Exam sim #1

C was injured while deep sea diving and requires a hospital stay. C has a Major Medical policy with a 80/20 coinsurance clause and a $400 deductible. What is the MAXIMUM C will pay if the covered medical expenses are $2000?

$720

____ of personal life insurance premiums is usually deductable for federal income tax purposes

0%

In Florida, monthly-premium health insurance policies must provide a grace period of at least

10 days

What percentage of eligible persons must a policy cover in a noncontributory group?

100%

The minimum age at which a person can sign a life insurance application is

15 years

A 15-year mortgage is best protected by what kind of policy?

15-year decreasing term

An insurance company cna contest a life insurance contract due to application fraud within

2 years

Employers with less than __ employees are affected by Florida's Health Insurance Coverage Continuation Act (Mini COBRA).

20

Eligibility for coverage under the Florida Healthy Kids Corporation requires a family to be within ______ of the federal poverty level

200%

A group plan was recently terminated. In Florida, how many days are covered individuals guaranteed coverage after a group plan's termination?

31 days

A ___ day notice to the policyholder is required for any health insurer that wishes to cancel a health policy

45

What do Dread Disease policies cover?

A specific disease or illness

Which of the following types of policies pays a benefit if the insured goes blind?

AD&D

When a policyowner cash surrenders a Universal Life insurance policy in it's early years, this may be considered a red flag for a(n)

Anti-Money Laundering violation

When can a policyowner change a revocable beneficiary?

Anytime

Before a life insurance policy is issued, which of these components of the contract is required?

Applicant's signature on application

When does a Probationary Period provision become effective in a health insurance contract?

Athe the policys inception

All of the following are nonforfeiture options EXCEPT

Automatic Premium Loan Option

Accidental Death coverage is provided to commercial airline passengers in which of the following types of policies?

Blanket Accident policy

Which of the following is an example of Unfair Trade Practice?

Coercion

The policy summary contains specific information on all of the following, EXCEPT:

Comission

An employee with $25,000 group term life coverage was recently fired. This employee's group coverage may be converted to a

$25,000 Individual Whole Life Policy

S takes out a health insurance policy which contains a provision that states that the agent does not have the authority to change the policy or waive any of its provisions. Which health policy provision is this?

Entire Contract

Which of the following is NOT included in the policy face?

Exclusions

Which Federal law allows an insurer to obtain an inspection report on a potential insured?

Fair Credit Reporting Act

A Multiple Employer Welfare Arrangement (MEWA) provides what type of benefits?

Insurance

Which statment regarding third-party ownership of a life insurance policy is true?

It is used extensively in estate-planning as well as business circumstances

Which Unfair Trade Practice involves making a false statement on an insurance application in order to receive money from an insurer?

Misrepresentation

In a life insurance policy, which provison states who may be select policy options, designate and name a beneficiary, and be the recipient of any financial benefits from the policy?

Owner's Rights

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

Insurance policies are considered aleatory contracts because

Performance is conditioned upon a future occurance

K is the insured and P is the sole beneficiary on an Accidental Death and Dismemberment (AD&D) insurance policy. Both are involved in a fatal accident where K dies before P. Under the Common Disaster provision, which of these statements is true?

Proceeds will be paid to P's Estate

T is covered by an Accidental Death and Dismemberment (AD&D) policy that has an irrevocable beneficiary. What action will the insurance company take if T requests a change of beneficiary?

Request of the change will be refused

Which of the following are equity indexed annuities invested in?

S&P 500

A(n) _____ Rider may be used to include coverage for children under their parents' life insurance policy.

Term

Which of the following factors is not considered when the department of financial services determines if an agent's home is an insurance agency?

The amount of premium collected at this location

The Cash value in a(n) _____ life policy may fluctuate to reflect changing assumptions regarding mortality cost, interest, and expense factors.

Universal

What type of annuity has a cash value that is based upon the performance of it's underlying investment funds?

Variable

Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options?

Variable Life

When must insurable interest be present in order for a life insurance policy to be valid?

