Insurance Study Guide For Success

What type of insurance company is domiciled in England, but conducts business in Florida?

Alien

T is an employee covered under a Group Life policy. If T's employment is terminated, the conversion privilege gives T the right to convert

to an individual policy upon employment termination

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

15 years

An example of an unfair claims practice would be

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

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 proceeds would be reduced based on whatever the premium would have been if purchased at age 59

An example of an unfair claims settlement practice is

turning down a claim without providing the basis of denial

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

Moody's corporate bond index

Which of the following activities will NOT result in the suspension of an agent's license?

Working for a foreign insurer

Which of the following acts is an agent NOT authorized to do on behalf of an insurer?

Authorize claim payments

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

the possible tax ramifications as a result of the transaction

Which of the following areas of state regulation is NOT protected by the savings clause in ERISA?

Commerce

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

Buyer's guide

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

Full-time employees after the probationary period

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

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

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

As a condition for a loan, a bank requires the borrower to purchase credit insurance from a specific company. What is the bank guilty of?

Coercion

Which of the following is considered to be misrepresentation?

An agent guaranteeing a policy's dividends

Florida resident insurance agents must complete __ hours of law and ethics continuing education every two years

4

If an agent combines premiums collected with their personal funds, they have engaged in

commingling

Which of the following is NOT considered rebating?

Sharing commissions with an agent licensed in the same line of business

In what year was The Florida Office of Financial Regulation (OFR) created?

2003

How many days does an insurance company have to reject a reinstatement application before it is automatically reinstated?

45

Which of the following professional organizations has its code of ethics incorporated into Florida law?

National Association of Insurance and Financial Advisors (NAIFA)

The Department of Financial Services serves as the receiver of any insurer placed into

receivership

Which of the following types of insureds are life insurance companies allowed to make policy rate discriminations against?

People that smoke

Which department oversees 'Market Conduct Examinations' in Florida?

Office of Insurance Regulation

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

30

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

is found guilty of misrepresentation

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

10%

In Florida, an insurer licensed to conduct business in Florida, but domiciled in New Jersey, is called a(n)

foreign company

A variable life insurance agent must be licensed and appointed as a life and variable contract agent, as well as a(n)

broker dealer

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

Misrepresentation

According to Florida law, group life insurance conversion privileges must NOT

require evidence of insurability

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

Marital status

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

commission

According to Florida law, which of the following statements accurately describes an admitted mail order insurance company?

It may solicit insurance business by mail only with the assistance of a licensed Florida agent

According to Florida's rules on disclosure, a life insurance applicant is expected to be provided with

a Buyer's Guide and Policy Summary

All of the following are Nonforfeiture Options EXCEPT

Automatic Premium Loan Option

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

Variable

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

certificate holder

All of the following are eligibility requirements for an association group EXCEPT

Contributory plans require a minimum of 25 participants

Florida's 14-day free-look period for life insurance policies begins at the

date of delivery

Group Life policies in Florida are required to contain a conversion privilege that allows for conversion

to an individual policy for a stated period of time

In order for a domestic, foreign, or alien insurance company to conduct business, it must be authorized by whom

The state where they are conducting business

If an agent would like to sell Variable annuities, which state examination must the agent pass?

Life and Variable contracts

In Florida, which employee is eligible for an employer's group term life plan?

Employee who works more than 40 hours per week

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

alien

J owns a business and has a Group Life policy covering her employees. J decides to cancel the policy by letting it lapse on the renewal date. What action must be taken?

All of the employees must be notified of the cancellation either by the insurance company or through J

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

J is an agent who recently told a claimant that his rights might be impaired if he does not complete a release form within a specified time. What could this agent be found guilty of?

Coercion

Nonprofit life insurance providers that are covered by a special section in the Florida insurance code are called

Fraternal life insurance organizations

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

fiduciary responsibility

The Department may request all of these during the licensing application process EXCEPT

drug test

The Financial Services Commission may hold hearings

for any reason deemed necessary

The Insurance Guaranty Fund Association is

funded by admitted insurance companies through assessments

Two partners own equal shares in a business worth a total of $1,000,000. If they both commit to the purchase of a life insurance policy that will fund a Buy-Sell Agreement, which of the following is TRUE?

