfeiture Options 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? A6% B8% C10% D15%

B. 8% The time that may elapse between a premium's due date and its eventual payment is called the grace period. Insurer's may impose interest charges not to exceed 8% per year for the number of days elapsing before the premium is paid.

Prohibited Provisions Who does the secondary notice provision protect? AThe insurer BElderly insureds CThe policyowners DSecondary addressees

B. Elderly insureds The secondary notice provision protects elderly insureds, and prevents the policy from lapsing for nonpayment of premium after the grace period without the insurer notifying the policyowner and a designated secondary addressee of the impending lapse in coverage.

Chapter Recap 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? AFor 3 years BFor 5 years after the insurance transaction is completed by the insurer CFor 10 years after the initial recommendation DFor 6 years after the initial contact with the consumer

B. 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.

. Policy or Contract Replacement Which statement is NOT true regarding a policy summary? AIt must include the date the policy summary is prepared. BIt must be combined with a sales illustration. CIt is generally given to applicants before acceptance of the initial premium. DIt must include the generic name of the basic policy and each rider.

B. It must be combined with a sales illustration. The policy summary must be a separate document. It cannot be combined with a sales illustration.

Nonforfeiture Options Which term describes the benefits of a life insurance policy that the policyowner does not automatically relinquish even if the policy lapses? AGuaranteed values BNonforfeiture values CPermanent values DCash values

B. Nonforfeiture values Nonforfeiture values are the benefits of a life insurance policy that the policyowner does not forfeit (lose) even if the policy lapses.

Nonforfeiture Options Who does the secondary addressee provision protect? AThe insurance company BThe insured over the age of 64 CContingent (secondary) beneficiaries DThe insured whose policy is being replaced

B. The insured over the age of 64 The secondary notice/addressee provision protects elderly insured. Coverage for persons age 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 policyowner and a specified secondary addressee (if designated in writing by the policyowner) of the impending lapse in coverage.

Exemptions How must a replacing producer respond to an applicant wishing to replace existing life insurance? AThe producer has no specific duties. BThe producer must provide the applicant with a Notice Regarding Replacement. CThe producer must collect the existing policies and turn them over to the replacing insurer. DThe producer must request the permission of the existing

B. The producer must provide the applicant with a Notice Regarding Replacement. Correct! In a replacement transaction, a producer must present to the applicant a Notice Regarding Replacement, signed by both the applicant and the producer.

1. Free-Look Period When does a free-look period begin on a life insurance policy? AWhen the policy is issued BWhen the policy is delivered to the insured CWhen the insured pays the first premium DWhen the insurer signs the policy

B. When the policy is delivered to the insured The free-look provision allows an insured a period of a specified number of days from the delivery date of the policy to look over a new policy and return it for a full premium refund if dissatisfied for any reason.

Group Life An employer offers group life insurance to its employees for the amount of $10,000. Which of the following is true? AThe cost of coverage paid by the employer is taxed to the employees. BThe cost of coverage paid by the employer is tax deductible by the employees. CThe cost of coverage is a deductible expense by the employer. DThe value of insurance will be deducted from the employees' compensation.

C 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.

Prohibited Practices and Penalties What is the maximum allowed value of promotional gifts that an agent may give to a prospective insured? A$20 B$50 C$100 DGifts are never allowed.

C. $100 A licensed insurer or its agents may not give to insureds or prospective insureds for the purpose of advertising any articles of merchandise that have a value of more than $100 per insured in any calendar year.

Chapter Recap An annuity contract is issued to a senior consumer over age 65. What is the maximum surrender charge for a withdrawal of money allowed on this annuity? A5% B8% C10% D12%

C. 10% An annuity contract issued to a senior consumer age 65 or older may not contain a surrender or deferred sales charge for a withdrawal of money from an annuity exceeding 10% of the amount withdrawn.

Free-Look Period 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? A7 B10 C14 D21

C. 14 The free-look provision in Florida allows the insured to return a life policy or annuity after 14 days if dissatisfied for any reason.

Conversion 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? A1 year B3 years C5 years D7 years

C. 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 by the insurer an individual policy of life insurance.

Nonforfeiture Options A paid-up nonforfeiture benefit will become effective as specified in the policy, unless the person entitled elects another available option within how many days after the due date of the premium in default? A15 B30 C60 D90

C. 60 A paid-up nonforfeiture benefit will become effective as specified in the policy, unless the person entitled elects another available option within 60 days after the due date of the premium in default

Group Life Under what conditions will proof of insurability NOT be required of an employee wanting to enroll in a group insurance plan? AIf the employee has been approved for other insurance policies in the past BIf the employee has maintained consistent insurance coverage CIf the employee enrolls within a certain time period DThe employee will never have to provide proof of insurability in order to enroll in a group plan

C. If the employee enrolls within a certain time period In group insurance, evidence of insurability is usually not required if participant enrolls during the open enrollment period, and participants (insureds) under the plan do not receive a policy, nor do they own or control the policy. Instead, they receive certificates, indicating that they are included in the coverage.

