Florida Insurance Exam Review

Florida Insurance Law and Regulations

Grace Periods

  • Florida law mandates a minimum grace period of 31 days for health insurance policies paid on a quarterly basis.
  • For monthly-premium health insurance policies in Florida, a grace period of at least 10 days must be provided.

Group Life Policies and Conversion Privileges

  • When an employee covered by a Group Life policy has their employment terminated, they have the right to convert to an individual policy upon termination.
  • The conversion privilege allows conversion at regular rates on an attained-age basis, without requiring a medical exam.

Variable Annuities

  • In Florida, a variable annuity policyholder must be informed at least once each year of the accumulated value of the contract during the premium payment period.
  • Variable annuities are regulated by both the Department of Financial Services and the Securities Exchange Commission.

Misstatement of Age

  • If an insured's age was misstated when purchasing a Life policy, the death benefit proceeds will be reduced based on what the premium would have been if purchased at the correct age.

Health Insurance Coverage in Florida

  • Health insurance policies in Florida must cover payment to dentists, pediatricians, and optometrists.
  • Naturopaths are typically NOT covered by health insurance policies in Florida.
  • Group Health policies are required to provide coverage for a newborn child at the moment of birth.

Unfair Claims Settlement Practices

  • Denying an insured's claim without indicating the basis of denial under the policy is considered an unfair claim settlement practice.

Life Policy Loans

  • Adjustable rates for life insurance policy loans in Florida are based on Moody's corporate bond index.
  • A life policy loan in Florida cannot charge a fixed rate of interest higher than 10%.

Policy Provisions

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

False Advertising

  • An insurance company may be judged guilty of false advertising if it exaggerates its dividends in advertisements.

Rebating

  • Rebating is offering a prospect something of value that is not specified in a contract in order to induce the purchase of that contract.
  • Sharing commissions with other licensed agents in the same line of business is not considered rebating.

Policy Replacement

  • When replacing an existing life insurance policy, an agent must submit notice to both the existing insurer and the replacing insurer of their intentions.

Buyer's Guide

  • Agents can help prospective insureds understand and purchase the most appropriate product by delivering a buyer's guide.

Agent's Home as Insurance Agency

  • The Department of Financial Services does not consider the amount of premium collected at an agent's home when determining whether or not the home is an insurance agency.

Medicare Supplement Policies

  • Under a Medicare Supplement policy, the waiting period for pre-existing conditions may not exceed 6 months.
  • A Medicare Supplement's Outline of Coverage MUST include the policy's exceptions and limitations.
  • Medicare Supplement policies may be returned for a premium refund within a MAXIMUM of 30 days after policy delivery.
  • If a Medicare Supplement policy is sold, the agent must deliver an Outline of Coverage to the applicant no later than when the application is taken.

Coercion

  • A creditor who requires a debtor to obtain insurance from a particular company or agent as a condition for a loan is guilty of coercion.
  • Coercion is also considered an unfair trade practice under Florida law.

Twisting

  • Twisting is a misrepresentation made by an agent in order to induce a policyholder to lapse a policy and switch insurance companies; it is considered an unfair trade practice.

Misrepresentation

  • It is illegal to issue, publish, or circulate any illustration or sales material that is false, misleading, or deceptive as to policy benefits or terms; this illegal act is called misrepresentation.

Florida Healthy Kids Corporation

  • Families with children covered by the Florida Healthy Kids Corporation program pay only a portion of the premium.
  • The primary recipients of coverage provided by the Florida Healthy Kids Corporation are school-age children in families with incomes within 200% of the federal poverty level.

Continuing Education Requirements

  • Florida requires that an insurance agent must complete 4 hours of continuing education on the subject of law and ethics every two years.
  • A newly licensed agent must complete 24 hours of continuing education every 2 years.

Policy Rate Discrimination

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

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.

Legal Entities for Selling Life Insurance

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

Foreign Insurance Companies

  • In Florida, a foreign insurance company is a company that is formed under the laws of a state other than Florida.

Variable Life Insurance Agents

  • An agent marketing variable life insurance must be licensed and appointed as a life and variable contract agent and a broker dealer.

Stock Insurance Companies

  • A stock insurance company is owned exclusively by its shareholders.

Agent Representation

  • When soliciting insurance to a client, an agent represents their insurance company.

FINRA Registration

  • An agent is required to register with the Financial Industry Regulatory Authority (FINRA) in order to sell Variable Life insurance policies.