When the application is made

If an insurance company issues a Disability Income policy that it cannot cancel or for which it cannot increase premiums, the type of renewability that best desribes this policy is called

noncancellable

The benefits under a disability buy-out policy are:

payable to the company or another shareholder

To be eligible for social security disability benefits, an employee must be unable to perform:

any occupation

Which of the following is NOT required in the Outline of Coverage for a health insurance policy?

projection of the policy's future costs

A long-term care lapse notice must be delivered to the applicant and

secondary addressee

Which statement regarding key employee life policy is NOT true?

the benediciary is named the key emmployee

A policy that becomes a Modified Endowment Contract (MEC)

will lose many of its tax advantages

An agent's license can be suspended or revoked by

writing primarily controlled business

Under a Graded Premium policy, the premiums

are lower during the policy's early years

M completes an application for life insurance but does not pay the initial premium. All of these actions must occur before M's policy goes into effect EXCEPT

free-look period has expired

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

A 45 year-old woman won $100,000 in a scratch off lottery ticket. She purchased an annuity that will pay her $1,500 per month beginning at age 60. Which of these annuities did this woman purchase?

Deferred Fixed Annuity

A characteristic of Preffered Provider Organizations (PPOs) would be:

Discounted fees for the patients

Under a trustee group life policy, who would be eligible for a certificate of coverage?

Employee

Which provision prevents an insurer from changing the terms of the contract with the policyowner by referring to documents not found within the policy itself?

Entire contract provision

S is close to retiring and would like to purchase a policy that will yield greater gains than bonds, but will still protect the principal with a minimum level or risk. Which product would S be advised to purchase?

Equity index insurance

Which of the following is an example of a nonforfeiture option?

Reduced Paid-Up option

M purchased an Accidental Death and Dismemberment (AD&D) policy and named his son as beneficiary. M has the right to change the beneficiary designation at anytime. What type of beneficiary is his son?

Revocable

What does a 401(k) plan generally provide its participants?

Salary-deferral contributions

What kind of life insurance product covers children under their parent's policy?

Term rider

The part of a life insurance policy guaranteed to be true is called a(n)

Warranty

Which of these is considered a statement that is assured to be true in every respect?

Warranty

Group health plans typically contain a coordination of benefits (COB) provision. This provision's purpose is to

avoid the duplication of benefit payments

Medicare Part A and Part B do NOT pay for

dental work

In Florida, an insurer domiciled and incorporated in this state is called a(n)

domestic company

Dividens paid from a life insurance policy are

issued by the insurer

Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies?

policyowner

A life policy loan in Florida cannot charge a fixed rate of interest higher than

10%

All of the following entries are classified under the four pricipal areas of Florida Insurance law EXCEPT

an agents comission

Which of the following situations does NOT apply to the florida replacement rule?

an existing policyholder purchases an additional policy from the same insurer

K is insured under a Group Life Insurance policy. K is considered to be a(n)

certificate holder

Which of the following statements about a Guaranteed Renewable Health Insurance policy is CORRECT?

Premiums normally increase at time of renewal

A foreign insurance company doing business in Florida

is a company that was formed under the laws of another state

What is the excise tax rate the IRS imposes on individuals aged 70 1/2 or older who do not take the required minimum distributions from their qualified retirement plan?

50%

What is Medicare?

A hospital and medical expense insurance program

Before a life policy is issued, which of these contract elements is necessary?

A signed application by the prospect

When funds are shifted straight from one IRA to another IRA, what percentage of the tax is withheld?

None

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)

Which of the followinf statements describes what an accidental and health policy owner may NOT do?

Adjust the premiums

Which of the following statements is correct regarding an employer/employee group health plan?

The employer receives a master policy and the employees receive certificates

J's Major Medical policy has a $2,000 deductible and an 80/20 Coinsurance clause. If J is hospitalized and receives a bill for $10,000, J would pay

$3,600

M has a Major Medical insurance policy with a $200 flat deductible and an 80% Coinsurance clause. If M incurs a $2,200 claim for an eligible medical expense, how much will M receive in payment for this claim?

