214 Florida Insurance

Which type of insurance protects an agent and even pays claims if a lawsuit is brought against the agent as a result of failing to provide a service to a client?

Errors and Omissions Insurance

Which of the following terms is known as the voluntary relinquishment of a given right or privilege?

Waiver

This Supreme Court case placed the regulation of insurance within the authority of the federal government by defining insurance as a form of interstate commerce?

United States v. Southeastern Underwriters Association (1944)

Tim was just hired today by MAB INC and wants to join the company's group insurance policy. What period of time is he currently in and when can he join the plan?

Probationary period, he can sign up after 90 days

If Justin submitted an initial premium with his life insurance application, was provided a conditional receipt by the insurance company and was ultimately issued a policy as applied for, when would his insurance policy be considered in force?

The date of his application or the day he completed any required medical exam

When dividends are issued, the policyowner has the following dividend options in utilizing a return EXCEPT:

Life Income Option

Which two life insurance riders can Bill purchase to guarantee that his policy will continue without further commitment from him and that income will be paid to him if he becomes totally and permanently disabled?

Waiver of premium and Disability Income Riders

In a contributory group plan, what percentage of eligible employees must be covered?

75%

Which statement regarding annuities is CORRECT?

Variable annuity units are fixed but the annuity payment will vary according to the value of the annuity unit.

In order to be considered currently insured and thus eligible for limited survivor benefits from Social Security, a worker must have earned ___ credits during the 13-quarter period ending with the quarter in which the worker died.

6

Social security is also known as:

Old Age Survivors and Disability Insurance (OASDI)

Insurance is not intended to protect against?

Speculative Risk

Under a family plan life insurance policy, coverage on the breadwinner is often provided by which of the following insurance types?

Whole Life

Which of the following statements regarding annuity settlement or payout options is NOT true?

If the annuitant dies before the principal sum is depleted, the Refund Life Annuity Option will pay the entire annuity amount to the beneficiary in a lump sum payment or over scheduled installments.

The following statements regarding 401(k) retirement plans are correct EXCEPT:

Plans rarely have a matching contribution component by an employer

All of the statements below pertaining to group life insurance are correct EXCEPT:

If the insurance coverage is less than $75,000, employees do not have to report the employer-paid premiums as income

According to Florida Statues, entering into any agreement to commit any act of intimidation resulting in the business of insurance is known as:

Coercion

William, age 67, has owned his life insurance policy for the past 15 years and has mailed his monthly premiums to his life insurance company. Last month he failed to mail the monthly payment on his premium due date as well as during his policy's grace period. As a result, which of the following scenarios will MOST likely occur?

The insurer will provide notification of impending lapse in coverage, and allow at least 21 additional days beyond the grace period to make a payment to prevent the policy from lapse

Before executing an exchange of an annuity contract resulting from a recommendation to a senior consumer, an insurance agent should make reasonable efforts to obtain information from the applicant concerning the suitability of the recommendation on an approved form, which upon completion, must be signed by the applicant and agent. Within what period of time must an agent submit this form to the insurer once it is complete?

Within 10 days

Shelly is considered to be terminally ill and has decided to sell her life insurance policy in exchange for living benefits to fulfill some final comforts and expenses before her death. In selling her life insurance policy, Shelly is referred to as a(n)_________and she will receive a percentage of her life policy's face amount in exchange for ownership of her policy.

Viator

Which of the following is NOT a type of speculative risk?

Unemployment

Which agency collects and provides reliable medical information regarding an applicant's health history?

The MIB

Tonya failed to pay her life policy's premium on the date in which it is normally due and is currently 23 days late. As a result of her policy's grace period provision, which outcome will occur?

Tonya is within her grace period and can pay her premium up to 30 or 31 days after the date in which the premium is normally due; however, she does not need to pay back any outstanding loans to the insurer.

Which type of E&O policy provides permanent coverage for the actions of an agent during which time he or she was covered under such policy, regardless of when a lawsuit is filed against the agent?

Occurrence Policy

In a group life contract, evidence of insurability is

Required only after the enrollment period ends.

Peril

For purposes of insurance, which of the following is NOT considered a hazard?

The loss must be speculative

All of the following are characteristics of pure risk EXCEPT

Twisting

When an agent persuades a client to cancel his or her current coverage for a policy from an entirely different company solely to produce another first year commission is called?

Grace Period Provision

In the event a policy's premium is paid late, which of the following provisions will keep the policy in force for a short period of time thereafter to allow the policyowner to submit payment?

Payor Rider

In the event that a parent dies or becomes disabled, which rider allows surviving child coverage to continue until the child reaches a specified age?