Each partner owns a $500,000 policy on their partner's life

Which of these factors does NOT influence an applicant's need for life insurance?

Self-maintenance expenses

Which of these is NOT a reason for a business to buy key person life insurance?

A pension deficiency if the key employee dies

What is the excise tax rate the IRS imposes on individuals age 73 or older who do not take the required minimum distributions from their qualified retirement plan?

25%

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

All are true statements regarding the underwriting process, EXCEPT:

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

A retirement plan that sets aside part of the company's net income for distributions to qualified employees is called a:

profit-sharing plan

Which factors are taken into consideration when an insurance company determines the premium rate for a Whole Life policy on an applicant?

Risk classification

One becomes eligible for Social Security disability benefits after having been disabled for:

5 months

Consumer reports requested by an underwriter during the application process of a life insurance policy can be used to determine:

probability of making timely premium payments

All of the following statements about traditional individual retirement accounts are false EXCEPT

10% penalty is applied to withdrawals before age 59 1/2

In a qualified retirement plan, the yearly contributions to an employee's account:

are restricted to maximum levels set by the IRS

Which of the following features of a group Term Life policy enables an individual to leave the group and continue his or her insurance without providing evidence of insurability?

Conversion privilege

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

Conversion

A(n) __________ term life policy is normally used when covering an insured's mortgage balance.

decreasing

Whole Life insurance is sometimes referred to as "Straight Life". What does the word "Straight" indicate when using this phrase?

The duration of premium payments

A statement made by an insured in an insurance application that must be true to the best of one's knowledge and which becomes a part of the contract is known as:

a representation

A Life insurance policyowner would like to take out a policy loan against the cash value in his Whole Life policy. The interest rate applied to this loan may vary over time. This is referred to as a(n) ________ rate loan.

Variable

The premiums paid by an employer for his employee's group life insurance are usually considered to be:

tax-deductible to the employer

A policyowner may generate taxable income from which of the following Dividend Options?

Accumulation at Interest

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

G purchased a Family Income policy at age 40. The policy has a 20-year rider period. If G were to die at age 50, how long would G's family receive an income?

10 years

An insured is past due on his life insurance premium, but is still within the Grace Period. What will the beneficiary receive if the insured dies during this Grace Period?

Full face amount minus any past due premiums

Stranger-Owned Life Insurance (STOLI) is when a person purchases life insurance only to sell to a(n):

third-party with no insurable interest

Which of the following policies is characterized by a flexible premium and death benefit and allows the policyowner control of the investment aspect of the plan?

Variable universal life

All of these are considered sources of underwriting information about an applicant, EXCEPT:

Rating Services

What is the initial source of underwriting for an insurance policy?

Application containing statements from the insure

T has a term policy that allows him to continue the coverage after expiration of the initial policy period. What type of term coverage is this?

Renewable

How does a typical Variable Life Policy investment account grow?

Through mutual funds, stocks, bonds

Stranger-Owned Life Insurance (STOLI) is when a person purchases life insurance only to sell to a(n):

third-party with no insurable interest

A policy loan is made possible by which of these life insurance policy features?

Cash value provision

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

A $20,000 life insurance policy application is completed, however the producer does not collect the initial premium. At what point does the coverage go into effect?

When the applicant receives the policy and pays the initial premium

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

Inspection report

ABC Insurance Company has accepted a life insurance application which contains unanswered questions. The company then makes the application part of the life contract. In this situation, the insurer has:

waived one of its legal rights

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

Church plans

Which of the following statements is CORRECT regarding the tax treatment of a lump-sum payment paid to a life insurance policy's primary beneficiary?

All proceeds are income tax free in the year they are received

A Return of Premium life insurance policy is:

Whole life and Increasing term

D was actively serving in the Marines when he was killed in an automobile accident while on leave. His $100,000 Whole life policy contains a War Exclusion clause. How much will D's beneficiary's receive?

The full face amount

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

None

Which of these is NOT an element of Life insurance premiums?

Morbidity rate

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

Decreasing Term

Who has the option to renew a Renewable Term policy?

Insured

How long does an individual have to "rollover" funds from an IRA or qualified plan?

60 days