$1,600

Upon policy delivery, a signed good health statement is requested from the applicant. Why would this be necessary?

The initial premium was NOT submitted with the application

What type of life insurance incorporates flexible premiums and an adjustable death benefit?

Universal life

The free-look provision begins

Upon receipt of the policy by the policyowner

An agent that sells ________ Life insurance MUST be registed with the Financial Industry Regulatory Authority (FINRA).

Variable

W is a 39-year old female who just purchased an annuity to provide income for life starting at age 60. All of these would be acceptable annuity choices EXCEPT a(n)

Immediate Annuity

Which of the following is TRUE if the owner of an IRA names their spouse as a beneficiary, but then dies before any distributions are made?

The account can be rolled into the surviving spouse's IRA

Within how many days after policy delivery can a medicare supplement policy be returned for a 100% premium refund?

30

According to florida law, an additional lapse notice must be issued after the standard grace period has expired for policyowners age

64 years or older

The insured and insurance company will share the cost of covered losses under which health policy feature?

Payment of Claims provision

Q applied for life insurance and submitted the initial premium on January 1. The policy was issued February 1, but it was not delivered by the agent until February 7. Q is dissatisfied and returns the policy February 13. How will the insurer handle this situation?

Policy was returned within the free-look period, premium will not be refunded

K is the insured and P is the sole beneficiary on a life insurance policy. Both are involved in a fatal accident where K dies before P. Under the Common Disaster provision, which of these statements is true?

Proceeds will be payable to K's estate if P dies within a specifed time

Which of these factors does not influence how much time consumers spend searching for information?

Self-maintance expenses

Which of the following types of permanent life insurance policies offers the highest initial cash value?

Single premium

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?

The cost

A person insured under a health policy is required to give the insurance company a Notice of Claim within how many days after a covered loss?

20

Insurer may request a hearing within _____ if their policy is rejected

20 days

P received Disability income benefits for 3 months then returns to work. She is able to work one month before her condition returns, leaving her disabled once again. What would the insurance company most likely regard this second period of disability as?

A reccurent disability

Under a Long Term Care policy, which benefit would be typically excluded or limited?

Alchohal rehabilition

Which of the following can an agent provide to help a prospective client understand and purchase the most appropraite product?

Buyer's guide

Which required disclosure helps a buyer choose the amount and type of insurance to buy, and how to save money by comparing the cost of similar policies?

Buyer;s Guide

What type of employee welfare plans are not subject to ERISA regulations?

Church plans

Which of these policies may NOT have the Automatic Premium Loan Provision attached to it?

Decreasing Term

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

P, age 50, purchased an annuity that P will fund with $500/ month for 15 years. The annuity will then pay P retirement payments after the 15 years. Which type of annuity did P purchase?

Deferred

With Accidental Death and Dismemberment policies, what is the purpose of the Grace Period?

Gives the policyowner additional time to pay overdue premiums

Bryce purchased a disability income policy with a rider that guarantees him the option of purchasing additional amounts of coverage at predetermined times without requiring to provide evidence of insurability. What kind of rider is this?

Guaranteed insurability rider

T owns an Accident & Health policy and notifies her insurance company that she has chosen a less hazardous occupation. Under the Change of Occupation provision, which of the following actions may her insurance company take?

Increase her policy's coverage amount

In a Key employee life insurance policy, the third party owner can be all of the following, EXCEPT:

Insured

Which of the following actions may NOT be taken by an insurance company to insure a substandard applicant for disability income coverage

Lengthen the contestability period

Which of the following BEST describes how a policy that uses the "accidental bodily injury" definiton of an accident differs from one that uses the "Acidental means" defintion

Less restrictive

An insured's inability to perform two or more activities of daily living may trigger which type of policy rider?

Long term care

What is the Main reason for regulating the insurance industry?

Maintain the solvency of insurance companies

A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid:

Mandatory income tax withholding on the transfer amount

According to Florida law, which of the following information does NOT need to be obtained by an agent reccomending an annuity purchase?

Marital status

Under an Individual Disability policy in Florida, what is the minimum schedule of time in which claims must be made to an insured?

