2-15 Life and Health questions
99. If 100 men, age 25, desired to provide their beneficiary with $10,000, how much would each have to pay if we knew three were going to die? $30 $300 $3000 $309
$300
84. Bill Wilson wants to obtain a life insurance policy on his employee, Kenneth Myers, and names Kenneth's wife, Susan, as the beneficiary. Signatures of which of the following would be legally required on the application? 1. Bill 2. Kenneth Myers 3. Susan 1 only 1 and 2 only 2 and 3 only 1, 2 and 3
1 and 2 only
An insurance company has how many years to challenge the validity of a life insurance contract?
2
74. An agent who has been licensed for 7 years must have how many hours of continuing education? 20 hours every 2 years including 5 hours of laws & rules 20 hours every 2 years including 3 hours of unauthorized insurers 24 hours every two years 10 hours every year
20 hours every 2 years including 5 hours of laws & rules
70. Ima Yankee has been licensed for seven years. How many hours of continuing education does Ima need? 20 hours every two years 24 hours every two years none, he knows it all
20 hours every two years If licensed for less than six years he needs 24 hours. If licensed more than six years he needs only 20 hours.
18. Florida law requires anyone convicted of a felony to report this to the Office of Insurance regulation within: 10 days 30 days 45 days 60 days
30 days
51. If an agents fails to maintain an appointment with an appointing entity writing the class of business in which the agent is licensed, after what period of time must the agent qualify as a first time applicant? 18 months 24 months 48 months the license is perpetual
48 months
78. What % of an agent's business can be controlled business? 25% 50% 75% 100%
50%
97. While New Mexico Life Insurance Company is operating in the state of Florida, it would be considered by the state of Florida to be a/an: A Foreign Company. A Domestic Company. An Alien Company. A nonadmitted company.
A Foreign Company.
90. The statement "there is no attempt to value financial loss" would be applied to which of the following? A valued contract An indemnity contract The doctrine of subrogation All of the above
A valued contract
23. Which of the following statements concerning void/voidable contracts is true? A voidable contract is unenforceable by law. A contract with a minor is a voidable contract. A void contract may be set aside by the party having the right to do so. A void contract is without legal effect.
A void contract is without legal effect.
12. Which of the following describes the idea that the insurance contract is created by the insurer and the client can "take it or leave it"? Adhesion Unilateral Aleatory Commutative
Adhesion
24. The use of testimonials, special offers, or statistics would be found under what code or act? Unfair Trade Practices Act Fair Trade Practices Act Unfair Advertising Code Advertising Code
Advertising Code
60. The following statements about INSURABLE INTEREST are true EXCEPT: -Brothers and sisters have an insurable interest in each other. -A creditor can have an insurable interest in a debtor limited to the amount of indebtedness. -An insurable interest must exist between the policy owner and the insured at the time of the claim. -People are considered to have an insurable interest in themselves.
An insurable interest must exist between the policy owner and the insured at the time of the claim.
With life and health contracts, when must an insurable interest exist?
At the inception of the policy
46. The NAIC developed: The Advertising Code The Unfair Trade Practices Act Both Neither
Both
63. The opposite of an Aleatory contract is a: Unilateral Commutative Adhesion Bilateral
Commutative
35. All of the following are unique elements of an insurance contract except? Insurable Interest Valued, Indemnity Adhesion Consideration
Consideration
56. Which of the following would NOT be a consequence for aiding and abetting an unauthorized insurer? Conviction of a first-degree misdemeanor Conviction of a third-degree felony Liability for all unpaid claims Suspension or revocation of all insurance licenses
Conviction of a first-degree misdemeanor
71. Circulating untrue statements about an insurance company would be classified under Florida law as: Misrepresentation Defamation False advertising All of the above
Defamation
101. Which of the following is an example of a Risk Retention Group (RRG)? HMO Dentists Association MEWA
Dentists
6. Fraud can involve the unintentional concealment of a non-material fact on an application. True False
False
68. Will the annual premium required for a 3% reserve interest assumption be greater or smaller than for a 3 1/2% reserve interest assumption? Smaller Greater Not enough information to answer The annual premium has nothing to do with interest assumption
Greater A "reserve interest assumption" is a fancy name for an interest rate that the company is making from its investments. The more money a company makes from its investments, the less it needs consumers to pay in premium, and vice versa. The questions asks about the premium, so since 3% is lower than 3 1/2%, the premium for the 3% interest rate would have to be higher than that of the 3 1/2% interest rate.
49. Which of the following cause the potential for increasing risk? Peril Hazard Speculation Over insurance
Hazard
40. Which areas of insurance have most frequently been plagued with unauthorized insurers: Health Insurance Life Insurance Annuities Property Insurance
Health Insurance
82. Regarding warranties and representations, which of the statements below are true? If a warranty is untrue, the insurer has the right to cancel the contract If a representation is untrue, the insurer has the right to cancel the contract only if the representation was not material If a representation is untrue, the insurer has the right to cancel the contract If a warranty is untrue, the insurer has the right to cancel the contract, even if it was not a material fact.
If a warranty is untrue, the insurer has the right to cancel the contract
67. What type of agent represents a number of insurance companies under separate contractual agreements? Career Agents Personal Producing General Agents Independent Agents Brokers
Independent Agents
29. Which of the following is NOT true concerning the Florida Insurance Guarantee Fund? All life, health, and annuity insurers are members as a condition of their authority to transact insurance in Florida Residents of other states whose company is domiciled in Florida It does not cover Health Maintenance insurance It automatically covers contracts covering Medicare Parts C & D
It automatically covers contracts covering Medicare Parts C & D
79. It is possible to predict the approximate number of deaths or frequency of disabilities within a certain group during a specific time. This is based on which of the following principles? Law of Large Numbers Insurance Probabilities Homogeneous Probabilities Law of Large Returns
Law of Large Numbers
50. Which of the following is not considered an insurance company? Lloyd's of London Risk Retention Groups Reciprocal Insurers Assessment Insurers
Lloyd's of London
What is NOT used to determine a company's ratings? A.M. Best Moody's Lloyd's of London S & P
Lloyd's of London
36. All the below are characteristics of a mutual company EXCEPT: Owned and controlled by policy owners Makes a profit for stockholders The policyholders elect a board of trustees or directors to manage the firm Pays dividends from surplus
Makes a profit for stockholders
19. Which of the following is not a federal run government insurance program? National Service Life Service members group life Veterans group life Medicaid
Medicaid
33. If a stock company sells both participating and non-participating policies it is said to be operating on the: Conservative Plan Mixed Plan Specialized Plan They can't sell both
Mixed Plan
5. Which is not involved in the administration of Insurance? Chief Financial Officer Financial Services Commission Office of Insurance Regulation Office of Financial Regulation
Office of Financial Regulation
83. Which statement most accurately describes a unilateral contract? Both parties to the contract are bound to the terms. Both parties adhere to the contract. Both parties exchange goods of equal value. Only one party is legally bound to the contract.
