Life Flashcards by Ivanna Matiz

An applicant who pays the initial premium at the time of application is typically given a(n)

certified receipt
official receipt
conditional receipt
binding receipt

The correct answer is “conditional receipt”. A conditional receipt is normally given to an applicant who pays the initial premium at the time of application.

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Under a life insurance policy, the ________ has the authority to name the beneficiary.

owner
agent
underwriter
beneficiary

The policyowner has the authority to name the beneficiary of a life insurance policy.

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Which action could result in a hearing being ordered by the Department of Financial Services?

Conducting insurance business in this state while being a resident of another

Representing a foreign insurer

Sharing commissions with another licensed agent

Performing insurance transactions without a license

A hearing may be conducted if anyone is suspected of engaging in the business of insurance without a license.

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Which entity approves the insurance policy forms used in Florida?

Department of Financial Services (DFS)
Office of Insurance Regulation (OIR)
National Association of Insurance Commissioners (NAIC)
Financial Services Commission (FSC)

The correct answer is “Office of Insurance Regulation (OIR)”. The insurance policy forms used in Florida are approved by the Office of Insurance Regulation (OIR).

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An example of an unfair trade practice is

replacing an old life insurance policy with a new one
an agent writing less than 50% of their total sales from controlled business
an agent making a material misrepresentation to the insured
denying payment of a claim within a reasonable time after proof of loss statements were provided

Making a material misrepresentation to an insured is considered to be an unfair trade practice.

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What are adjustable rates for life policy loans in Florida based on?

90-day treasury bill rate
National average of other states’ variable rate
Moody’s corporate bond index
Prime lending rate

Adjustable rates for life insurance policy loans in Florida are based on Moody’s corporate bond index.

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When replacing or exchanging an annuity, the agent must disclose to the annuitant

proof of appointment by the agent
the possible tax ramifications as a result of the transaction
the commissions to be paid as a result of the transaction
the insurer’s A.M. Best rating

The correct answer is “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.

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An example of rebating would be

offering a client something of value not stated in the contract in exchange for their business
using intimidation in order to restrain or monopolize the business of insurance.
reducing the premiums across the board for a specific risk class
a mutual insurance company paying dividends to its policyowners

Rebating can be defined as offering a prospect something of value that is not specified in a contract in order to induce the purchase of that contract.

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An example of sliding would be

replacing an existing insurance policy with a new one
speaking maliciously of an insurer intending to harm
inducing an applicant to purchase an insurance policy by returning some of the premium
charging for an additional product without the applicant’s consent

The correct answer is “charging for an additional product without the applicant’s consent”. Sliding involves selling additional coverage to an insurance applicant who doesn’t want or need it. An agent will often “slide” this additional coverage in without the customer’s knowledge or consent

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Which of the following employees may NOT be excluded from a group life plan?

Seasonal workers
Full-time employees before the probationary period
Full-time employees after the probationary period
Part-time employees

The correct answer is “Full time employees after the probationary period”. All of these employees may be excluded from a group life plan except for “Full time employees after the probationary period”.

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Which of the following is a standard provision of the conversion privileges in a Group Life policy?

Group Life coverage can normally be converted to an individual policy within 6 months
Group Life coverage can only be converted if the employer pays for the individual policy
Group Life coverage can be converted to an individual policy at regular rates on an attained-age basis
Group Life coverage can only be converted by providing evidence of insurability

Conversion at regular rates on an attained-age basis without a medical exam is a standard provision for conversion privileges in Group Life policies.

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Any violations of the Florida financial institutions code may be investigated by the

Department of Homeland Security (DHS)
Office of Insurance Regulation (OIR)
Attorney General’s office
Department of Financial Services (DFS)

The correct answer is “Department of Financial Services (DFS)”. The DFS has the authority to investigate violations or potential violations of the Florida financial institutions code.

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Which of the following situations are NOT subject to Florida life insurance laws?

Insurance companies’ life policy replacement requirements
Insurance companies’ guidelines for paying a life insurance claim
Insurance companies’ setting of life insurance policy rates
Insurance companies’ day-to-day operations

Insurance companies’ day-to-day operations

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Defamation occurs when an agent makes a false statement intended to

replace an existing insurance policy with another
restrict fair trade
misrepresent the provisions of an insurance policy
malign another insurer

The correct answer is “malign another insurer”. Defamation is an unfair trade practice involving false, maliciously critical, or derogatory statements intended to injure a person or company engaged in the insurance business.

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Which of the following is NOT required on every insurance application sold in Florida?

