Practice Questions XCEL (Section 7-8 (17-18))

What is the required minimum percentage of employee participation for a noncontributory group health insurance plan according to Florida Law? A. 0% B. 25% C. 75% D. 100%

A. 0% (Most noncontributory group health plans require 100% participation by eligible members. Under Florida law, there is no specific minimum percentage for employees covered by employee group health insurance)

What do Dread Disease policies cover? A. A specific disease or illness B. All diseases or illnesses C. Only terminal illnesses D. Only heart-related diseases

A. A specific disease or illness (Dread Disease policies cover only a single disease of illness)

According to Florida law, when must an agent deliver the Outline of Coverage to a Medicare Supplement applicant? A. At the time of application B. At the time of policy delivery C. Within 14 days of the time of application D. Within 14 days of policy deliver

A. At the time of application (Florida insurance law requires that if Medicare Supplement policy is sold, the agent must deliver an Outline of Coverage to the applicant no later than when the application is taken)

Which of the following documents must an agent submit to the replacing insurance company during the replacement of an existing life insurance policy? A. Notice to existing and replacing insurers of intention to replace B. A list of all policies the agent has replaced in the last 3 years C. A statement made by the agent that NAIC guidelines have been met during the replacement process D. A copy of the agent's insurance license

A. Notice to existing and replacing insurers of intention to replace

The coordination of benefits (COB) provision exists in order to A. avoid duplication of benefit payments B. avoid excessive hospitalization C. lower insurance premiums D. maximize patient care

A. avoid duplication of benefit payments (The purpose of COB provision, found only in group health plans, is to avoid duplication of benefit payments)

Florida's 14-day free-look period for life insurance policies begins at the A. date of delivery B. date of approval C. date of application D. date of physical examination

A. date of delivery (In Florida, the free-look period for life insurance contracts is 14 days from policy delivery)

An insurance company incorporated under the laws of the state in which its home office is located is called which company? A. domestic B. alien C. foreign D. authorized

A. domestic (domestic insurance company is domiciled and incorporated under the laws of the state in which its home office is located)

Pre-hospitalization authorization is considered an example of A. managed care B. PPO care C. Medicaid D. Major Medical insurance

A. managed care

A long-term care lapse notice must be delivered to both the applicant and A. secondary addressee B. beneficiary C. personal physician D. MIB

A. secondary addressee (An insurer must mail a long-term care lapse notice at least 30 days prior to the effective date of cancellation to both the policyholder and a specified secondary addressee)

In Florida, most life insurance policies have a contestability period of A. 1 year B. 2 years C. 3 years D. 4 years

B. 2 years (The maximum contestability period for most life insurance policies is 2 years)

What do families pay that are covered by the Florida Healthy Kids Corporation? A. Full premium B. A portion of their premiums C. The first initial premium D. Nothing

B. A portion of their premiums (Families with children covered by the Florida Healthy Kids Corporation program pay only a portion of the premium)

Which of the following is considered to be misrepresentation? A. Replacing an existing policy with a new one B. An agent guaranteeing a policy's dividends C. Sharing commissions with other license agents D. Representing a foreign insurer

B. An agent guaranteeing a policy's dividends (Stating that dividends are guaranteed is considered a misrepresentation)

When is a Group Health policy required to provide coverage for a newborn child? A. When the policyowner notifies the insurance company B. At the moment of birth C. When the required additional premium is paid D. No more than 10 days after date of birth

B. At the moment of birth (A Group Health policy is required to provide coverage for a newborn child at the moment of birth)

In Florida, which of the following is considered an Unfair Trade Practice? A. Replacement B. Coercion C. Aleatory D. Subrogation

B. Coercion

All of the following are eligibility requirements for an association group EXCEPT A. Group must have been in existence for two years B. Contributory plans require a minimum of 25 participants C. Group must hold regular meetings at least on an annual basis D. Must have been organized for some reason other than to obtain groups insurance

B. Contributory plans require a minimum of 25 participants (A minimum of 100 participants is required for a contributory plan)

Which two entities regulate variable annuities? A. NAIC; and Department of Financial Services B. Department of Financial Services; and Securities Exchange Commission C. National Association of Insurance and Financial Advisors; and Securities Exchange Commission D. Financial Industry Regulatory Authority; and Department of Financial Services