30-31 days

According to the NAIC Model Group Life Insurance Provisions, what is the standard grace period?

50%

For individuals who have reached their normal retirement age, their spouses are entitled a retirement benefit that is equal to what percentage of the retired worker's primary insurance amount (PIA)?

Interest is not taxed upon withdrawal due its funding from post-tax dollars

Which of the following statements is CORRECT in regards to a Roth IRA?

Fails the 7-Pay Test

An insurance contract becomes a Modified Endowment Contract (MEC) if which of the following occurs?

Buy-Sell agreement

Which type of business life insurance 'buyout' agreement is used to purchase the interest of a deceased partner so that the business can continue to operate without financial interruption?

The death of the insured due to an accident

In order for a beneficiary to receive double indemnity, which of the following scenarios must occur?

Agents selling insurance products for an agency are not required to be individually licensed, as long as the agency itself is.

Which of the following statements regarding insurance agencies in Florida is INCORRECT?

100%

When an employee makes contributions into a pension plan, what percentage of his or her own contributions are vested?

Cash value

Which of the following is NOT associated with a term life policy?

Pre-texting

As a provision of the Financial Services Modernization Act of 1999, attempts to obtain non-public personal information from consumers and customers under false pretenses is referred to as

Extended Term option

Which of the following is NOT considered to be a life policy settlement option?

Interest earned will be taxed, but premiums paid into the policy will not be taxed.

In the event that a policyowner surrenders his or her individual whole life policy, which outcome will likely occur?

Occurence Policy

Which type of E&O policy provides permanent coverage for the actions of an agent during which time he or she was covered under such policy, regardless of when a lawsuit is filed against the agent?

Deferred Vesting

Which of the following is NOT a retirement vesting schedule?

Spendthrift Clause

Which of the following life policy clauses or provisions protects a life policy's proceeds against a beneficiary's creditors?

Reviewing the applicants MIB file

A paramedical exam includes all of the following EXCEPT

The employer

In an employer-related group life contract, an employee may choose any of the following individuals or entities to serve as his or her policy's beneficiary EXCEPT

A broker

Raymond, a licensed insurance producer, solicits insurance through more than one insurer and negotiates on behalf of his clients; therefore, he is considered to be

Non-Medical

Referred to as a _________ application, it is common for a health or life insurance policy to be issued to an applicant based solely on the medical information gathered from the application that is submitted by the applicant to the insurer.

National Association of Insurance Commissioners (NAIC)

Which agency has influenced the insurance industry by introducing uniform regulation 'models' for states to follow in an attempt to standardize multiple-state insurance laws?

A beneficiary

Which of the following does not have the responsibility of acting as a fiduciary?

The ratio between company losses and company revenue that determines an insurance company's revenues that must be maintained to cover annual claims by its policyowners.

Loss ratio is defined as

No minimum

In the state of Florida, what is the minimum number of members required for a group life insurance policy?

Controlled business

Sandra, who is a licensed agent and an employee at XYZ company, is writing an insurance policy on herself and a few of her co-workers since group benefits are currently not available. What type of business is she considered to be conducting?

Substandard risk

Betty has a history of poor health and is currently taking four medications for high blood pressure and cholesterol. What type of risk is Betty if she were to apply for a health policy?

The primary function of an Equity Index Annuity is to:

Link excess interest to the upward movement of an outside market index, such as the S&P 500, while maintaining a minimum guaranteed interest rate

Speculative risk

Insurance is not intended to protect against?

At the time of application

In determining the validity of an insurance contract, when must insurable interest be present?

60 days

If an individual wants to transfer funds from their 401(k) plan into a Rollover IRA, what is the maximum allowed time in order to be eligible for a tax-free rollover?

Annuity Funding plan

Which of the following qualified employer retirement plans is NOT recognized as a 'defined contribution' plan?

40 credits

What is the full amount of Social Security credits needed to be fully insured for benefits?

Long-term care rider

Which life rider allows for care in a convalescent or nursing home?

Extended term option

If Jim decides to cancel his whole life insurance policy and uses his policy's cash value to purchase a term life policy with a face amount of equal value but with a likely shorter coverage period, he is utilizing which type of life insurance nonforfeiture option?

Consideration Clause

Which provision or clause below will illustrate the frequency and amount of policy premiums?

A term life policy builds cash value over the policy's term.

Which of the following statements describing term life insurance is INCORRECT?

The insurance company evaluates the individuals within a group instead of the group as a whole, and then measures the individual's risks against its underwriting standards.

In regards to group insurance, which statement below is INCORRECT?