Address and phone number of the agent
Agent’s name
Agent’s license number
Insurer’s name

All of these must be shown on every insurance application sold in Florida EXCEPT “Address and phone number of the agent”.

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A life insurance policyowner may sell their policy to a(n) _____ in order to receive a percentage of the policy’s face value.

viator agent
broker
viatical settlement provider
insurer

The correct answer is “viatical settlement provider”. To receive a percentage of the policy face value, an owner of a life policy may sell the policy to a viatical settlement provider.

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If a policyowner does not pay the premium by the due date, the

policyowner can make the premium payment during the grace period
policy must be reinstated
policyowner is automatically assessed a late charge
insurance company cancels the policy

If a policyowner does not pay the premium by the due date, the premium may be paid during the grace period.

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A life insurance policyowner would like to file a complaint against a life insurance agent. In Florida, the entity that oversees these complaints is called the

Office of Insurance Regulation
Department of Financial Services
Securities Exchange Commission
Department of Homeland Security

The correct answer is “Department of Financial Services (DFS).” The Department of Financial Services (DFS), specifically the DFS Division of Consumer Services, oversees complaints against life insurance agents and agencies selling life insurance products.

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Which of these is NOT a legal entity for selling life insurance in Florida?

Independent agency system
Risk management advisers
Personal producing general agency
Career agency system

Risk management advisers do not qualify as a legal entity for selling life insurance.

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

31 days
14 days
60 days
45 days

The correct answer is “31 days”. If a group plan is terminated, covered persons are guaranteed coverage for 31 days after termination.

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A life insurance policy’s grace period entitles the insured a period of no less than ___ days to make the premium payment.

40
25
35
30

The grace period for a life insurance policy is never less than 30 days.

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A license may be denied, suspended, or revoked if the licensee

does not meet a sales quota
engages in replacement of an existing policy
is found guilty of misrepresentation
files for bankruptcy

Being found guilty of misrepresentation may result in the Department of Financial Services denying, suspending, revoking, or not renewing any license.

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According to Florida law, a Group Life insurance policy requires a minimum of how many insureds?

2
No minimum
100
25

In Florida, there is no minimum number of insureds required for a group life insurance policy.

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According to Florida’s life insurance replacement laws, a policyowner must be provided with a written Comparison and Summary Statement when it’s requested by

the Financial Services Commission
the insurer
the policyowner
the Chief Financial Officer

The replacement of existing life insurance policies with new contracts of life insurance requires a written Comparison and Summary Statement at the policyowner’s request.

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Within how many days must a licensee notify the Department of Financial Services of a change in address? 60 90 30 120

30 The correct answer is "30". All licensees are required to notify the Department of Financial Services of a change in address within 30 days.

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

An automatic premium loan is not considered a Nonforfeiture Option. B

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

A minimum of 100 participants is required for a contributory plan. A

In Florida, which of the following is considered an Unfair Trade Practice? Coercion Replacement Subrogation Aleatory

Coercion is considered an unfair trade practice under Florida law. A

In Florida, most life insurance policies have a contestability period of 3 years 1 year 4 years 2 years

2 Years D

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

The correct answer is "Twisting". Twisting is the unfair trade practice of replacing an insurance policy from one insurer to another based on misrepresentation. A

K is insured under a Group Life insurance policy. K is considered to be a(n) beneficiary policyowner certificate holder annuitant

Each person covered under a Group Life insurance policy is considered to be a certificate holder. C

One definition of replacement is "the act of replacing an existing insurance policy with another". Replacement is allowed only if the policy originated outside the state of Florida closely regulated and requires full disclosure not legal in the state of Florida legal and requires no disclosure

The correct answer is "closely regulated and requires full disclosure". Replacement of insurance policies is strictly regulated and requires full disclosure. B

The Financial Services Commission may hold hearings for any reason deemed necessary when approved by the NAIC only when a felony is involved only if there is a complaint filed

The Financial Services Commission may hold hearings for any purpose within the scope of the insurance code deemed necessary. A

In an insurance contract, the element that shows each party is giving something of value is called consideration offer acceptance purpose

Consideration A

Which of these will have the highest monthly payout upon annuitization? Life with period certain Joint and survivor life Joint life Straight life

The correct answer is, "Straight life". A straight life annuity will have the highest monthly payout. D

The least expensive option to pay off a 30-year mortgage balance would be adjustable term life decreasing term life increasing term life convertible term life

The correct answer is, "decreasing term life". The least expensive option to pay off a 30-year mortgage balance would be decreasing term life. B

A life insurance policy that is subject to a contract interest rate is referred to as group life term life adjustable life universal life