Only one party is legally bound to the contract.
11. All of the following are not considered competent parties to the contract except: Minors The mentally infirm Physically disabled Those under the influence of alcohol or narcotics
Physically disabled
4. The Florida Guarantee Association: Protects the insured if the insurer becomes insolvent Protects the insurer if the insurer becomes insolvent Protects the agent if the insurer becomes insolvent Protects the insurer if the insured becomes insolvent
Protects the insured if the insurer becomes insolvent
59. Giving a prospect or policy owner anything of significant value as an inducement to buy insurance is called: Discounting Misrepresentation Rebating Twisting
Rebating
48. The USA PATRIOT Act requires financial institutions to do all of the following, except: Develop new compliance systems and training Designate anti-money laundering officers Share information with other financial institutions and enforcement entities Share information with credit reporting agencies
Share information with credit reporting agencies
32. Which of the following statements are true? Stock companies sell only non-participating policies Mutual (participating) companies sell only non-participating policies Stock companies sell both participating and non-participating policies Mutual (participating) companies sell both participating and non-participating policies
Stock companies sell both participating and non-participating policies
34. Which of the following is sometimes called the American Agency system? The career agency system The Personal Producing Agency system The Independent Agency system Direct Selling
The Independent Agency system
66. Which of the following would not be found in the policy summary? The name of the agent The beneficiary Dividend information Loan interest rates
The beneficiary The beneficiary is subject to change. Not listed in the summary.
28. Which of the following statements concerning an agent's license is not correct? The agent must report in writing, to the OIR, with-in 30 days of pleading guilty to a felony The insurance license will terminate if four years elapses without being appointed The insurance license is suspended automatically for bankruptcy An agent may appoint himself as an agent
The insurance license is suspended automatically for bankruptcy
104. For a risk to be insurable it must contain all of the following characteristics EXCEPT: The loss must be definite and measurable. The loss exposures to be insured must be large. The loss must not be due to chance. The loss must be predictable.
The loss must not be due to chance.
22. A company transfers a risk. The company assuming the risk is: The ceding company Risk Retention Risk transference The re-insurer
The re-insurer
66. A stock insurance company has stockholders and policyholders. The directors & officers are responsible to which of the following? The policyholders The stockholders Stockholders & policyholders Board of directors
The stockholders
11. An unaffiliated agent may affiliate with which of the following? An insurance agency An insurer An independent agency They may not affiliate with anyone
They may not affiliate with anyone
50. Of the following terms, which best describes the act of replacing existing life insurance with a new life insurance policy based upon incomplete or incorrect representations? Twisting Rebating Embezzlement Concealment
Twisting
103. A company that is licensed to sell insurance in a state in which it is domiciled is called: a domestic company an alien company a nonadmitted company an authorized company
a domestic company
70. All of the following describe an unaffiliated agent except: a licensed agent a limited lines agent one who is not appointed by an insurer one who is self-appointed
a limited lines agent
37. Which of the following could be considered a commercial company? a stock or mutual company a service provider an assessment company a health maintenance organization
a stock or mutual company
21. Which of the following undertakes to effect settlement of claims? agents agencies adjusters commissioners
adjusters
67. Public adjusters prepare, complete and file claims on behalf of who? an insured an insurer both of the above none of the above
an insured
31. When MUST the Office of Insurance Regulation conduct a market conduct examination on domestic insurers? as often as warranted at least once every year at least once every three years at least once every five years
at least once every five years
64. Most new life insurance is purchased: by employers for employees through group insurance by individuals through insurance agents in equal amounts through group and individual policies by the federal government
by individuals through insurance agents
Which of the following terms is used for the voluntary relinquishment of a known right? a. Estoppel b. Adhesion c. Waiver d. Unilateral
c. Waiver
77. To legally conduct insurance business in the state of Florida, an insurer must have which of the following? certificate of authority solicitation license transaction certificate policy delivery license
certificate of authority
44. Any activity limiting a client's free choice regarding transacting insurance is intimidation coercion defamation twisting
coercion
51. A producer represents the: buyer company buyer and the company agent
company
42. All of the following systems support the sale of insurance through agents EXCEPT: career agency system PPGA's independent agency system direct selling
direct selling
59. Selling insurance through a vending machine would be: mass marketing direct selling a yank and pull a prohibited practice
direct selling
63. The Department of Financial Services (department) have all of the following powers and duties except: enforce the insurance code enact laws relating to the insurance code conduct an investigation to determine if a person has violated the code employ actuaries
enact laws relating to the insurance code
The authority that an insurer gives to its agent by means of the agent's contract is known as
express authority
The purpose behind full disclosure requirements is to
help a client make an informed decision
27. What type of authority is not overtly extended but must be used to enable the agent to transact business of the principle? express implied apparent fiduciary
implied
93. Which of the following is a distinguishing element of an insurance contract? consideration competent parties incontestability offer and acceptance
incontestability
22. The Office of Financial Regulation has the authority to issue all of the following except: cease and desist orders emergency cease and desist orders subpoenas injunctions
injunctions
58. During an investigation, the Department of Financial Services and the Office of Financial Regulation may do all of the following except: issue an injunction examine witnesses subpoena witnesses compel an agent's attendance and testimony
issue an injunction
76. Any person who holds an insurance license must complete a minimum of five hours of continuing education on the subject of unfair trade practices unauthorized entities fiduciary responsibilities laws and ethics
laws and ethics
54. The term agency refers to which of the following? agent adjuster location all of the above
location
Diverting insurance funds for personal use is an example of
misuse of premiums
89. Alcoholism or drug addiction would be considered which of the following hazards? physical moral morale all of the above
moral
15. Tendencies for attitude and state of mind which cause indifference to loss are a: moral hazard morale hazard physical hazard dukes of hazard
morale hazard
74. All statements on an application are considered to be: warranties representations material facts all the above
representations
78. Statements made by an applicant for a life insurance policy which are supposed to be true are referred to as: representations facts warranties information
representations
94. Rules pertaining to testimonials, statistics and special offers would be found in: the policy summary the entire contract the advertising code buyers guide
the advertising code
43. In a sales transaction, the producer will represent the: the company the policyowner/insured both
the company
86. A producer owes a fiduciary responsibility to: the company the client the company and the client the client and the beneficiary
the company and the client
34. Who is responsible for reporting suspicious activity concerning money laundering? the insurance company the producer no one the producer and the company
the producer and the company
80. A person covered under a service provider is called: the insured the member the client the subscriber
the subscriber
96. Fraternal Benefit Societies are required to do all of the following except: be non-profit have a lodge system operate as a society, corporation or association to provide the insured with a policy
to provide the insured with a policy
21. A _______ contract may be set aside. void voidable misrepresented bad
voidable
26. When does the insurance company NOT do an autopsy under AD&D insurance? when the death is caused by an accident when the death is caused by illness when it is prohibited by law when the death is caused by homicide
when it is prohibited by law
91. All of the following statements about life insurance and the risk it covers are true EXCEPT: -Life insurance is a mechanism for pooling and sharing risks. -As the number of separate risks of the same type increases, the amount of loss within a given group becomes more certain. -The probability of an individual insured's death increases each year until it becomes a certainty. -Life insurance is like a mutual fund in that a certain sum of money must be set aside each year to meet the contractual obligations of the insured.