B. Department of Financial Services; and Securities Exchange Commission

Which organization was established to provide funds to protect an insured in the event of an insurer's insolvency? A. NAIC B. Florida Life and Health Insurance Guaranty Association C. Department of Financial Services D. Office of Insurance Regulation

B. Florida Life and Health Insurance Guaranty Association

Who owns a stock company? A. Its policyowners B. Its stockholders C. Its board of directors D. Its CEO

B. Its stockholders

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? A. Sell the client a more appropriate annuity B. Pay monetary restitution to the client C. Provide a written apology letter D. Pay a penalty of three times the client's loss

B. Pay monetary restitution to the client (The Department of Financial Services may order the agent to pay monetary restitution to the client)

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? A. Deposit the applicant's check into his account and make a personal check out to the insurance company from his personal account. B. Return to the customer, collect a new check made out to the insurance company, and send the new check out to the insurance company C. Cross off his name on the "pay to" portion of the check, write the name of the insurance company, and send the check back to the insurance company D. Deposit the check into his personal account, use the funds to purchase a cashiers check, and send the new cashiers check back to the insurance company

B. Return to the customer, collect a new check made out to the insurance company, and send the new check out to the insurance company (if an agent receives a check made out to them instead of the insurance company, they should return the check to the customer and collect a new check properly made out to the insurance company)

A prepaid application for individual Disability Income insurance was recently submitted to an insurer. When the insurer received the Medical Information Bureau (MIB) report, the report showed that the applicant had suffered a stroke 18 months ago, something that was not disclosed on the application. Which of the following actions would the insurance company NOT take? A. Send the initial premium back to the applicant B. Send a notice to the MIB that the applicant was declined C. Send a notice to the applicant that the coverage was declined D. Send a notice to the agent that the applicant was declined

B. Send a notice to the MIB that the applicant was declined

According to Florida Law, in which of the following situations would a dependent handicapped child NOT be covered under a Family Health policy? A. The handicapped child has reached the limiting B. The premiums for the handicapped child are not paid C. The handicapped child becomes a full-time student D. The family moves outside the provider network

B. The premiums for the handicapped child are not paid (Under a Family Health policy issued in Florida, a handicapped child must continue to be covered in all these situations EXCEPT when premium payments cease to be paid)

In order for a domestic, foreign, or alien insurance company to conduct business, it must be authorized by whom? A. The National Association of Insurance Commissioners (NAIC) B. The state where they are conducting business C. The attorney general in the state where they are domiciled D. Homeland Security

B. The state where they are conducting business

Which of the following BEST describes how pre-admission certifications are used? A. Used to assist in underwriting B. Used to prevent nonessential medical costs C. Used to minimize hospital lawsuits D. used to help process claims

B. Used to prevent nonessential medical costs

An example of an unfair claims practice would be A. requesting a third-party arbitrator to resolve a disagreement B. failing to effectuate prompt, fair and equitable settlements of a claim C. paying a claim promptly after receiving proof of loss D. requiring the insured to give a statement under oath

B. failing to effectuate prompt, fair and equitable settlements of a claim

When replacing or exchanging an annuity, the agent must disclose to the annuitant A. the commissions to be paid as result of the transaction B. the possible tax ramifications as a result of the transaction C. the insurer's A.M. Best rating D. proof of appointment by the agent

B. the possible tax ramifications as a result of the transaction (An agent must disclose the possible tax consequences of replacing or exchanging an existing annuity or life insurance policy)

An insurance company can contest a life insurance contract due to application fraud within A. 60 days B. 1 year C. 2 years D. 3 years

C. 2 years (There is a 2 year time limit for an insurer to contest a life insurance contract due to application fraud)

Employers with less than __ employees are affected by Florida's Health Insurance Coverage Continuation Act (Mini COBRA). A. 40 B. 30 C. 20 D. 10

C. 20 (Florida's Mini COBRA regulation entitles individuals to continuation of coverage for groups with less than 20 full-time employees)

In Florida, a health policy that is paid on a quarterly basis requires a grace period of A. 7 days B. 10 days C. 31 days D. 45 days

C. 31 days (Florida law requires that the minimum grace period on a health insurance policy paid on a quarterly basis is 31 days)