Monthly

Which of the following is TRUE about a qualified retirement that is "Top heavy"?

More than 60% of plan assets are in key employee accounts

If a corportation pays the premium on a group life policy for its employees, the corporation is required to report how much additional taxable income for each employee?

Nothing

P and Q are married and have three children. P is the primary beneficiary on Q's Accidental Death and Dismemberment (AD&D) policy and Q's sister R is the contingent beneficiary. P, Q, and R are involved in a car accident and Q and R are killed instantly. The Accidental Death benefits will be paid to

P only

What does Medicare Parts A and B cover?

Part A covers hospitalization; Part B covers doctor's services

What is the purpose of the time of payment of claims provision?

Prevents delayed claim payments made by the insurer

Which of the following is considered to be the time period after a health policy is issued, during which no benefits are provided for illnes

Probationary period

D is an architect receiving Disability Income benefits who is not able to return to work full time, but can work on a part-time basis. Which of these features would allow D to continue receiving benefits?

Residual benefit clause

S buys a $10,000 Whole Life policy in 2003 and pays an annual premium of $100. S dies 5 years later in 2008 and the insurer pays the beneficiary $10,500. What kind of rider did S include on the policy?

Return of premium rider

Agent J takes an application and initial premium from an applicant and sends the application and premium check to the insurance company. The insurance company returns the check back to J because the check is made out to J instead of the insurance company. What action should J take?

Return to the customer, collect a new check made out to the insurance company, and send the new check out to the insurance company

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

Which of the following is the reimbursment of benefits for the treatment of a beneficiary's injuries coased by a third party?

Subrogation

Which policy requires an agent to register with the National Association of Securities Dealers (NASD) before selling?

Variable Life

Life insurance immediately creates an estate upon the death of an insured. which of the following policies is characterized by a guaranteed minimum death benefit?

Varible Life

A Life insurance policy owner may sell their policy to a(n) ______ in order to receive a percentage of the policy's face value.

Viatical settlement provider

At what point does a Whole Life Insurance policy endow?

When the cash value equals the death benefit

An agent gives a conditional receipt to a client for an insurance policy after collecting the initial premium. When will the policy become effective?

When the conditions of the receipt are met

What type of insurance offers permanent life coverage with premiums that are payable for life?

Whole life

In Florida, the underwriting and issuance of a master group health policy requires that all employees

are elligible to participate, regardless of their individual health history

When is it acceptable to share commissions with another agent?

as long as both agents are licensed for the same lines of insurance

A life insurance application must be signed by all of these, EXCEPT:

beneficaiary

All individuals covered under a group contract will receive a(n)

certificate

An individual covered under a Group Life insurance policy is considered to be a(n)

certificate holder

One definition of replacement is "the act of replacing an existing insurance policy with another". Replacement is

closely regulated and required full disclosure

A business Overhead Expense policy:

covers business expenses such as rent and utilities

Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it?

decreasing term

The act of an insurance company publishing misleading information about its policy's provisions is called

false advertising

A Nonforfeiture clause gives the policyowner

guaranteed values even if the policy has lapsed

Insurers/agents must, in Florida, offer and issue all small employer health plans on _____ basis:

guaranteed-issue

Basic Medical Expense Insurance

has lower benefit limits than Major Medical insurance

The Health Insurance Portability and Accountability Act (HIPAA) gives privacy protection for:

health information

Medicare Part B does NOT cover

inpatient hospital services

A stock insurance company

is owned exclusively by its shareholders

An employer that offers a qualified retirement plan to its employees is eligible to

make tax-deductable contributions to the plan

Asset protection can be provided by a long-term care partnership policy if the policy holder qualifies for

medicaid

During the course of an insurance transaction, if an agent makes a false or incomplete statement, he/she could be found guilty of

misrepresentation

Periodic health claim payments MUST be made at least

monthly

Which of these is NOT considered to be an element of an insurance contract?

negotiating

An accident policy will most likely pay a benefit for a(n)

off-the-job accident

Deductibles are used in health policies to lower

overuse of medical services

Under a life insurance policy the ___ has the authority to name the beneficiary?

owner

A major medical policy typically:

provides benefits for reasonable and necessary medical expenses, subject to policy limits

Under a Renewable Term policy,

the renewal premium is calculated on the basis of the insured's attained age

What is issued to each employee of an employer health plan?