-Life insurance is like a mutual fund in that a certain sum of money must be set aside each year to meet the contractual obligations of the insured.
2. An emergency cease and desist order would be issued by the Office of Financial Regulation in all of the following circumstances except: -The office finds that a subpoenaed person has not appeared before the court. -The office finds that the conduct of the financial institution is likely to cause insolvency. -The office finds that the conduct of the financial institution is likely to cause substantial dissipation of assets or earnings. -The office finds that the conduct of the financial institution is likely to cause substantial prejudice to the depositors or shareholders.
-The office finds that a subpoenaed person has not appeared before the court.
42. Which is true about the agents' change of address rule? 1. The agent must notify the OIR within 30 days. 2. The agent must notify the OIR within 31 days. 3. There is a $250 fine for violating this rule. 4. The agent must notify the OIR of his/her change of company. 1 only 2 only 1 & 3 1,3, & 4
1 & 3
77. Which of the following statements concerning pure and speculative risks is/are true? 1. Pure risks have only the chance for loss. 2. Speculative risks have only the chance for gain. 3. Only pure risks are insurable. 4. Both pure and speculative risks are insurable. 1, 3, 4 1 & 3 1, 2, & 3 2, 3, & 4
1 & 3
65. Which of the following are true? 1. Notification to the Department of Insurance is required within 30 days of change of address. 2. Notification to the Department of Insurance is required within 30 days of change of company. 3. An agent will lose licensure as a result of 1 year non-appointment. 4. An agent will lose licensure as a result of 4 years non-appointment 1 & 2 1 & 3 1 & 4 2 & 4
1 & 4
7. To be characterized as a fraternal benefit society, the organization must : 1. be non-profit. 2. have ritualistic work within a lodge system. 3. elected officers. 4. operate on a pure assessment system. 1, 2, & 3 2, 3, & 4 1, 3, & 4 all the above
1, 2, & 3
20. An agent may write controlled business provided she writes at least what percentage of other similar business? 25% 50% 75% 100%
100%
32. An insurer may not deliver a policy, application, certificate rider, endorsement, or annuity contract until such forms have been approved by the Office of Insurance Regulation, and such forms have to have been filed with the office at least how many days before delivery to a consumer? 15 days 30 days 45 days 60 days
30 days The insurer must file the forms with the office at least 30 days before being presented to an applicant. Once the form has been filed, if the office takes no action on the form for 30 days then the form is deemed approved.
9. The authority of an agent to undertake certain functions for an insurance company would be found under which of the following? A contract of agency Agency law A contract of principal The general agency principal
A contract of agency
38. Tom completes the application, pays the initial premium, and the agent submits this to the insurance company. The insurer issues a policy with several riders and waivers not requested by Tom. Which of the following answers describes the insurer's action? An acceptance by the company A counter offer by the insurer A voidable contract An offer and acceptance
A counter offer by the insurer
35. A licensed insurance company that is domiciled in and is permitted to do business in the licensing state is called: A fraternal company A permitted company An authorized company A domestic company
A domestic company
43. A licensed and appointed agent may share his commission with: Any licensed agent Any appointed agent Any licensed and appointed agent with the same company A licensed and appointed agent who works in the same line of business
A licensed and appointed agent who works in the same line of business
81. A life insurance policy paid $500,000 to a beneficiary and the total premiums paid were $2500. Which of the following terms defines this type of contract? Aleatory Unequal Disproportionate Adhesion
Aleatory
19. Grounds for refusal, revocation or suspension of an agent's license includes: failing to pay to an insurer any money belonging to the insurer voilating the provision against twisting willfully overinsuring any property or health risk All of the above
All of the above
64. Which of the following statements is/are true regarding misrepresentation? An innocent misrepresentation of a material fact is grounds to void a contract A fraudulent misrepresentation of an immaterial fact would not necessarily void the contract An advertisement that would cause a reasonable person to believe the state or federal government stands behind any returns on insurance products is a misrepresentation. All of the above
All of the above
102. Which of the following statements are true? -Both Personal Producing agents and Career agents sell and train. -Both General agents and P.P.G.A.'s sell and train. -Too many questions, I can't take it any more. -Career agents are contracted to represent the particular company.
Career agents are contracted to represent the particular company.
