Final review
All of these are considered sources of underwriting information about an applicant EXCEPT
Rating Services
Which of these is not a legal entity for selling life insurance in Florida?
Risk management advisers
Upon delivery of a rated life insurance policy, the Producer must obtain each of the following EXCEPT
Signed HIPAA disclosure
An immediate annuity consists of a
Single Premium
Group life insurance policies are generally written as
annually renewable term
Under an interest sensitive whole life policy
cash values are determined by interest rates
One definition of replacement is "the act of replacing an existing insurance policy with another". Replacement is
closely regulated and requires full disclosure
Omitting information that affects the issuance or the rate of an insurance contract is called:
concealment
K applies for a life insurance policy on herself and submits the initial premium with the application. She is given a receipt by the agent stating that coverage begins immediately if the application is approved. What kind of receipt was used?
conditional
In life insurance, the needs approach is used mostly to establish ~
how much life insurance a client should apply for
What kind of premium does a Whole Life policy have?
level
Which of these is not an element of life insurance premiums?
morbidity rate
In Florida, agents are allowed to engage in rebating if
offered to all insureds in the same actuarial class
Under Florida law, a variable annuity policyowner must be notified of the accumulated value of the contract
once each year
An insurance company can contest a life insurance contract due to application fraud within
2 years
In what year was the Florida Office of Financial Regulation (OFR) created
2003
Three law partners form a Cross-Purchase Buy and Sell agreement. This agreement is funded with individual life insurance. How many total life policies are needed for this agreement?
6
When an insurance application is taken by a producer, which of these statements is true?
Any changes made on the application require the applicant's initials
How do life insurance companies handle cases where the insured commits suicide within the contract's stated Contestable period?
Claims are denied under the Suicide clause of the policy
Which of these statements is incorrect regarding the federal income tax treatment of life insurance
Entire cash surrender value is taxable
J is an agent who recently told a claimant that his rights might be impaired if he does not complete a release form within a specified time. What could this agent be found guilty of?
Guilty of coercion
All of the following statements regarding tax shelter annuity are true except
Income derive from the TSA is received income tax free
Accurate definition of Controlled business
Insurance Business that is written on the agent life, property or interest
If the insured and primary beneficiary are both killed in the same accident and it cannot be determined who died first, where are the death proceeds to be directed under the Uniform Simultaneous Death Act?
Insured's contingent beneficiary
The agreement in The life insurance contract that state a specific sum of money will be paid to a designing person upon an insured's death
Insuring agreement
B receives yearly dividends and interest from a participating life insurance policy. Which of these should B include as gross income for federal income tax purposes?
Interest only
What is the purpose of a policy summary?
It highlights the critical parts of the policy issued
According to Florida law, which of the following statements accurately describes an admitted mail order insurance company?
It may solicit insurance business by mail without the assistance of a licensed agent
K is an insured under a life insurance policy owned by a third party. Which of these statements is true? K has no ownership right K may change the beneficiary K may borrow against the policy cash value
K has no ownership right
D needs life insurance that provides coverage for only a limited amount of time while also paying the lowest possible premium. What kind of policy is needed? Limited pay Life Graded Premium Level term
Level term
A whole life insurance policyowner does not wish to continue making premium payments. Which of the following enables the policyowner to sell the policy for more than its cash value? Cash surrender Life settlement contract
Life settlement contract
Convincing a prospective insured to buy an insurance policy based on exaggerations is called Rebating Misrepresentation Twisting
Misrepresentation
Under which circumstances may a licensed agent in Florida represent an unauthorized entity?
Never
In an individual retirement account (IRA), rollover contributions are Subject to capital gains tax Subject to ordinary income tax Not limited by dollar amount
Not limited by dollar amount
If a corporation pays The premium on a group life policy for as employees, the corporation is required to report how much additional taxable and comfort each employee
Nothing
A life insurance policyowner woukd like to file a complaint against a life insurance agent. In Florida, the entity that oversees these complaints is called the
Office of Financial Regulation
Which entity approves the insurance policy forms used in Florida?
Office of Insurance Regulation (OIR)
Which tax would an IRA participant be subjected to on distributions received prior to age 59 1/2?
Ordinary income tax and a 10% tax penalty for early withdrawal
K owns a Whole Life policy. If K wants an increasing Death Benefit to protect against inflation, which Dividend Option should she chose?