The correct answer is, "universal life". Universal life is subject to a contract interest rate or a current annual interest rate. D

The type of multiple protection coverage that pays on the death of the last person is called a(n) survivorship life policy annuity joint policy joint life policy dual life policy

The correct answer is, "survivorship life policy". Under a multiple protective policy, the policy that pays on the death of the last person is called a survivorship life policy. A

An employee under a group insurance policy has the right to name a beneficiary and the right to cash surrender the existing policy convert to an individual policy in the event of employment termination change the policy provisions remain on the group plan in the event of employment termination

The correct answer is, "convert to an individual policy in the event of employment termination". A person whose life is insured under a group insurance policy has the right to designate a beneficiary and the right to have an individual policy issued in the case of termination of employment. B

The term which describes the fact that both parties of a contract may NOT receive the same value is referred to as Aleatory Apparent Unilateral Estoppel

The correct answer is, "Aleatory". Aleatory is a term that describes the fact that both parties of a contract may NOT receive the same value. A

Under a contract of adhesion, the insurer's obligations are dependent upon certain acts of the insured individual only one party makes any kind of enforceable promise the terms must be accepted or rejected in full there is the potential for an unequal exchange of value

Correct. Under a contract of adhesion, the contract has been prepared by one party (the insurance company) with no negotiation between the applicant and insurer. In effect, the applicant "adheres" to the terms of the contract on a "take it or leave it" basis when accepted. C

A Renewable Term Life insurance policy can be renewed at a predetermined date or age, regardless of the insured's health only if the insured provides evidence of insurability anytime at the policyowner's request typically with no change in premium

The correct answer is, "at a predetermined date or age, regardless of the insured's health". Renewable Term Life insurance guarantees the policy can be renewed to a predetermined date or age, regardless of the insured's health status. A

The coverage, conditions, and limitations in the master policy of a group contract can be found in which document? Coverage document Certificate of coverage and benefits Certificate of Authority Consumer report

The certificate of coverage and benefits describes the coverage, conditions, and limitations found in the master policy of a group contract. B

All of these are settlement options for life insurance policies EXCEPT Life income Lump sum Fixed period Extended term

The correct answer is, "Extended term". The extended term option is a nonforfeiture option, not a settlement option. D

Jonas is a whole life insurance policyowner and would like to add coverage for his two children. Which of the following products would allow him to accomplish this? Child term rider Family income rider Family maintenance rider Payor rider

A child term rider is level term insurance that can be added to an existing policy. A

What would be an accurate definition of "controlled business"? Insurance business that is written on the agent's own life, property, or interests Insurance business that is obtained through false advertising Insurance business that is obtained by replacing an existing policy through misrepresentation Insurance business obtained by an agent through coercion, intimidation, or boycotting

"Controlled business" is insurance business that is written on the agent's own life, property, or interests. A

W gave W's age as 50 when W purchased a Life policy. At the time of W's death seven years later, the company discovered W's true age at issue had been 59. What would the normal procedure be under the misstatement of age provision in regard to the payment of the death claim? The insurer is only obligated to refund all premiums paid The proceeds would be reduced based on whatever the premium would have been if purchased at age 59 The policy's full death benefit would be paid, due to the expiration of the incontestable period There would be no death proceeds paid out by the insurer

In this situation, the proceeds will be reduced based on whatever the premium would have been if purchased at age 59. B

What is Florida's definition of Life insurance replacement? A transaction in which coverage on an existing policy is increased A transaction in which a new policy is bought and an old policy is terminated A transaction in which a policyowner reinstates a lapsed policy A transaction in which group life coverage is converted to an individual policy

Florida's Replacement Rule defines replacement of Life insurance as a transaction in which a new policy is bought and an old policy is discontinued. B

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

When replacing an existing life insurance policy, an agent must submit notice to existing insurer and replacing insurer of intentions. B

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

The correct answer is "Buyer's guide". Agents can help prospective insureds understand and purchase the most appropriate product by delivering a buyer's guide. B

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 Listing the address on the agent's business cards Clients are met at this location Business solicitation is done 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. D

Which of the following types of insureds are life insurance companies allowed to make policy rate discriminations against? People of different races People that smoke People of different religions People that are married

A life insurance company may make policy rate discriminations against people that smoke. B

In Florida, an element of an insurance transaction would be setting up the sales appointment determining how much coverage is needed issuing an insurance contract ordering an MIB report

The issuance of an insurance contract is considered to be an element of an insurance transaction. C

Which type of insurance company allows their policyowners to elect a governing body? Mixed Mutual Admitted Stock

The correct answer is "Mutual". Policyholders elect the governing bodies of mutual insurance companies. B