30. Of the following terms, which best describes the act of using cash value from one policy to purchase another policy from the same insurer? Twisting Rebating Embezzlement Churning
Churning
When values of an insurance policy are used to purchase another policy with the same insurer for the sole purpose of earning additional premiums or commissions, this practice is called
Churning
105. When an applicant applies for insurance by completing an application and paying one month's premium, this constitutes: Consideration and an offer to buy. An acceptance. A conditioned contract. A completed contract.
Consideration and an offer to buy.
4. Which of the following acts could constitute defamation? Using a reporting agency, such as Standard & Poors, to illustrate a company's ability to pay future obligations Copying, for circulation, a newspaper article regarding a company's unstable financial condition none of the above
Copying, for circulation, a newspaper article regarding a company's unstable financial condition
92. Which of the following is not a unique characteristic of a life insurance contract? Aleatory Adhesion Conditional Estoppel
Estoppel
52. Which type of authority is given to the agent specifically through a contract with an insurance company? Contractual Implied Apparent Expressed
Expressed
8. Monies collected by an agent are held by the agent in what capacity? Holder Creditor Debtor Fiduciary of trust
Fiduciary of trust
48. An agent's obligation to handle funds of a client or insurance company honestly and fairly and not use them for the agent's own purpose is called: Fiduciary responsibility Solicitation Legal Responsibility Ethical responsibility
Fiduciary responsibility
53. What would cause the Chief Financial Officer to conduct a hearing? If he feels you have engaged in twisting If he heard you had participated in illegal activities If he has reasonable cause to believe you have defamed an insurance company If he feels you are engaged in actively misrepresenting insurance coverage to the public
If he has reasonable cause to believe you have defamed an insurance company
25. Which of the following is not true concerning the National Association of Insurance Commissioners? It created the advertising code and the Unfair Trade Practices Act. It encourages uniformity in state insurance laws by legislative acts. It is concerned with the preservation of state regulation. It develops standards for policy provisions.
It encourages uniformity in state insurance laws by legislative acts.
95. Which statement concerning a life insurance contract is true? It is a personal contract and can be given away. It is not a personal contract and can be given away. It is a personal contract and can not be given away. It is not a personal contract and can not be given away.
It is not a personal contract and can be given away.
39. Defamation is all the following EXCEPT: It may be derogatory It is not meant to be maliciously critical It can be written (Libel) It can be spoken (Slander)
It is not meant to be maliciously critical
62. All the following types of insurance companies may be approved to operate in nearly all states EXCEPT: Fraternal Insurance Companies Mutual Insurance Companies. (issue Par. Policies). Lloyds of London Stock Insurance Companies (issue Non Par. Policies).
Lloyds of London
49. Under Florida's Code of Ethics, rebating is declared unethical but may still be done if all of the following is adhered to except: The rebate must be available to all insureds in the same actuarial class The rebate must be uniformly applied to all who purchase the same policy The agent must file a rebating schedule with the insurance company issuing the policy Notice must be given to the Department of Insurance
Notice must be given to the Department of Insurance
33. Who is charged with rehabilitating or liquidating insurers where necessary? Office of Financial Regulation Office of Insurance Regulation Department of Rehabilitation Financial Services Commission
Office of Insurance Regulation Department of Financial Regulation may be listed instead. It is the same thing for this question
10. Agents hired by a PPGA are considered to be employees of the : PPGA Company Both Neither
PPGA
87. All of the following statements describe risk avoidance, EXCEPT: Wendy keeps her money out of the stock market. Pat pays his insurance premium. John never drives a car. Louis keeps his Rolex in a safe deposit box.
Pat pays his insurance premium.
15. An agent may be permitted to do all the following (EXCEPT) Show a proposal for a company with which he is not appointed if he is licensed for that line of business Write excess business with outside companies other than his or her parent company Show a proposal from another company to applicants which have been rejected by his parent company Receive commissions from companies for which he is not yet appointed
Receive commissions from companies for which he is not yet appointed
44. There are risks that include the possibility of loss or gain. What is the definition of accepting risk and confronting it if and when it occurs? Pure risk Speculative risk Retention Funding
Retention
47. The following penalties may be imposed upon an agent by the Chief Financial Officer EXCEPT: -Fines of $5,000 for nonwillful and $75,000 for willfully submitting fraudulent signatures on an application or other policy-related document -Up to $50,000 for violation of a cease & desist order -Fines of $5,000 for nonwillful and $75,000 for willful violations of twisting and churning -Revocation of the agent's company contract
Revocation of the agent's company contract
24. Who comprises the Financial Services Commission? The Governor, CFO, Attorney General, & the Insurance Commissioner The Governor, CFO, Attorney General, & the Agriculture Commissioner The Governor, CFO, Insurance Commissioner, & the Agriculture Commissioner The Governor, CFO, Insurance Commissioner, & the Speaker of the House
The Governor, CFO, Attorney General, & the Agriculture Commissioner
60. The Financial Services Commission consists of all the following except: The Chief Financial Officer The Governor The Agriculture Commissioner The Insurance Commissioner
The Insurance Commissioner
27. The agency of state government involved in the regulation of the Insurance industry in the state of Florida are: The Office of Insurance Regulation The Department of Insurance The Office of financial Regulation The Securities & Exchange Commission
The Office of Insurance Regulation
16. The USA PATRIOT Act was created in response to which of the following? The Korean War The Vietnam War Desert Storm The September 11th Attacks
The September 11th Attacks
88. Which Act gives the Chief Financial Officer the right to suspend licenses, assign fines, and prosecute insurance companies? The McCarran-Ferguson Act Advertising Code The Florida Legislature The Unfair Trade Practices Act
The Unfair Trade Practices Act
14. Florida law requires continuing education for all agents. Which of the following is true concerning an agent who has five years' experience and has earned the Chartered Life Underwriter designation? The agent needs 24 hours of continuing education The agent needs 20 hours of continuing education The agent needs 10 hours of continuing education No continuing education is needed
The agent needs 24 hours of continuing education
25. Which of the following is NOT classified under the four principal areas of the Florida Insurance law: The amount of commissions paid to agents The qualifications & licensing requirements of the agents The rights of policyowners & beneficiaries Policy Provisions
The amount of commissions paid to agents
31. The company transferring the risk to another company is called the: The reinsurer The purchasing company The risk retention group The ceding company
The ceding company
45. Which of the following is not true regarding unaffiliated agents? -They are self-appointed and act as an independent consultant. -They are prohibited from being affiliated with an insurance company. -They may not receive any commissions of any kind. -They pay the same appointment fees as an agent who is affiliated with an insurer.