Paid-Up Additional Insurance
The underwriting process involves all of these, EXCEPT
Policy loan
According to Florida law, group life insurance conversion privilege must not
require evidence of insurability
According to Florida's law, an additional lapse notice must be issued after the standard grace period has expired for policyowners age
64 years or older
The option that provides an additional death benefit for a limited amount of time at the lowest possible cost is called a(n)
Accidental Death and Dismemberment rider (AD&D)
A policyowner may generate taxable income from which of the following Dividend Options?
Accumulation at interest
Which of the following employer tasks does a Professional Employer Organization normally handle?
Administration tasks
Which of the following areas of state regulation is NOT protected by the saving clause ERISA
Commerce
Insurance contract are known as ____ because certain future conditions or acts and must occur before any claim can be paid
Conditional
If its employee share the cost of insurance , what type of group life insurance plan would a corporation have
Contributory
K is shopping for a permanent life insurance policy that will offer her the MOST protection per dollar of annual premium. Which of these policies best fits her needs?
Straight life
K is an agent who takes an application for individual life insurance and accepts a check from the client. He submits the application and check to the insurance company, however the check was never signed by the applicant. If the application is approved, when will coverage be effective?
The date the agent delivered the policy, collected the initial premium, and obtained a good health statement from the insured
Group life policies in Florida are required to contain a conversion privilege that allow conversion
To an individual policy for a stated period of time
A stock life insurance company that issues both participating and nonparticipating policies is doing business on
a mixed plan
______ Of personal life insurance premiums as usually deductible for federal income tax purpose
0%
Premature IRA distributions are assessed a penalty tax of
10%
What is the maximum number of employees (earning at least $5000) that an employer can have in order to start a simple retirement plan?
100
What percentage of eligible persons must a policy cover in a non-contributory group?
100%
A group plan was recently terminated. In Florida, how many days are covered individuals guaranteed coverage after a group plan's termination?
31 days
How many days does an insurance company have to reject a reinstatement application before is is automatically reinstated?
45 days
A licensed agent must be appointed by an insurance company to solicit insurance in Florida. The agent's license will terminate if a certain period of time elapses without being appointed. How long is this period of time?
48 months
Every resident agent must have and maintain at their place of business the usual and customary records pertaining to transactions under their license for at least how long?
5 years
In Florida, what is the maximum percentage of controlled business an agent may produce?
50%
How long does the coverage normally remain a Limited pay life policy
Age 100
Which of the following situation does not apply to the Florida replacement rule?
An existing policy holder purchase an. Additional policy from the same insurer
P is a 40 years old woman and would like to purchase an a new editing that will provide a lifetime income stream beginning at age 60. Which of the following that she not buy?
An immediate annuity
What action can a policyowner take if an application for a bank loan requires collateral? Borrow against policy cash value and use as a down payment Assign policy ownership to the bank Name bank as beneficiary
Assign policy ownership to the bank
P died five years after purchasing a life policy. While investigating the claim, the insurer discovered material misrepresentations made by P during the application process. Which of these actions will the insurer take?
Beneficiary will be paid the Death Benefit
Which of these actions taken when a policy owner use a life insurance policy as collateral for a bank loan
Collateral Assignment
Was provision allowed the policy owner to change a term policy to a permanent one without providing proof of good health?
Conversion
F needs life insurance that provides coverage for only a limited amount of time with a death benefit that changes regularly according to a schedule. What kind of policy is needed?
Decreasing term policy
How are surrender charges deducted in a life policy with a rear-end loaded provision?
Deducted when the policy is discontinued
Which of the following unfair trade practice involves an agent who make malicious statement about another persons financial condition Boycotting Defamation Unfair discrimination Misrepresentation
Defamation
In Florida, which agency is responsible for the rehabilitation or liquidation of insurers?
Department of Financial Services (DFS)
Company Z has a Cross Purchase Buy-Sell Agreement in place among its three founding partners. If the agreement is funded with individual life insurance, what would it require?
Each partner must own a policy on the other partners
Which of these statements about Guaranteed Insurability Option rider is NOT TRUE? Evidence of insurability is required when the option is exercised Evidence of insurability is not required when the option is exercised
Evidence of insurability is required when the option is exercised
An underwriter determines that a Life insurance applicants risk should be reclassified due to health issue. This policy may issue with a
Extra premium
An example of an unfair claims settlement practice is
Failing to effectively promt, fair and equitable settlement of a claim
The act of an insurance company publishing misleading information about its policy's provision is called
False advertising
The payments on Q's annuity are no less than $250 quarterly. Which of the following annuities does Q own?