A life policy loan in Florida cannot charge a fixed rate of interest higher than 9% 10% 7% 8%

The correct answer is "10%". The maximum fixed interest rate permitted on a life policy loan is 10%. B

Which Unfair Trade Practice involves an agent suggesting that an insurance policy is like a share of stock? Sliding Intimidation Twisting Misrepresentation

If an agent tells an applicant that an insurance policy is like a share of stock, the agent may be guilty of misrepresentation. D

A variable life insurance agent must be licensed and appointed as a life and variable contract agent, as well as a(n) accredited agent Registered Managing Agent (RMA) Certified Variable Dealer (CVD) broker dealer

The correct answer is "broker dealer". An agent marketing variable life insurance must be licensed and appointed as a life and variable contract agent and a broker dealer. D

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

The correct answer is "50%". In Florida, an agent's controlled business may NOT exceed a maximum of 50%. C

Which Unfair Trade Practice involves an agent telling a prospective client that a policy's dividends are guaranteed? Sliding Fraud Coercion Misrepresentation

An agent who tells a client that dividends are guaranteed may be guilty of misrepresentation. D

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

The correct answer is "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. B

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

Marital status

A stock life insurance company that issues both participating and nonparticipating policies is doing business on an assorted plan a multiple plan a diverse plan a mixed plan

When a stock life insurance company issues both participating and nonparticipating policies, the company is doing business on a mixed plan. D

Who is a mutual insurance company owned by? Its employees Its board of directors The State of Florida Its policyholders

A mutual insurance company is owned by its policyholders. D

According to Florida's rules on disclosure, a life insurance applicant is expected to be provided with a Certificate of Coverage and Buyer's Guide a Buyer's Guide and Policy Summary a Written Comparison and Policy Summary a Summary Statement and Buyer's Guide

The correct answer is "a Buyer's Guide and a Policy Summary". Florida's rules on disclosure require an insurance company to provide a purchaser of life insurance with a Buyer's Guide and a Policy Summary. B

An agent that sells _________ Life insurance MUST be registered with the Financial Industry Regulatory Authority (FINRA). Credit Universal Straight Variable

The correct answer is "Variable". An agent is required to register with the Financial Industry Regulatory Authority (FINRA) in order to sell Variable Life insurance policies. D

An insurance company can contest a life insurance contract due to application fraud within 3 years 1 year 60 days 2 years The correct answer is "2 years". There is a 2 year time limit for an insurer to contest a life insurance contract due to application fraud.

The correct answer is "2 years". There is a 2 year time limit for an insurer to contest a life insurance contract due to application fraud. D

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

The correct answer is "date of delivery". In Florida, the free-look period for life insurance contracts is 14 days from policy delivery. A

All of the following will result in the suspension of an agent's license EXCEPT forging a name on an insurance application intentionally misrepresenting the provisions of a policy acting with fiduciary responsibility being convicted of a felony

Acting as a fiduciary would not result in suspension of an agent's license. C

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

Florida's Replacement Rule applies to all of these situations EXCEPT "An existing policyholder purchases an additional policy from the same insurer". B

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

The correct answer is "National Association of Insurance and Financial Advisors (NAIFA)". 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. A

A foreign insurance company doing business in Florida is only authorized to write business outside the United States is a company that was formed under the laws of another state is not subject to Florida insurance laws is a company that was formed under the laws of another country

The correct answer is "is a company that was formed under the laws of another state". In Florida, a foreign insurance company is a company that is formed under the laws of a state other than Florida. B

Which organization was established to provide funds to protect an insured in the event of an insurer's insolvency? National Association of Insurance Commissioners (NAIC) Office of Insurance Regulation Department of Financial Services Florida Insurance Guaranty Fund Association

The correct answer is "Florida Insurance Guaranty Fund Association". The Florida Insurance Guaranty Fund Association exists to protect an insured in the event of an insurer's insolvency. D

In Florida, deceptive advertising is considered to be a form of rebating a form of coercion a form of sliding a form of misrepresentation

According to Florida law, deceptive advertising is considered a form of misrepresentation. B

Agents that have been licensed for less than six years must complete __ hours of continuing education every two years. 20 36 8 24

Group Life policies in Florida are required to contain a conversion privilege that allows for conversion to an individual policy at anytime with evidence of insurability to an individual policy for a stated period of time only if the premiums are paid by the employer

Correct. In Florida, Group Life policies must contain a conversion privilege that allows for conversion to an individual policy for a specified period of time. C

If an agent would like to sell Variable annuities, which state examination must the agent pass? Life insurance Life and Variable contracts Variable annuities Accident and Health insurance

The correct answer is "Life and Variable contracts". An agent who wants to sell Variable annuities must be licensed by the state which includes examinations in Life and Variable contracts. Continue

In Florida, which employee is eligible for an employer's group term life plan? Employee who works part-time Employee who works more than 40 hours per week Employee who works seasonally during the summer Full time employee not actively at work

All of these employees may be EXCLUDED for group term life coverage EXCEPT "Employee who works more than 40 hours per week".