They may not receive any commissions of any kind.
7. An individual becomes licensed, then appointed by a domiciled insurance company. He subsequently writes insurance on all his relatives. Which statement would be correct? -This is called controlled business and is encouraged because family members would rather deal with someone they know. -This is controlled business and could subject the agent to revocation of his license. -This is rebating and is allowed. -This is rebating and is not allowed.
This is controlled business and could subject the agent to revocation of his license.
69. Miami Mutual rewards their clients with a matching deposit of 10% into their annuity when they open an account. Which statement below is correct? This is rebating and would be allowed. This is rebating and would not be allowed. This is twisting and would be allowed. This is twisting and would not be allowed.
This is rebating and would be allowed.
52. What is the purpose of the insurance license? To have someone to blame when things go wrong To help protect the general public by announcing which insurance agents commit poor business practices through public service announcements To help protect the general public by requiring a minimum level of insurance knowledge and competence To help the government track the whereabouts of those conducting insurance activities
To help protect the general public by requiring a minimum level of insurance knowledge and competence
13. Charging a risk in the same actuarial class as another a higher premium would be an example of: Unfair discrimination Coercion Rating Adverse selection
Unfair discrimination
53. A/an __________ is the voluntary giving up of a legal right. Estoppel Waiver Aleatory Warranty
Waiver
46. Can an agent in charge be designated as the agent in charge for more than one location? Yes, as long as insurance activities requiring licensure as an agent do not occur at any location when the agent is not physically present Yes, provided that the agent in charge has a designated office at each location insurance activities may be conducted even if the agent in charge is not physically present Yes, the number of locations is unlimited and there are no requirements requiring physical presence No, an agent in charge may be named agent in charge of only one location
Yes, as long as insurance activities requiring licensure as an agent do not occur at any location when the agent is not physically present
37. Which of the following is considered an unfair practice? a gift valued at not more than $15 a gift valued at not more than $25 a gift valued at not more than $75 a gift valued at more than $100
a gift valued at more than $100
36. Rooster died as the result of an automobile accident. His alcohol level was well above the state's limit for impairment. The accident was considered: a physical hazard. a moral hazard. a peril. all the above
a peril. There peril is the event that cause the loss. Hazards make them more likely to occur. This question is asking about the accident itself, not the drunk driving (the moral hazard)
85. A group of pharmacists or dentists might be covered under: a reinsurance group a risk retention group a reciprocal group a fraternal group
a risk retention group
A life insurance policy paid $500,000 to a beneficiary and the total premiums paid were $2500. Which of the following terms defines this type of contract? a. Aleatory b. Unequal c. Disproportionate d. Adhesiona.
a. Aleatory
Which of the following is the goal of a sales presentation? a. To educate the client so the client can make his or her own decision about what's right for him or her b. To sell the client as many products as possible c. To convince the client that the producer's recommendations are best d. To explain the rules and regulations governing particular insurance products
a. To educate the client so the client can make his or her own decision about what's right for him or her
76. Which of the following statements would mean that the values of the contract are unequal? unilateral adhesion aleatory bilateral
aleatory
13. When an agent is replacing an existing policy, he is to provide what with the application? 1. Agent's name and ID number 2. Notice to Applicant Regarding Replacement of Life Insurance? (Exhibit A) 3. A copy of all Sales Proposals used for presentation to the applicant 1 only 1 & 2 2 & 3 all of the above
all of the above
10. Regarding group health, an agent is permitted to charge a consulting fee in lieu of receiving a commission if -the agent rebates the commission received within 30 days of receipt to the third party she is consulting -maintains records of the agreement for three years -the compensation is based on a written contract between the agent and the party being charged the negotiated fee -all of the above are correct -none of the above are correct
all of the above are correct
55. Which of the following would not be considered controlled business? an agent writing business solely on his family an agent writing business on his partner an agent writing business on his employees an agent writing business on his neighbor
an agent writing business on his neighbor
17. If an unauthorized insurer fails to pay part or all of the claim, who is responsible for paying the claim? -the Department of Financial Services -the Florida Life and Health Insurance Guarantee Association -any agent involved in the transaction who knew, or reasonably should have known, that the insurance contract was made with an unauthorized insurer -all of the above
any agent involved in the transaction who knew, or reasonably should have known, that the insurance contract was made with an unauthorized insurer
38. If a domestic insurer has held a certificate of authority for less than three years, how often must the Office of Insurance Regulation conduct an examination? as often as warranted at least once every year at least once every three years at least once every five years
at least once every year
30. Insurable Interest must exist at the time of the claim at the time of the application at the time of underwriting the risk at any time during the life of the contract
at the time of the application
Which of the following statements regarding insurable interest is NOT correct? a. Insurable interest exists when the applicant is the insured. b. A policy obtained by a person without an insurable interest in the insured can be enforced. c. The applicant must be subject to loss upon the death, illness or disability of the insured. d. Generally, the person to be insured must give his or her consent before a policy is issued, even if the applicant has an insurable interest.
b. A policy obtained by a person without an insurable interest in the insured can be enforced.
Which of the following is a distinguishing element of an insurance contract? a. Offer and acceptance b. Conditional c. Consideration d. Competent parties
b. Conditional
Which of the following statements about authority is NOT correct? a. Express authority is granted by means of the agent's contract. b. Express authority is determined by a principal's conduct. c. Implied authority is not overtly extended to the agent's contract, but does permit many of the agent's operations. d. Apparent authority can be assumed from the actions of the principal.
b. Express authority is determined by a principal's conduct.
Which of the following best describes the function of insurance? a. It is a form of legalized gambling. b. It spreads financial risk over a large group to minimize the loss to any one individual. c. It protects against living too long. d. It creates and protects risks.
b. It spreads financial risk over a large group to minimize the loss to any one individual.
Which of the following statements is CORRECT? a. Only speculative risks are insurable. b. Only pure risks are insurable. c. Both pure risks and speculative risks are insurable. d. Neither pure risks nor speculative risks are insurable.
b. Only pure risks are insurable.