In Florida, what is the maximum percentage of controlled business an agent may produce? A. 30% B. 40% C. 50% D. 60%

C. 50%

The waiting period for a pre-existing condition under a Medicare Supplement policy may NOT go beyond A. 1 month B. 3 months C. 6 months D. 12 months

C. 6 months (under a Medicare Supplement policy, the waiting period for pre-existing conditions may not exceed 6 months)

Which of the following employer tasks does a Professional Employer Organization normally handle? A. Marketing strategies B. Setting sales quotas C. Administration tasks D. Hiring staff

C. Administration tasks (A Professional Employer Organization typically handles administration functions)

Which of the following can an agent provide to help a prospective client understand and purchase the most appropriate product? A. Policy summary B. Conditional receipt C. Buyer's guide D. Illustration

C. Buyer's guide (Agents can help prospective insured understand and purchase the most appropriate product by delivering a buyer's guide)

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? A. Legal Actions B. Insurance with other insurers C. Entire Contract D. Reinstatement

C. Entire Contract (The Entire Contract provision states that the agent does NOT have the authority to change the policy or waive any of its provisions)

Information obtained from a phone conversation to the proposed insured can be found in which of these reports? A. Agent's report B. MIB report C. Inspection report D. Attending physician's report

C. Inspection report. (An inspection report may include information obtained by a telephone call to the proposed insured.)

According to Florida law, which of the following information does NOT need to be obtained by an agent recommending an annuity purchase? A. Annual income B. Age C. Martial status D. Financial objectives

C. Martial status (Florida law requires an agent who is recommending the purchase of an annuity to a person to obtain information regarding all of these EXCEPT the person's 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? A. Annually B. Weekly C. Monthly D. Daily

C. Monthly (Claims on an individual disability policies must be paid out at monthly intervals, at minimum)

Which of the following professional organizations has its code of ethics incorporated into Florida law? A. Financial Industry Regulatory Agency (FINRA) B. NAIC C. National Association of Insurance and Financial Advisors (NAIFA) D. The American College of Life Insurance

C. National Association of Insurance and Financial Advisors (The professional organization whose code of ethics is incorporated into Florida law, and whose responsibility is to establish the activities of agents is the National Association of Insurance and Financial Advisors)

Which action could result in a hearing being ordered by the Department of Financial Services? A. Representing a foreign insurer B. Sharing commissions with another licensed agent C. Performing insurance transaction without a license D. Conducting insurance business in this state while being a resident of another

C. Performing insurance transaction without a license (A hearing may be conducted if anyone is suspected of engaging in the business of insurance without a license)

Which of the following is NOT required in the Outline of Coverage for a health insurance policy? A. Explanation of the policy's benefits B. Listing of the policy's exclusions and limitations C. Projection of the policy's future costs D. Explanation of the policy's renewal and cancellation provisions

C. Projection of the policy's future costs (A table indicating the policy's projected future costs is not required in an Outline of Coverage)

What is the purpose of the Life and Health Insurance Guaranty Association? A. Enforces Florida's insurance regulations B. Underwrites high-risk insurance applicants C. Protects policy owners against insolvent insurance companies D. Establishes underwriting guidelines for admitted insurers

C. Protects policy owners against insolvent insurance companies (The Life and Health Insurance Guaranty Association is an association that protects policyowners against insolvent insurance companies)

J is an agent who has induced an insured through misrepresentation to surrender an existing insurance policy. What is J guilty of? A. Coercion B. Sliding C. Twisting D. Rebating

C. Twisting (Twisting is the unfair trade practice of replacing an insurance policy from one insurer to another based on misrepresentation)

Which of the following activities will NOT result in the suspension of an agent's license? A. Making malicious and false statements about an insurer B. Replacing an insurance policy from one insurer to another based on misrepresentation C. Working for a foreign insurer D. Misrepresenting any fact about an insurance policy

C. Working for a foreign insurer

An individual covered under a Group Life insurance policy is considered to be a(n) A. annuitant B. policyowner C. certificate holder D. contingent

C. certificate holder (Each person insured under a Group Life insurance policy is a certificate holder)

Under Florida law, a variable annuity policyowner must be notified of the accumulated value of the contract A. only when requested by the policyowner B. once each month C. once each year D. twice each year

