Flashcards for last 3 chapters

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? A. probationary period b. grace period c. free look d. waiver of premium

c. free look

Which of the following dates must be contained in a policy summary? A. the date that the policy was issued b. the date that the producer was licensed c. the date the summary was prepared d. the date the application was signed

c. the date the summary was prepared

Which of the following must an insurer obtain in order to transact insurance within a given state? A. producer's certificate b. business entity license c. insurer's license d. certificate of authority

d. certificate of authority

Who may share in the commission from the sale of a life insurance policy?

Only producers properly licensed for the type of insurance transaction

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? A. 180days b. 10 days c. 30 days d. 90 days

c. 30 days

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? A. 7 B. 10 C. 14 D. 21

C. 14

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? A. 7 b. 10 c. 14 d. 21

C. 14

Regulations for annuity recommendations would apply when a consumer is at least what age? a. 50 years old b. 62 years old c. 65 years old d. 70 years old

c. 65 years old a senior cosnumer is a person 65 or older

In what way can an agent demonstrate a high standard of ethics? A. setting and meeting monthly production goals b. recommending qualified retirement plans to each client c. putting the client's best interest before their own d. making enough commissions to cover personal expenses

c. putting the client's best interest before their own

If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered a. a required disclosure b. a legal representation of the Association c. unfair trade practice d. misrepresentation

c. unfair trade practice although illegal to advertise, it is true so it is not misrepresentation

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? A. for 10 years after the initial recommendation b. for 6 years after the initial contact with the consumer c. for 3 years d. for 5 years after the insurance transaction is completed by the insurer

d. for 5 years after the insurance transaction is completed by the insurer

What are the most common penalties for violations of insurance statutes?

A Cease and desist order, a fine, and license suspension or revocation

Who is an insurance agent?

A person authorized to sell, solicit and negotiate insurance contracts

Which statement is NOT true regarding a policy summary? A. it must be combined with a sales illustration b. it is generally given to applicants before acceptance of the initial premium c. it must include the generic name of the basic policy and each rider d. it must include the date the policy summary is prepared

A. it must be combined with a sales illustration

Under a group plan, certificates of insurance must include all the following except A. the name of the writing agent b. the group policy number c. description of the insurance protection d. the name of the insured

A. the name of the writing agent

Who must be a member of insurance guaranty associations?

All insurers authorized to write insurance within the state

Who is considered a nonresident agent?

An agent who resides and is licensed in another state, but who is authorized to transact insurance in this state

If an insurer holds a Certificate of Authority, it is known as what type of insurer?

Authorized or admitted

The requirement that agents not commingle insurance monies with their own funds is known as A) Accepted accounting principal B) Fiduciary responsibility C) Premium accountability D) Express authority

B) Fiduciary responsibility

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

B. 30

Which of the following entities is responsible for agent licensing and administrative supervision? A. the Governor's Cabinet B. The office of Insurance Regulation c. the Office of Financial Regulation D. The Insurance Guaranty Association

B. The office of Insurance Regulation responsible for all activities concerning insurers, including licensing and certificates of authority, rates, policy forms, claims, solvency, administrative supervision, and any other related provisions of the Insurance Code

What type of licensee represents the insured?

Broker

What is the maximum allowed value of promotional gifts that an agent may give to a prospective insured? A. $20 b. $50 c. $100 D. gifts are never allowed

C. $100

What kind of policy issues certificates of insurance to insureds? A. nonqualified annuity b. any insurance C. group insurance d. individual insurance

C. Group Insurance ind covered by group life insurance do not receive a policy, but receive a certificate of insurance from the master policy

All advertisements are the responsibility of the A. advertising agency b. Department of insurance C. Insurer D. soliciting agent

C. Insurer

If the Commissioner/Superintendent finds a licensee engaging in an unfair method of competition or an unfair practice, what order will be issued?

Cease and desist order

What document is required for an insurance company to transact insurance?

Certificate of authority

What are producers required to do in order to renew their license

Complete continuing education hours and pay a renewal fee

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. $20,000 D. $50,000

D. $50,000

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? A. 60% B. 20% C. 35% D. 50%

D. 50%

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 insurance laws and regulations

D. All of the insurance laws and regulations

If a producers makes maliciously critical statements about another insurer, what is this illegal practice called?

Defamation

Two individuals who are in the same risk and age class are charged different rates for their insurance policies due to an insignificant factor. What is this called?

Discrimination

Insurers are classified according to their domicile. What are the three types of insurers?

Domestic, foreign, alien

For what reason can a temporary license be issued?

For continuation of business in case the licensed producer dies or becomes disabled

In general, who can be excluded from producer licensing and examination requirements?

Insurance company officers, directors, or any other employees who do not transact insurance and who do not receive commissions for their services (usually, their responsibilities include administrative, executive, or clerical)

What is controlled business?

Insurance on the producer's own life or property, or the lives or property of the producer's family or business associates

In the agent/ insurer relationship, who is considered the principal?

Insurer

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. What is the company guilty of?

Misrepresentation

What illegal act does a producer commit when the producer represents a policy in a more favorable light than the policy really is?

Misrepresentation

Can insurers advertise the existence of the guaranty association during solicitation and sale of insurance policies?