Which of the following statements describes an insurable interest? a. The policy owner must expect to benefit from the insured's death. b. The policy owner must expect to suffer a loss when the insured dies or becomes disabled. c. The beneficiary, by definition, has an insurable interest in the insured. d. The insured must have a personal or business relationship with the beneficiary.
b. The policy owner must expect to suffer a loss when the insured dies or becomes disabled.
An insurer is considered competent if it a. is registered with NAIC b. is licensed or authorized by the state with a certificate of authority c. follows the Code of Ethics of the state Office of Insurance Regulation d. is registered with the Securities and Exchange Commission
b. is licensed or authorized by the state with a certificate of authority
All of the following are reasons why it is seldom in the best interest of a policyholder to replace a life insurance policy with a new one EXCEPT a. most of the first year premium is swallowed up in commission b. replacement policies are never in the best interest of the policy owner c. the premium is higher because the insured is older d. waiting periods begin anew
b. replacement policies are never in the best interest of the policy owner
55. The opposite of a unilateral contract is a: collateral contract multi-lateral contract bilateral contract omni-lateral contract
bilateral contract
Which of the following statements describe the parol evidence rule? a. A written contract cannot be changed once it is signed. b. An oral contract cannot be modified by written evidence. c. A written contract cannot be changed by oral evidence. d. An oral contract takes preference over any earlier written contracts.
c. A written contract cannot be changed by oral evidence.
All of the following actions are examples of risk avoidance EXCEPT: a. Bill won't fly in an airplane b. Wendy keeps her money out of the stock market c. Pat pays his insurance premium c. John never drives a car
c. Pat pays his insurance premium
Which of the following is an example of churning a. Illegally inducing a person to drop existing insurance to purchase similar coverage with another agent or company b. Rephrasing a policy provision in such a way that it says just the opposite of the original c. Replacing a policy for another with the same insurer with the intent of earning additional premiums or commissions d. Representing an insurance policy as a retirement plan
c. Replacing a policy for another with the same insurer with the intent of earning additional premiums or commissions
"An insurance contract is prepared by one party, the insurer, rather than by negotiation between the contracting parties." Which of the following statements explains this characteristic of insurance contracts? a. The insurance contract is an aleatory contract. b. The insurance contract is a contract of acceptance. c. The insurance contract is a contract of adhesion. d. The insurance contract names only the insurer as the competent party.
c. The insurance contract is a contract of adhesion.
An insurance company organized and headquartered in Florida can be described as what type of company in Florida? a.Alien b. Home-based c. Foreign d. Domestic
d. Domestic
Which of the following statements regarding the utmost good faith in insurance contracts is CORRECT? a. The concept of utmost good faith - that there is no attempt to conceal, disguise, or deceive - applies only to the insurer. b. Although a warranty is a statement, it is not technically part of the contract. c. A representation is a statement that the applicant guarantees to be true. d. Most state insurance laws consider statements made in an application for an insurance policy to be representations, not warranties.
d. Most state insurance laws consider statements made in an application for an insurance policy to be representations, not warranties.
Competent parties who can enter into insurance contracts are a. applicants b. trusts and estates c. business entities d. all of the above
d. all of the above
All of the following methods support the sale of insurance through agents and brokers EXCEPT a. independent agency system b. personal producing general agency system c. career agency system d. direct selling system
d. direct selling system
The Buyer's Guide is intended to accomplish all of the following EXCEPT a. helps buyers choose the most suitable plan b. explain basic product features c. provide information about the recommended policy d. ensures that buyers obtain the lowest price for insurance
d. ensures that buyers obtain the lowest price for insurance
Who is responsible for reporting suspicious activity concerning money laundering? a. the insurance company b. the producer c. no one d. the producer and the company
d. the producer and the company
57. Another name for a home service company is: industrial debit door to door neighborhood
debit Home service, or debit companies, offer industrial insurance, for which the premiums are collected at the home of the insured on a weekly basis for small face amounts, usually $1000 - $3000.
75. The "right of subrogation" means the insurance company may acquire the right of the insured against liable third parties, those that may have contributed to the loss, in the event a claim is paid. This could be found in which type of contract? a life insurance contract a valued contract disability contracts indemnity contracts
indemnity contracts
75. Which of the following would make rebating a prohibited practice? rebating to all in the same actuarial class maintaining copies of all rebating schedules for the most recent 3 years maintaining copies of all rebating schedules for the most recent 5 years rebating without regard to discrimination
maintaining copies of all rebating schedules for the most recent 3 years
41. All of the following are characteristics of a mutual insurance company except: management elects the board of directors the policyowners are the owners of the company dividends, if any, are paid to the policyowners it must be incorporated in order to operate
management elects the board of directors The policyowners have the right to elect the board of directors.
72. Long Life, a stock insurance company, transfers ownership of the company to the policy holders. This process is called: an illegal act de-mutualization mutualization a mutual-stock combinational company
mutualization
61. All of the following would be found under the Unfair Trade Practices Act except: false advertising coercion discrimination rebating
rebating Rebating is not an illegal act. However, there are strict guidelines that must be adhered to. If one were to discriminate while rebating, this would make rebating an illegal act because discrimination is covered under the unfair trade practices act.