T is an agent and when hired, is reminded that he has a responsibility to handle clients' funds in an honest and ethical manner. This responsibility is referred to as legal competence fiduciary responsibility reasonable trust ethical behavior

Fiduciary responsibility involves an agent handling funds of a client or insurance company honestly and fairly, and not using them for the agent's own purposes.

The act of an insurance company publishing misleading information about its policy's provisions is called coercion twisting intimidation false advertising

An insurance company that publishes misleading information about insurance coverage may be found guilty of false advertising.

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

The correct answer is "Administration tasks". A Professional Employer Organization typically handles administration functions.

In Florida, an insurer licensed to conduct business in Florida, but domiciled in New Jersey, is called a(n) foreign company domestic company non-admitted company alien company

An insurance company that is domiciled in New Jersey and licensed to conduct business in Florida is referred to in Florida as a foreign company.

A stock insurance company guarantees dividends to its shareholders is owned exclusively by its policyowners elects a governing body by its policyowners is owned exclusively by its shareholders

Correct. A stock insurance company is best defined as an incorporated company that has its capital divided into shares and is owned exclusively by its shareholders.

In Florida, which agency is responsible for the rehabilitation or liquidation of insurers? Department of Financial Services (DFS) Office of the Attorney General (OAG) Office of Financial Regulation (OFR) Office of Consumer Affairs (OCA)

Correct. The Department of Financial Services (DFS) is responsible for the rehabilitation or liquidation of insurers when necessary. Continue

If an agent would like to sell Variable annuities, which state examination must the agent pass? Accident and Health insurance Life and Variable contracts Life insurance Variable annuities

The correct answer is "Life and Variable contracts". An agent who wants to sell Variable annuities must be licensed by the state which includes examinations in Life and Variable contracts.

Insurance companies that are organized in countries outside the United States are referred to as foreign alien domestic international

Alien

The insurer must provide a prospective buyer with a(n) copy of the application actuarial table A.M. Best report Buyer's Guide and Policy Summary

The insurer must provide a prospective buyer with a Buyer’s Guide and Policy Summary.

A non-contributory health insurance plan helps the insurer avoid tax deductions the underwriting process state compliance adverse selection

Because all eligible employees are usually covered, noncontributory plans are desirable from an underwriting standpoint because adverse selection is minimized.

Under a group life policy, the insurer will issue an individual _____ to the policyowner for delivery to each person insured. certificate policy application rider

Correct. The insurer will issue an individual certificate to the policyowner for delivery to each person insured under a group life policy.

Lisa has recently bought a fixed annuity. Which of these is considered to be a disadvantage of owning this type of annuity? Payments cease 5 years after the annuitant's death During periods of inflation, annuitants will experience a decrease in purchasing power of their payments During periods of inflation, annuitants will experience an increase in purchasing power of their payments Payment amounts can be unpredictable from month to month

The disadvantage of fixed annuities is annuitants could experience a decrease in the purchasing power of their payments over a period of years due to inflation. Continue

Julie has a $100,000 30-year mortgage on her new home. What type of life insurance could she purchase that is designed to pay off the loan balance if she dies within the 30-year period? Decreasing term insurance Modified life insurance Adjustable life insurance Increasing term insurance

The correct answer is, "Decreasing term insurance". Decreasing term insurance is normally used to pay off a mortgage balance in the event of death of the insured.

The power given to an individual producer that is not specifically addressed in his/her contract is considered what type of authority? apparent discreet implied express

The correct answer is, "implied". Implied authority is the unwritten authority that is not expressly granted, but which the agent is assumed to have in order to transact the business of the principal. C

A Modified Endowment Contract (MEC) is best described as An annuity contract which was converted from a life insurance contract A life insurance contract which accumulates cash values higher than the IRS will allow A life insurance contract where all withdrawals prior to age 65 are subject to a 10% penalty A modified life contract which enjoys all the tax advantages of whole life insurance

The correct answer is, "A life insurance contract which accumulates cash values higher than the IRS will allow". A Modified Endowment Contract (MEC) can be described as a life insurance contract that has accumulated cash values higher than the IRS allows.