Certificate

In Florida, which of the following is considered an Unfair Trade Practice?

Coercion

Which provision allows the policyowner to change a term life policy to a permanent one without providing proof of good health?

Conversion

K is an insured under a life insurance policy owned by a third party. Which of these statements is true?

K has no ownership rights

A sole propietor may use this plan ONLY if the employees of this business are included

Keogh Pension Plan

What type of group insurance plan involves employees sharing the cost?

contributory plans

When a policy owner exchanges a term policy for a whole life policy without providing proof of good health which of these apply?

conversion provision

The Financial Services Commission may hold hearings

for any reason deemed necessary

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 privilges in a group life policy?

Group life coverage can be converted to an individual policy at regular rates on an attained-age basis.

Which requirment must be met for an associaction to be eligible for a group life plan?

Group was formed for a purpose other than aquiring insurance

What is the elimination period of an individuals disability policy?

Time period a disabled person must wait before the benefits are paid

Which type of policy contains a monthly mortality charge as well as self-directed investment choices?

Variable Universal Life

A contract where one party either accepts or rejects the terms of a contract written by another party is called a contract of

adhesion

An example of an unfair trade practice is

an agent making a material misrepresentation to the insured

Which of the following health insurance policy provsions specifies the health care services a policy will provide?

insuring clause

In health insurance policies, a waiver of premium provision keeps the coverage in force without premium payments:

After an insured has become totally disabled as defined in the policy

Insurance companies that are organized in countries outside the United States are referred to as

Alien

Under Florida law, a variable annuity policyowner must be notified of the accumulated value of the contract

once each year

Which mode of payment is NOT used by health insurance policies?

single premium

Life and health insurance policies are:

unilateral contracts

A potential client, age 40, would like to purchase a whole life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct?

20-Pay life accumulates cash value faster than straight life

All are true statements regarding the underwriting process, EXCEPT:

AIDS and HIV virus exams can be conducted in a discriminatory fashion

Which statement about a whole life policy is true?

Cash value may be borrowed against

Which of the following organizations would make reimbursment payments directly to the insured individual for covered medical expenditures?

Commercial insurer

Additional coverage can be added to a whole life policy by adding a(n):

Decreasing term rider

Which of the following does Social Security NOT provide benefits for?

Dismemberment

Term insurance has which of the following characteristics?

Expires at the end of the policy period

A long-term care rider in a life insurance policy pays a daily benefit in the event of which of the following?

Inavility of the insured to perform more than 2 Activities of Daily Living (ADL's)

Information obtained from a phone conversation to the proposed insured can be found in which of these reports?

Inspection Report

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 ______ clause identifies which losses resulting from an accident or sickness are insured by the policy.

Insuring

Under Florida law, which of the following provisions is NOT required in a Medicare Supplement policy?

Limitation on pre-existing conditions for up to 12 months

Which type of policy is considered to be overfunded, as stated by IRS guidelines?

Modified Endowment Contract

When a life insurance policy exceeds certain IRS table values, the result would create which of the following?

Modified Endowment Contract (MEC)

All of these insurance products require an agent to have proper FINRA securities registration in order to sell them EXCEPT for

Modified Whole Life

Which of these life products is NOT considered interest-sensitive?

Modified Whole Life

Which of the following documents must an insurance agent submit to the replacing insurance company during the replacement of an existing life insurance policy?

Notice to existing and replacing insurers of intention to replace

Which department oversees 'Market Conduct Examinations' In Florida?

Office of Insurance Regulation

An applicant's medical information received from the Medical Information Bureau (MIB) may be furnished to the

applicant's physician

the automatic premium loan provision is designed to:

avoid a policy lapse

The Legal Actions provision of an insurance contract is designed to do all of the following EXCEPT

protect the producer

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