12. All the following are major areas in which the Chief Financial Officer and the Office of Insurance Regulation are involved except: regulating banks with-in the state regulating policy forms, provisions and rates assessing insurer solvency issuing certificates of authority
regulating banks with-in the state
23. Hoggie was licensed in March of 2010 and was appointed in April of the same year. In March of 2011 Hoggie gave up his appointment but maintained his license with the intent of returning to the business at a later time. What must Hoggie do to get reappointed in April of 2015? apply to the insurance company for reappointment pay all late fees and reapply for the appointment retake the examination continue to flip burgers and forget about it
retake the examination
73. Willful violation of the Insurance code is a: third degree felony second degree misdemeanor first degree felony first degree misdemeanor
second degree misdemeanor
57. The term agent may include all of the following except: service representative life agent health agent title agent
service representative
1. Adding a rider or endorsement to a policy without the client's knowledge or telling them that the rider or endorsement is required by law would be an example of coercion intimidation tacking on sliding
sliding
3. Concealing coverage within a policy is considered: fraud sliding misrepresentation rebating
sliding
79. Adding on coverages without the knowledge of the insured/applicant is an example of: excess charges sliding rebating excess insurance
sliding
98. Principle of agency law refers to the relationship between which two parties? the career agent and the general agent the career agent and the personal producing general agent the captive agent and the general agent the agent and the company
the agent and the company
9. The state would require an agent's home office to be licensed as an "insurance agency" if: the agent advertised in the yellow pages the agent had client meetings at Starbucks the agent hung out a sign on the front lawn the agent had more than $50,000 in revenue
the agent hung out a sign on the front lawn
16. Which of the following is not an example of an insurable risk? the loss must be catastrophic the loss must be due to chance the loss must be predictable the loss must be measurable
the loss must be catastrophic
100. The USA PATRIOT Act was created: to prevent a non-U.S. citizen from being a named insured to prevent a non-U.S. citizen from being a named beneficiary to prevent alien companies from operating in the U.S. to protect against terrorism & money laundering
to protect against terrorism & money laundering
72. A company that charges different premiums for people in the same actuarial class could be found guilty of: twisting unfair discrimination segregation unfair trade practices
unfair discrimination
20. An agent's license will terminate if he or she allows how many years to pass without an appointment? Two years Four years Five years Six years
Medicaid
2. Which of the following statements concerning rebating is not correct? The rebate must be available to all insureds in the same actuarial class The percentage of rebate cannot discriminate Rebates should be given to insureds who purchase a policy from an insurer that prohibits rebating Rebating is legal in Florida
Rebates should be given to insureds who purchase a policy from an insurer that prohibits rebating
47. The Financial Services Modernization Act: Repealed the Glass-Steegal Act Prohibits banks from selling more than $50,000 of total life insurance on any one life Prohibits banks from selling life insurance Prohibits insurance companies from engaging in banking
Repealed the Glass-Steegal Act
18. An applicant for a health policy has a heart condition of which he is unaware and therefore he answers "no" to the question pertaining to heart problems. His answer is considered to be a: Warranty Concealment Fraudulent answer Representation
Representation
62. Sonny submitted an application, with the first month's required premium, to the insurance company for $100,000. The company issued the policy as applied for. Which statement is true? The company made the offer and Sonny accepted. Sonny made the offer and the company accepted. The agent soliciting the application made the offer on behalf of the company. It depends.
Sonny made the offer and the company accepted.
45. An applicant has been denied insurance coverage because of information contained in a consumer report. According to the Fair Credit Reporting Act, all of the following statements are true about this situation EXCEPT: -The applicant has the right to obtain a copy of the consumer report directly from the insurance company that used the report. -The applicant has the right to obtain disclosure of the substance of the information in the consumer report from the reporting agency. -The applicant has the right to obtain the names of all people contacted within the past 6 months. -Applicants must be notified within 3 days that a report has been requested.
The applicant has the right to obtain a copy of the consumer report directly from the insurance company that used the report.
71. Which of the following is true regarding a STOLI or IOLI? These are usually sold by persuading seniors to purchase life insurance for the benefit of an investor. These are usually sold by persuading young people to purchase life insurance for the benefit of an investor. These are usually sold by persuading disabled persons to purchase life insurance for the benefit of an investor. This is a mixed drink I could use right about now.
These are usually sold by persuading seniors to purchase life insurance for the benefit of an investor.
58. Which is true about the net payment cost comparison index and the surrender cost comparison index? They are found at the end of the policy They are found in the policy summary They are found in the entire contract They must be presented at policy delivery
They are found in the policy summary
73. Which of the following is not true concerning "stock" insurance companies? They sell only non-participating policies They sell both par and non-par policies They seek a profit for their stockholders They may operate on the mixed plan
They sell only non-participating policies
5. Which of the following statements is/are true? Twisting is internal replacement Churning is external replacement Twisting is replacement with misrepresentation Twisting and churning are dance numbers
Twisting is replacement with misrepresentation
Which of the following statements does NOT describe an element of an insurable risk? a. The loss must not be due to chance. b. The loss must be definite and measurable. c. The loss cannot be catastrophic. d. The loss exposures to be insured must be large.
a. The loss must not be due to chance.
How many hours of continuing education in law and ethics does an agent need every two years? a. five hours b. seven hours c. 20 hours d. 24 hours
a. five hours
In an insurance transaction, licensed agents legally represent which of the following? a. insurer b. applicant and insured c. state office of insurance regulation d. themselves
a. insurer
Which of the following is not true concerning a Risk Retention Group? a. it insures a group of separate businesses b. is insures members of the same occupation c. is a mutual company d. all insureds own the company
a. it insures a group of separate businesses
Which of the following statements regarding the National Association of Insurance Commissioners (NAIC) is NOT correct? a. the NAIC is empowered to prosecute and punish criminal violators in the insurance industry. b. the NAIC seeks to preserve state rather than federal regulation of the insurance industry. c. the NAIC promotes uniformity in state insurance laws and regulations. d. the NAIC seeks to promote efficient administration of insurance laws and regulations.
a. the NAIC is empowered to prosecute and punish criminal violators in the insurance industry.