Required Provisions Can a group that is formed for the sole purpose of obtaining group insurance qualify for group coverage? AYes, any group can apply for group coverage. BYes, but only if the group has more than 35 members. CNo, the group must be formed for a purpose other than obtaining group insurance. DNo, a group of individuals cannot apply for group coverage unless represented by an association or trust.

C. No, the group must be formed for a purpose other than obtaining group insurance. In order to qualify for group coverage, the group must be formed for a purpose other than obtaining group insurance. In other words, it must be a natural group. There are generally two types of groups eligible for group insurance: employers sponsored, and association sponsored.

Exemptions 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? AConversion rule BDisclosure rule CReplacement rule DReinstatement rule

C. Replacement rule Correct! Anytime a new policy is issued that replaces or modifies existing insurance, a replacement form must be submitted to the ceding company.

Prohibited Practices and Penalties 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? AConversion rule BDisclosure rule CReplacement rule DReinstatement rule

C. Replacement rule Correct! Anytime a new policy is issued that replaces or modifies existing insurance, a replacement form must be submitted to the ceding company.

Policy or Contract Replacement When replacing life insurance, the duties of the replacing insurance company include all of the following EXCEPT ARequiring from the agent with the application a copy of the Notice Regarding Replacement. BSending to the existing insurer a copy of the Notice Regarding Replacement immediately. CProviding to each purchaser a Buyer's Guide and a Policy Summary. DMaintaining a copy of the Notice Regarding Replacement and all sales proposals used for at least 5 years.

D Maintaining a copy of the Notice Regarding Replacement and all sales proposals used for at least 5 years. Correct! Replacing insurers must maintain copies of the Notice Regarding Replacement and all sales proposals used for at least 3 years or until the conclusion of the next regular audit by the insurance department, whichever is later.

Group Life An employee will be taxed on the cost of group life insurance paid by the employer if the amount of coverage exceeds A$10,000. B$15,000. C$25,000. D$50,000

D, $50,000 The cost of coverage paid by the employer in excess of $50,000 is taxed to the employee.

Policy Summary Which of the following insurance products will be subject to the regulation on life insurance solicitation? AA credit life policy BA group life policy CAn annuity DA term life policy

D, A term life policy Incorrect! The regulation on 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.

Required Provisions In order for a debtor group to qualify for group life insurance, what should be the minimum number of participants joining the plan every year? A10 B25 C50 D100

D. 100 Life insurance policies can be issued to debtor groups if the group of eligible debtors is receiving new entrants at the rate of at least 100 persons a year.

Prohibited Practices and Penalties When replacing life insurance, the duties of the replacing insurance company include all of the following EXCEPT ARequiring from the agent with the application a copy of the Notice Regarding Replacement. BSending to the existing insurer a copy of the Notice Regarding Replacement immediately. CProviding to each purchaser a Buyer's Guide and a Policy Summary. DMaintaining a copy of the Notice Regarding Replacement and all sales proposals used for at least 5 years.

D. 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 or until the conclusion of the next regular audit by the insurance department, whichever is later.

4. Prohibited Practices and Penalties Which of the following documents must be provided to the policyowner or applicant during policy replacement? ADisclosure Authorization Form BBuyer's Guide and Policy Summary CPolicy illustrations DNotice Regarding Replacement

D. Notice Regarding Replacement During policy replacement, the replacing producer must present to the applicant a Notice Regarding Replacement that is signed by both the applicant and the producer.

Policy or Contract Replacement Which of the following documents must be provided to the policyowner or applicant during policy replacement? ADisclosure Authorization Form BBuyer's Guide and Policy Summary CPolicy illustrations DNotice Regarding Replacement

D. Notice Regarding Replacement Correct! During policy replacement, the replacing producer must present to the applicant a Notice Regarding Replacement that is signed by both the applicant and the producer.

Group Life Under a group plan, Certificates of Insurance must include all of the following EXCEPT AThe group policy number. BA description of the insurance protection. CThe name of the insured. DThe name of the writing agent.

D. The name of the writing agent. Certificate of insurance for a 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. Marketing Practices Licensed life insurance agents are expected to be familiar with which of the following laws? AFlorida Life Insurance Solicitation laws BFlorida Life Insurance Replacement laws CCode of Ethics of Florida Association of Insurance and Financial Advisers DAll of the insurance laws and regulations

DAll of the insurance laws and regulations Correct! While the other laws may have particular significance, an agent should be generally aware of all insurance laws.