Contestability Period

  • There is a 2-year time limit for an insurer to contest a life insurance contract due to application fraud; the maximum contestability period for most life insurance policies is 2 years.

Notice of Claim

  • Written notice of a health claim must be given to the insurer 20 days after the occurrence of the loss.

Group Life Policies Conversion Privilege

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

Insurance Company Authorization

  • Domestic, foreign, or alien companies must be authorized by each state where they conduct business.

Variable Annuities License

  • An agent who wants to sell Variable annuities must be licensed by the state, which includes examinations in Life and Variable contracts.

Accident and Health Insurance Reinstatement

  • An insurance company must act on an Accident and Health insurance application for reinstatement within 45 days.

Association Plans Regulation

  • Association Plans must be fully insured by an authorized insurer; the insurer is subject to state regulation.

False Advertising by Insurance Companies

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

Mini COBRA

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

Unauthorized Entities

  • A licensed agent in Florida may never represent an unauthorized entity.

Medicare Parts

  • Medicare Part B is also known as supplementary medical insurance.
  • Eligibility for Part D: Prescription Drug Coverage depends on having Medicare coverage.
  • Medicare Part B covers medically necessary doctors’ services, preventive care, durable medical equipment, hospital outpatient services, lab tests, x-rays, mental health care, and some home health/ambulance services, with a monthly premium.

Guaranteed Insurability Rider

  • A guaranteed insurability rider guarantees the insured the option of purchasing additional amounts of disability income coverage at predetermined times without requiring the insured to provide evidence of insurability.

Group Long-Term Disability Benefit Amounts

  • Group long-term disability benefit amounts are usually limited to 60% of the participant's income.

Underwriting Disability Income Policies

  • When an insurer underwrites an individual for disability income coverage, the most commonly used factor is annual earnings.

Non-Contributory Health Insurance Plans

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

Waiver of Premium

  • All future premiums are NOT waived if the insured recovers from the disability.

Optional Renewability Clause

  • An optional renewability clause allows an insurer the unrestricted right to terminate coverage at any anniversary or at any premium due date.

Medicare as Secondary Payer

  • If an individual continues to work after the age of 65 and keeps the group plan, primary coverage comes from the group insurance plan, and Medicare is considered the secondary payer.

COBRA (Consolidated Omnibus Budget Reconciliation Act) of 1985

  • The Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 allows an employee to continue group medical insurance by self-paying the premiums after employment has been terminated.

Conditionally Renewable Health Insurance

  • When an insurer has the right to terminate a health insurance policy for specific reasons other than the insured's health, the plan is described as conditionally renewable.

Tax Deductions for Sole Proprietors

  • 100% of health costs paid by sole proprietors is tax deductible.

Associations and Labor Groups

  • Associations and labor groups have a constitution and bylaws and are organized and maintained in good faith for purposes other than obtaining insurance.

Master Policy

  • A single contract for group medical insurance issued to an employer is known as a master policy.

Consideration

  • Consideration is the element of an insurance contract which demonstrates that each party is giving something of value.

Fixed Annuities

  • Written notice for a health claim must be given to the insurer 20 days after the occurrence of the loss.
  • 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.

Presumptive Disability

  • Deafness is an example of a presumptive disability.

COBRA Continued Coverage

  • A terminated employee is eligible to continue health coverage under COBRA unless they are terminated for gross misconduct.
  • "Former dependent of employee no longer of dependent status" and a "divorced spouse of employee" would both be eligible for COBRA continuation as long as they were covered under the plan the day prior to divorce or losing dependent status.

Life Insurance for Employees

  • A type of life insurance policy most commonly used by businesses for employees is a group policy.

Entire Contract Provision

  • All of these are included as part of a contract in the entire contract provision EXCEPT the changes made by the producer.

HIPAA and Individually Identifiable Health Information

  • HIPAA considers a person's health claim information as "individually identifiable health information".

Group Health Policy Eligibility

  • A temporary employee is typically NOT eligible for coverage in a group health policy.

Unpaid Premium Provision

  • If there is an unpaid premium at the time a claim becomes payable, the amount of the premium is to be deducted from the sum payable to the insured or beneficiary.

Partial Surrender

  • A partial surrender allows the interest-sensitive life policyholder to withdraw the policy's cash value interest-free.

Effective Date of Health Insurance

  • The "effective date" is the health insurance coverage start date.

Misstatement of age provision

  • The misstatement of age provision allows the insurer to adjust the benefit payable if the age of the insured was misstated when application for the policy was made.

Index Whole Life Insurance

  • The securities component of index whole life insurance is considered an effective hedge against inflation.