C. once each year (A variable annuity policyholder must be informed at least once each year of the accumulated value of the contract during the premium payment period)

Which of the following situations does NOT apply to the Florida Replacement Rule? A. An existing policy is reissued with a reduction in cash value B. A new policy is issued while an existing one is surrendered C. An existing policy is subject to extensive borrowing D. An existing policyholder purchases an additional policy from the same insurer

D. An existing policyholder purchases an additional policy from the same insurer

All of the following are Nonforfeiture Options EXCEPT A. Cash Surrender Option B. Extended Term Option C. Reduced Paid-Up Option D. Automatic Premium Loan Option

D. Automatic Premium Loan Option

Which of the following is a standard provision of the conversion privileges in a Group Life policy? A. Group Life coverage can only be converted if the employer pays for the individual policy B. Group Life coverage can normally be converted to an individual policy within 6 months C. Group Life coverage can only be converted by providing evidence of insurability D. Group Life coverage can be converted to an individual policy at regular rates on an attained-age basis

D. Group Life coverage can be converted to an individual policy at regular rates on an attained-age basis (Conversion at regular rates on an attained-age basis without a medical exam is a standard provision for conversion privileges in Group life policies)

Under Florida law, which of the following provisions is NOT required in a Medicare Supplement policy? A. Suitability form B. Guaranteed issue C. Free-look period of 30 days D. Limitation on pre-exhisting conditions for up to 12 months

D. Limitation on pre-exhisting conditions for up to 12 months (There is only a 6-month limitation on pre-existing conditions for Medicare Supplements)

Which type of plan normally includes hospice benefits? A. Short-term disability plans B. Group life plans C. Worker's Compensation D. Managed care plans

D. Managed care plans

According to Florida law, a Group Life insurance policy requires a minimum of how many insureds? A. 2 B. 25 C. 100 D. No minimum

D. No minimum

A mutual insurance company and a stock insurance company have one main difference between them. What is this major contrast? A. Stock company is regulated by the state where it's incorporated. Mutual company is regulated by its policyholders B. Stock company is considered an authorized insurer. Mutual company is considered an unauthorized insurer. C. Stock company is owned by its policyholders. Mutual company is owned by its shareholders D. Stock company is owned by its shareholders. Mutual company is owned by its policyholders.

D. Stock company is owned by its shareholders. Mutual company is owned by its policyholders.

Which of the following factors is NOT considered when the Department of Financial Services determines if an agent's home is an insurance agency? A. Listing the address on the agent's business cards B. Business solicitation is done at this location C. Clients are met at this location D. The amount of premium collected at this location

D. The amount of premium collected at this location (The Department of Financial Services does not take into consideration the amount of premium collected at an agent's home when determining whether or not the home is an insurance agency)

In Florida, agents are allowed to engage in rebating if A. the amount rebated stays below a maximum percentage of annual premium B. the transaction is reported to the IRS for tax purposes C. the insured gives his/her written consent D. offered to all insureds in the same actuarial class

D. offered to all insureds in the same actuarial class (Rebating is allowed in Florida if the agent rebates insureds in the same actuarial class)

According to Florida law, group life insurance conversion privileges must NOT A. allow the converted policy to exceed 75% of the original group life amount B. allow a time period to convert group life coverage to an individual life policy C. require a rate increase D. require evidence of insurability

D. require evidence of insurability (Florida's insurance law that governs group life insurance conversion privileges provides that the individual policies do not require evidence of insurability)

An example of an unfair claims settlement practice is A. making it mandatory that proof of loss be provided for each claim B. requiring a time limit for submitting a claim C. paying a claim in a timely matter D. turning down a claim without providing the basis of denial

D. turning down a claim without providing the basis of denial (Denying an insured's claim without indicating the basis of denial under the policy is considered an unfair claim settlement practice)

P is self-employed and owns an Individual Disability Income policy. He becomes totally disabled on June 1 and receives $2,000 a month for the next 10 months. How much of this income is subject to federal income tax? $20,000 $14,000 $6,000 $0

$0 (Disability income benefits that derive from an individual policy which was paid entirely by the policyowner is not subject to federal income tax.)