Flexible Installment Deferred
Nonprofit life insurance providers that are covered by a special section in the Florida insurance code are called
Fraternal life insurance organizations
S, while in the process of converting her group life insurance to an individual policy, dies. What happens to the claim her beneficiary submits?
Full benefits are payable under the Master contract
Which of the following is a standard provision of the conversion privilege in a group life policy
Group life coverage can be converted to an individual policy at regular rate on an attained age basis
Which of these needs is satisfied by Adjustable Life insurance?
Insured's need for flexible premiums
K's whole life insurance policy lapsed two months ago due to nonpayment. She would now like to reinstate the policy. All of these statements are correct about the policy's reinstatement EXCEPT K will forfeit the right to use the automatic loan provision upon reinstatement K must provide evidence of insurability
K will forfeit the right to use the automatic loan provision upon reinstatement
Which Unfair Trade Practice involves an agent suggesting that an insurance policy is like a share of stock? *Twisting *Intimidation *Misrepresentation *Sliding
Misrepresentation
Which type of policy is considered to be overfunded, as stated by IRS guidelines?
Modified Endowment Contract
K is an agent who made an improper sale of an annuity to a client. Which of the following corrective actions would the Department of Financial Services likely order K to take?
Pay monetary restitution to the client
Which of these statements concerning an individual Straight Life annuity is accurate?
Payments are made to an annuitant for life
Which of the following information is not required to be included in a whole life policy
Policy's guaranteed dividend table
According to Florida life insurance replacement law, The policy only must be provided with a written comparison and summary statement when is requested by
Policyowner
Which is true concerning a Variable Universal Life policy?
Policyowner controls where the investment will go and selects the amount of the premium payment
A policyowner is able to choose the frequency of premium payments through what policy feature?
Premium Mode
What benefit does the payor clause on a Juvenile Life policy provide?
Premiums are waived if payor becomes disabled
Which of the following actions is not possible with a universal life policy?
Premiums may be applied as a credit against income tax
Who is normally considered to be the owner of 403B tax shelter annuity?
The employee
What advantage does the renewability feature give to a term policy? The insurer may extend the coverage. With no additional cost The insured may extend the coverage period
The insured may extend the coverage period
All of these statements about Equity Indexed Life Insurance are correct EXCEPT Cash value has a minimum rate of accumulation If the gain on index goes beyond the policy's minimum rate of return, the cash value will mirror that of the index The premiums can be lowered or raised, based on investment performance
The premiums can be lowered or raised, based on investment performance
What is the basic function of annuity?
The systematic liquidation of accumulated fund
B owns a Whole Life policy with a guaranteed insurability option that allows him to purchase, without evidence of insurability, stated amounts of
additional Whole Life coverage at specified times
L takes out a life insurance policy and dies 10 years later. During the claim process, the insurer discovers that L had understated her age on the application. Under the Misstatement of Age provision, the insurer will
adjust the death benefit to a reduced amount
To be eligible for social security disability benefits, an employee must be unable to perform
any occupation
Any changes made on an insurance application requires the initials of whom?
applicant
When does a Guaranteed Insurability Rider allow the insured to buy additional coverage?
at future dates specified in the contract with no evidence of insurability required
As a condition for a loan, a bank requires the borrower to purchase credit insurance from a specific company. What is the bank guilty of?
coercion
Florida 14 day free look period for life insurance policy begins at the
date of delivery
A life insurance policy would be considered a wagering contract WITHOUT
insurable interest
Who makes the legally enforceable promises in a unilateral contract?
insurer, insurance company
A license may be denied, suspended, or revoked if the licensee
is found guilty of misrepresentation
The fundamental reason for regulation of insurance is to
protect consumers
According to Florida law, group life insurance conversion privileges must NoT
require evidence of insurability
Typically a life insurance death benefit is paid by a lump-sum payment. A(n) __________ option is a method of distributing a Life Insurance policy's death benefit OTHER than by a lump sum payment.
settlement
The purpose of the USA Patriot Act of 2001 was to
suspend certain civil liberties and protections
Group Life policies in Florida are required to contain a conversion privilege that allows for conversion
to an individual policy for a stated period of time
T is an employee covered under a Group Life policy. If T's employment is terminated, the conversion privilege gives T the right to convert
to an individual policy upon employment termination
C is trying to determine whether to convert her convertible term life policy to whole life insurance using her original age or attained age. What factor would affect her decision the most?
to cost
All of these are a prerequisite for becoming a licensed agent EXCEPT
to graduate from high school
Which of the following is considered an element of a Variable Life Policy?
underlying equity investment