65. The tendency for less favorable risks to seek or continue insurance is known as: catastrophic loss adverse selection questionable moral standards questionable morale standards
adverse selection
14. An insurance contract is: not a personal contract a conditional contract a contract of adhesion all of the above
all of the above
40. Which of the following is not a valued contract? a variable universal policy A disability policy an accidental death and dismemberment policy an 80/20 major medical policy
an 80/20 major medical policy
68. Andy the agent was fired by the general agent three months ago for conduct "unbecoming". Andy's general agent later was known to accept business that Andy had written after having been fired. One of these policy holders died before the policy was issued but had paid the required premium. Assuming the applicant had been insurable at standard rates, the company would pay because of: apparent authority implied authority expressed authority agency law
apparent authority
A reinsurer is a company that a. accepts all the risk from another insurer b. assumes a portion of the risk from another insurer c. cedes the risk d. does not take any risk
b. assumes a portion of the risk from another insurer
Tom buys his wife Mary a $50,000 diamond ring. When she is not wearing the ring, she keeps it in a safe deposit box at a local bank. This is an example of risk a. avoidance b. reduction c. retention d. transference
b. reduction
The State Guaranty Association guarantees a. that a policy will be issued b. that the claim will be paid if the insurer becomes insolvent c. that dividends will be paid d. the rate of return on a policy
b. that the claim will be paid if the insurer becomes insolvent
Which of the following insurance concepts is founded on the ability to predict the approximate number of deaths or frequency of disabilities within a certain group during a specific time? a. Principle of large loss b. Quantum insurance principle c. Indemnity law d. Law of large numbers
d. Law of large numbers
The head of a state office of insurance regulation is generally responsible for all the following EXCEPT a. licensing and supervising agents and brokers b. overseeing insurance companies' marketing practices c. issuing rules and regulations d. making insurance laws
d. making insurance laws
41. Lloyd's of London: insures unusual perils does not insure anything is an insurance company specializing in unusual risks
does not insure anything
8. Which of the following is not true concerning a Risk Retention Group? it insures a group of separate businesses is insures members of the same occupation is a mutual company all insureds own the company
it insures a group of separate businesses
29. The principle that the large amount of exposures that are combined into a group, the more certainty there is to the amount of loss incurred in any given period is known as: loss sharing the law of large numbers pooling of risks mortality tables
the law of large numbers
39. An applicant for insurance denied having ever been diagnosed with heart problems when in fact he had recently had triple bypass surgery. How long does the company have to uncover this fact? one year two years five years Fraud is forever contestable.
two years
28. Which of the following gives the state their ability to fine, issue cease and desist orders and impose penalties? unfair trade practices act unfair claim settlement practices act the Code of Ethics of the FAIFA the McCarran-Ferguson Act
unfair trade practices act
Which of the following statements regarding types of insurers is NOT correct? a. Reinsurers usually deal with group policy owners. b. Mutual insurance companies are "owned" by their policy owners. c. Stock insurance companies seek a profit for their shareholders. d. Fraternal benefit societies must be nonprofit organizations.
a. Reinsurers usually deal with group policy owners.
26. Which of the following statements best describes an element of an insurable risk? 1. The loss must be due to chance. 2. The loss must be definite and measurable. 3. The loss must not be catastrophic. 4. The loss exposures to be insured must be large. 1 & 2 1, 2, & 3 2 & 3 All the above
All the above
54. Which of the following statements about representations and warranties is/are true? 1. If a warranty is untrue the company may cancel the contract 2. If a representation is untrue the company can not cancel the contract unless it is a material fact. 1 only 2 only Both 1 and 2 Neither 1 nor 2
Both 1 and 2 A representation is a statement that you believe to be true and once it becomes part of the contract, it becomes a warranty. Warranties and representations can only void the policy if they are a material fact, a fact that could have been used by the insurer to issue or not to issue the policy.
17. Which of the following denotes an "element of chance"? Conditional Aleatory Adhesion Utmost good faith
Aleatory
3. The policyowner/insured of a $100,000 life insurance policy died of a heart attack four months after taking out the policy. The company then learned that the insured had been treated for a heart condition nine months prior to being insured, but the fact had been omitted from the application. Which course of action would the company likely follow? 1. The company had to pay the death benefit because the discrepancy was not uncovered prior to the insured's death. 2. The company had to pay the death benefit because the contract is incontestable after the payment of the initial premium. 3. The company will not have to pay the death benefit, but will return the premiums. 1 only 2 only 3 only 1 & 2
3 only
6. An insurable interest must exist when: A life insurance policy is issued Death proceeds become payable Policy ownership is transferred Cash values are borrowed
A life insurance policy is issued
56. If an insured did not pay his premium the company may or may not exercise their right to cancel the policy. This would apply to which of the following contracts? A void contract A voidable contract An implied contract A verbal Contract
A voidable contract
69. Which of the following is/are true concerning the NAIC? They are instrumental in developing guidelines and model legislation They develop standards for policy provisions They created the Unfair Trade practices act and the Advertising Code All of the above
All of the above
In Florida, properly licensed and appointed agents may act as brokers in insurance transactions, in which case they may legally represent a. the insurer b. the applicant and insured c. the state office of insurance regulation d. themselves
b. the applicant and insured This is a "bad" question. The manual states that there are NO brokers....But, if there were, the broker would represent the client....
Buying insurance is one of the most effective ways of a. avoiding risk b. transferring risk c. reducing risk d. retaining risk
b. transferring risk
In addition to the state, the organization that regulates variable life and variable annuities is the a. Federal Trade Commission (FTC) b. National Association of Insurance Commissioners (NAIC) c. Securities and Exchange Commission (SEC) d. Federal Communications Commission (FCC)
c. Securities and Exchange Commission (SEC)
Producers are expected to adhere to all of the following standards to protect consumers and promote suitable sales EXCEPT a. selling to customers' needs b. determining the suitability of recommended products c. assessing prospects financial ability to pay commissions d. full and accurate disclosure
c. assessing prospects financial ability to pay commissions
A life insurance company, organized in Illinois, with its home office in Philadelphia, is licensed to conduct business in Florida. In Florida, this company is classified as a(n) a. domestic company b. alien company c. foreign company d. regional company
c. foreign company
A tornado is an example of a a. physical hazard b. speculative risk c. peril d. moral hazard
c. peril
Regarding landmark cases and laws involving the regulation of insurance, which of the following statements is NOT correct? a. Insurers are required to disclose when an applicant's consumer/credit history is being investigated. b. the Securities and Exchange Commission (SEC) may regulate insurers that sell variable annuities and variable life insurance. c. the Federal Trade Commission (FTC) directly supervises all insurance marketing activities. d. the McCarran-Ferguson Act (1945) led directly to our current understanding that the insurance industry is predominantly regulated by the states
c. the Federal Trade Commission (FTC) directly supervises all insurance marketing activities. (it's NAIC)
In the insurance business, risk can best be defined as: a. sharing the possibility of loss b. uncertainty regarding the future c. uncertainty regarding financial loss d. uncertainty regarding when death will occur
c. uncertainty regarding financial loss
61. Because an insurance contract has been prepared by an insurance company without negotiation, it is considered a/an aleatory contract contract of adhesion personal contract unilateral contract
contract of adhesion