Class Designation

  • "All surviving children" is an example of naming a beneficiary by class designation.

Insurance Policy Forms

  • The insurance carrier has become responsible for assembling the policy forms for the insured person(s).

Guaranteed Renewable Premium Benefit

  • A guaranteed renewable policy CANNOT increase the premiums on an individual basis, only on the basis of an entire classification.

Temporary Annuity Certain

  • The correct answer is, "Temporary annuity certain". Under a temporary annuity certain, the company guarantees that payments will be made for a specified number of years. Since this income is guaranteed, if the annuitant dies before receiving payments for the full specified period of time, the annuitant's beneficiary will receive the payments for the remaining number of years.

Employer-Sponsored Contributory Group Disability Income Plan Taxation

  • 60% of an income benefit is taxed to the employee because 60% of the premiums paid come from the employer.

Notice of Loss Procedures

  • The insured may file written proof of loss in any form if the insurer does NOT furnish forms after the insured gives notice of loss.

Noncancellable Policy

  • Noncancellable policies may not be changed in anyway by the insurer up to a specified age so long as the premiums are paid.

Guaranteed Renewable Policy

  • An insurer has the right to change the premium for policyowners with a guaranteed renewable policy, but CANNOT cancel the policy.

Variable Universal Life Insurance

  • The right to select the investment which will provide the greatest return pertains only to variable universal life insurance.

Risk Factors in Life Insurance Underwriting

  • All of these are considered risk factors in life underwriting criteria EXCEPT number of children.

Nonforfeiture Options

  • All of these are nonforfeiture options EXCEPT Reduction of Premium.

Limited Policies

  • Health insurance policies that can be purchased to cover specific low frequency diseases are called limited policies.

Insurance Rider

  • An endorsement found in an insurance plan which modifies the provisions of the policy is called a rider.

Policy Summary

  • A document that specifies the critical segments of an insured's life insurance policy is known as a policy summary.

Life Insurance Policy Exclusions

  • Accidental death is not a common exclusion to a life insurance policy.

Military Service Exclusion Clause

  • The correct answer is, "Results". The "results clause" states the insurer is excused from paying the amount only if the death is a result of war.

Common Disaster Provision

  • The correct answer is, "the insured outlived the beneficiary". A common disaster provision states that if the beneficiary dies from the same accident as the insured individual, the insurer will proceed as if the insured outlived the beneficiary. This allows the proceeds to go to the contingent beneficiary.

Double Indemnity Rider

  • Matt's beneficiary will be provided with the double indemnity rider if Matt dies instantly from a car accident.

Nature of Insurance Applications

  • The proposed insured's statements on a life insurance application are considered to be representations.

Alternatives to Life Settlement

  • An alternative to a life settlement is an accelerated death benefit rider.

Statement of Good Health

  • In this situation, the producer must have the applicant sign a statement of good health when delivering the policy.

Disability Income Rider

  • The rider which pays a life insurance policyowner a monthly amount in the event of total and permanent disability is called a disability income rider.

Key Factors in Underwriting Life Insurance

  • Marital status is not a key factor in underwriting life insurance.

Living Benefit Option

  • The accelerated death benefit is considered to be a Living Benefit option in a life insurance policy.

Standard Policy Dividends

  • Policyowner dividends normally accumulate WITH interest.

Nonforfeiture Provision

  • A nonforfeiture provision in a cash value life insurance policy allows a policyowner to terminate the policy in return for a reduced paid-up policy of the same type.

Policy Effective Date

  • The effective date is the health insurance coverage start date.

Underwriting Medical History

  • A disclosure authorization response is not considered a source of underwriting information.

Privacy Notice Provision

  • The correct answer is "Producer". The producer is responsible for providing the insurance applicant with privacy Notice

Medical information Buruea

  • The Medical Information Bureau (MIB) is a nonprofit central information agency that was established years ago by several insurance companies to aid in the underwriting process.

Insurance Provider Organization

  • If a patient with a preferred provider organization (PPO) chooses to use a non-PPO, the patient usually can expect to have higher out-of-pocket expenses

Concurrent Review

  • Concurrent review involves monitoring the insured's hospital stay to ensure everything is going according to schedule and that the insured will be released as planned.

Employeer Mandate

  • Group health plans obligated by the Consolidated Omnibus Budget Reconciliation Act (COBRA) cover groups of at least 20 employees.

Premiums

  • Cobra premiums may be higher, up to 102% of what would be paid if still employed.