No, advertising of the existence of the guaranty association for the purposes of solicitation and sale of insurance policies by insurers is an illegal business practice

Who can usually be granted a temporary license?

Producer's spouse or designee in case the licensed producer dies or becomes disabled

An agent offers a client free tickets to a sporting event in exchange for the purchase of an insurance policy. What is the agent guilty of?

Rebating

Who owns stock companies?

Stockholders

Who must be notified of a producer's change of address?

The Department of Insurance (Commissioner/ Director/ Superintendent)

What type of licensee represents the insurance company?

The agent

Who is responsible for the contents of insurance advertisements?

The insurance company

Who is responsible for the costs associated with the examination of insurers?

The insurer who is being examined

To whom may a certificate of authority be issused?

To an insurer authorized to transact business in this state

What is the purpose of a cease and desist order?

To prevent a producer or insurer from further violating laws for transacting insurance

What is the purpose of insurance guaranty associations?

To protect policyowners, insureds, and beneficiaries from financial losses caused by insolvent insurers

What type of misrepresentation persuades an insured, to their detriment, to cancel, lapse, or switch policies from one another?

Twisting

When is controlled business legal?

When the commissions from controlled business do not exceed the aggregate commissions on all the other business (specific limits may vary from state to state)

When can the Commissioner or Director examine insurers?

Whenever deemed necessary, but at least once every few years (check state)

When does a free-look period begin on a life insurance policy? a. when the policy is delivered to the insured b. when the insured pays the first premium c. when the insurer signs the policy d. when the policy is issued

a. when the policy is delivered to the insured

If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered what type of insurer?

authorized or admitted

When replacing life insurance, the duties of the replacing insurance company include all the of the following EXCEPT: A. providing to each purchaser a Buyer's Guide and a Policy Summary b. Maintaining a copy of the Notice Regarding replacement and all sales proposals used for at least 5 years c. requiring from the agent with the application a copy of the Notice Regarding replacement d. sending to the existing insurer a copy of the Notice Regarding Replacement immediately

b. Maintaining a copy of the Notice Regarding replacement and all sales proposals used for at least 5 years

If an employee is accepted into a group insurance plan, which status will the employee have? a. dependent b. certificate holder c. policy holder d. co-owner

b. certificate holder

All of the following would be considered an insurance transaction EXCEPT a. negotiating coverage b. obtaining an insurance license c. soliciting a policy d. advising a policyholder regarding a claim

b. obtaining an insurance license

An employer offers group life insurance to its employees for the amount of $10,000. Which of the following is true? a. the cost of coverage paid by the employer is tax deductible by the employees b. the cost of coverage is deductible expense by the employer c. the value of insurance will be ducted from the employees' compensation d. the cost of coverage paid by the employer is taxed to the employees

b. the cost of coverage is deductible expense by the employer

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

c. the extra hours may be continued into the next period

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 1 year later. What will probably happen? a. the insurer will sue the insured for committing fraud b. Because the insured is currently not a drug user, his policy will not be affected c. the policy will not be affected d. the policy will be voided

c. the policy will not be affected did not commit intentional fraud

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? A. 2% b. 4% c. 6% d. 8%

d. 8%

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

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

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? A. disclosure rule b. replacement rule c. reinstatement rule d. conversion rule

b. replacement rule

The Office of Insurance Regulation is responsible for all of the following insurer activities EXCEPT? A. policy forms b. premium financing c. issue of securities d. viatical settlements

c. issue of securities responsible for all activities of the Financial Services Commission relating to the regulation of banks, credit unions, finance companies, and the securities industry. All other listed activities are the responsibilities of the Office of Insurance Regulation

Which of the following best describes the unfair trade practice of defamation? A. issuing false advertising material b. refusing to deal with other insurers c. making derogatory oral statements about another insurer's financial condition d. assuming the name and identity of another person

c. making derogatory oral statements about another insurer's financial condition

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? A. the type of life insurance policy obtained will determine which replacement regulations will be required b. the number of employees covered by the policy will determine which replacement regulations will be required c. replacement regulations will not apply in this situation d. special corporate replacement regulations will apply

c. 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

If a life insurer holds the proceeds of any policy it issues, which of the following is true? A. Death benefits will be increased as an incentive b. premiums wills be decreased as an incentive c. the proceeds may be exempt from any creditor's claims against a beneficiary other than the policy owner d. the proceeds will be more likely to be subject to a creditor's claims against a beneficiary

c. the proceeds may be exempt from any creditor's claims against a beneficiary other than the policy owner

Under what circumstances can an agent's appointment be transferred to another person? A. with the Commissioner's written approval b. if the agent's license has been temporarily suspended c. under no circumstances d. when another person works for the same appointing insurer

c. under no circumstances Any issued appointment is valid only for the person named and is not transferrable to another person

In insurance transactions, fiduciary responsibility means a. maintaining a good credit record b. being liable with respect to payment of claims c. commingling premiums with agent's personal funds d. handling insurer funds in a trust capacity

d. handling insurer funds in a trust capacity

Who does the secondary addressee provision protect? A. contingent (secondary) beneficiaries b. the insured whose policy is being replaced c. the insurance company d. the insured over the age of 64

d. the insured over the age of 64