Central Medical Bureau (CMB)

All of the following are sources for obtaining information regarding an applicant's insurability EXCEPT:

An insurer is required to disclose medical information to an applicant in the event the applicant is rejected due to findings in the report.

Which of the following is NOT required by the Fair Credit Reporting Act of 1970?

Friends

Insurable interest exists between all of the following EXCEPT:

The policy no longer meets the needs of the client

Which of the following reasons would justify a policy replacement?

Usually 2 years, but in some states only 1 year

The Incontestable Clause states that the insurer cannot contest the validity of a life insurance policy as long as it remains in force after what period of time?

Non-contributory plans

Group insurance plans that do not require employees to pay a portion of policy premiums are referred to as:

4 credits

What is the maximum number of Social Security credits an individual can earn per year?

An annuity contract exchanged for a life insurance policy

Under the 1035 policy exchange provision, which of the following will NOT receive favorable tax treatment?

Stock

Which of the following insurers is best defined as a non-participating company?

100%

A non-contributory group policy requires which percentage of eligible employees to be covered?

Revocable Designation

Carla has named her husband Jeffrey as the beneficiary to her life insurance policy. Under which beneficiary designation does she remains in control of the policy and can make any changes she sees fit in the future?

Graded premium whole life

Which type of whole life insurance policy is characterized by affordable premiums in its initial years, then gradually increasing over the next few years until finally leveling off at a slightly higher rate than a standard whole life policy?

Cash surrender option, reduced paid-up option and extended term option

In the event that a whole life insurance policy lapses due to nonpayment or it is intentionally cancelled, which of the following nonforfeiture options are available to the policyowner?

1000x24 months = ?

Carl purchased an Immediate Annuity with a 5-year 'life with period certain option,' which pays him $1,000 per month. Exactly 3 years after his policy start date Carl dies. How much money will his beneficiary receive for the remainder of the policy?

His distribution payment amount will fluctuate depending on the return of interest at the time of each distribution payment

Leon currently receives $650 per month from his variable annuity. Since he is scheduled to receive payments from his variable annuity for the remainder of his life, what will most likely occur to Leon's distribution payment amount as time goes on?

Conviction of a 3rd degree felony

Unauthorized entities acting as a licensed insurer in the state of Florida are subject to the following possible consequences EXCEPT:

14 days for life policies and 21 days for annuities

Under Florida law, how long must an individual be allowed to review a new life policy or annuity contract with the option of an unconditional refund if not fully satisfied?

Pension Benefit Guaranty Corporation (PBGC)

Which federal organization was created under ERISA to guarantee payments of pension benefits in defined benefit plans that terminate due to a lack of funding to cover benefit payments?

The FTC

Which of the following entities manages the National Do-Not-Call Registry?

Actuary

Which of the following professions analyzes and predicts potential loss in order to set and maintain premium pricing for an insurance company?

7

Under a stock redemption corporate buy-sell agreement, how many policies must be written if the corporation is owned by 7 shareholders?

Taft-Hartley Trust

Which of the following is established to fund a multiemployer plan?

Misrepresentation

Overstating promises, using inaccurate or misleading information and guaranteeing insurance are types of:

Interest-free option

The following life policy settlement options are available to the policy's beneficiary EXCEPT:

Dividend

A return of premium that is paid out by mutual insurance companies at the end of the year as a result of either positive operating costs or other investment returns is also known as a:

Accumulation Period

Which of the following defines the period during which funds grow in an annuity?

50%

For individuals who have reached their normal retirement age, their spouses are entitled a retirement benefit that is equal to what percentage of the retired worker's primary insurance amount (PIA)?

Floods

All of the following are considered hazards EXCEPT:

Buy-Sell Agreement

Which type of business life insurance 'buyout' agreement is used to purchase the interest of a deceased partner so that the business can continue to operate without financial interruption?

Viatical settlement Provider

An individual, company or legal entity that purchases ownership of a life insurance contract from a policyowner who, in return, receives compensation amounting to less than the policy's death benefit, usually 60%-80% of the policy's proceeds is known as a :

A new application for insurance must be established

In the event that a life insurance policy has lapsed, which of the following actions is NOT required of the policyowner before an insurance company will reinstate the policy?

If the insurance coverage is less than $75,000, employees do not have to report the employer-paid premiums as income

All of the statements below pertaining to group life insurance are correct EXCEPT:

30 days

Within what amount of time must a licensed insurance agent report to the Florida Department of Financial Services that he/she has been found guilty of or has pleaded guilty to a felony or crime punishable by imprisonment of 1 year or more?

Individual Life insurance

Which of the following insurance contracts must follow the Florida Life Solicitation Law?