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2024 FLORIDA LIFE AND HEALTH FINAL EXAM WITH 100% CORRECT ANSWERS Which Unfair Trade Practice involves making a false statement on an insurance application in order to receive money from an insurer? - CORRECT ANSWERS- Misrepresentation Which of these options can an individual use their medical flexible spending account to pay for? - CORRECT ANSWERS- Prescription drugs are an allowable expense when paid for by a medical flexible spending account. 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? - CORRECT ANSWERS- The conversion privilege allows an individual to leave the group term plan and continue his or her insurance without providing evidence of insurability. Who owns a stock company? - CORRECT ANSWERS- A stock insurance company is owned by its stockholders.
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Insured - CORRECT ANSWERS- The person covered by the insurance policy. Rider - CORRECT ANSWERS- A written modification attached to a policy that increases or decreases coverage and/or premiums. Agent - CORRECT ANSWERS- An individual who is licensed to sell, negotiate, or effect insurance contracts on behalf of the insurer. According to the Affordable Care Act, what are the cost-sharing requirements for preventive care? - CORRECT ANSWERS- No cost sharing. What is a unilateral contract? - CORRECT ANSWERS- A contract in which only one of the parties is legally bound to fulfill its obligations. What law protects consumers from the circulation of inaccurate or obsolete information? - CORRECT ANSWERS- The Fair Credit Reporting Act. What are the three types of agent authority? - CORRECT ANSWERS- Implied, Express, and Apparent. What is a hospital indemnity plan? - CORRECT ANSWERS- A policy that provides a benefit based only on the number of days confined in the hospital, regardless of medical expenses incurred. What is the main principle of an HMO plan? - CORRECT ANSWERS- Preventive Care What does the amount of group disability benefit an insured can receive depend upon? - CORRECT ANSWERS- The insured's income prior to a disability. What is name of the process that insurance companies use to determine whether or not an applicant is insurable? - CORRECT ANSWERS- Underwriting
The requirement that agents must account for and promptly remit all insurance funds collected is known as what type of agent responsibility? - CORRECT ANSWERS- Fiduciary What is a third-party ownership? - CORRECT ANSWERS- An insurance arrangement in which the policy owner and the insured are not the same person. Suitability - CORRECT ANSWERS- Factors that determine if an insurance product is appropriate for a particular customer. Premium - CORRECT ANSWERS- A payment by the policy owner to the insurance company to keep the policy in force. Disclosure - CORRECT ANSWERS- Providing sufficient information to help someone make informed decision. An agent offer a client free tickets to a sporting event in exchange for the purchase of an insurance policy. What is the agent guilty of? - CORRECT ANSWERS- Rebating If an insurer meets the states financial requirements and is approved to transact business in the state, it is considered what type of insurer? - CORRECT ANSWERS- Authorized What information are the members of the medical information bureau required to report? - CORRECT ANSWERS- Adverse medical information about the applicants or insureds. What type of beneficiary can be changed at any point by the policy owner? - CORRECT ANSWERS- Revocable What document describes the specific information about a policy? - CORRECT ANSWERS- Policy Summary What is the term for the causes of loss insured against in an insurance policy? - CORRECT ANSWERS- Peril Whom does an insurance agent represent? - CORRECT ANSWERS- Insurance Company What is an unfair trade practice? - CORRECT ANSWERS- Any fraudulent, deceptive, or dishonest business practice that is prohibited by statutes and regulations. Insurer - CORRECT ANSWERS- The company that issues an insurance policy.
Peril - CORRECT ANSWERS- Cause of loss Contract of Adhesion - CORRECT ANSWERS- A contract prepared by one party that must be accepted as written or be rejected by the other party. What are the four elements of an insurance contract? - CORRECT ANSWERS- Agreement (Offer and Acceptance), consideration, competent parties, and legal purpose. Policy Provision - CORRECT ANSWERS- A clause that stipulates the rights and obligations under an insurance contract. Fiduciary - CORRECT ANSWERS- A producer who handles insurer's funds in a trust capacity. Who is considered a nonresident agent? - CORRECT ANSWERS- An agent who resides and is licensed in another state, but is authorized to transact insurance in Florida. What is underwriting? - CORRECT ANSWERS- The risk selection and classification process. What is the best way to handle incomplete insurance applications? - CORRECT ANSWERS- Return the application to the applicant for completion. What are the five characteristics of an ideally insurable risk? - CORRECT ANSWERS- Loss must be:
Who must be notified of the producers change of address? - CORRECT ANSWERS- The department of Insurance Certificate of Insurance - CORRECT ANSWERS- A document issued to insureds under a group plan that states the coverage being issued, and indicates the coverage type and amounts. Nonrenewal - CORRECT ANSWERS- Termination of a policy by an insurer on the anniversary or renewal date. Representation - CORRECT ANSWERS- A statement made by the applicant on the insurance application that is believed to be true. What is a warranty? - CORRECT ANSWERS- An absolutely true statement that, if breached, may viod an insurance contract. In insurance, when is the offer usually made on a contract? - CORRECT ANSWERS- When the insurance application is submitted. When a change needs to be made on the application for insurance, which is the best method for correcting the information? - CORRECT ANSWERS- Complete a new application or ask the applicant to initial the correction on the original application. A situation in which a person can only experience a loss and no gain represents what type of risk? - CORRECT ANSWERS- Pure Risk Who is responsible for the contents of insurance advertisements? - CORRECT ANSWERS- The Insurance Company What is the entire contract in health insurance underwriting? - CORRECT ANSWERS- The policy with riders and endorsements, plus a copy of the application. What is the main purpose for requiring a person to be licensed to transact insurance? - CORRECT ANSWERS- To protect the general public. Who is an insurance agent? - CORRECT ANSWERS- A person authorized to sell, solicit, and negotiate insurance contracts. What illegal act does a producer commit what representing a policy in a more favorable light than the policy really is? - CORRECT ANSWERS- Misrepresentation
Field Underwriter - CORRECT ANSWERS- An insurance agent who conducts an initial policy solicitation and application. (The company's front line of underwriting) Policyowner - CORRECT ANSWERS- The person entitled to exercise the rights and privileges in the policy. What is solvency? - CORRECT ANSWERS- An insurer's ability to meet its financial obligations of policy owners, insureds, and beneficiaries. What entities make up the medical information bureau (MIB)? - CORRECT ANSWERS- Insurers What is the foundation of statistical prediction of loss upon which rate for insurance are calculated? - CORRECT ANSWERS- Law of Large Numbers Adverse Selection - CORRECT ANSWERS- The tendency of risk with higher probability of loss to purchase and maintain insurance more often than the risks who represent lower probability of loss. Concealment - CORRECT ANSWERS- The withholding of known facts that, if material, can void a contract. What is the purpose of a cease and desist order? - CORRECT ANSWERS- To prevent a producer or insurer from violating laws for transacting insurance. What is the purpose of the Florida Guaranty Association? - CORRECT ANSWERS- To protect policy owners, insureds, and beneficiaries from financial losses caused by insolvent insurers. Who's responsible for paying the cost of a medical examination required in the process of underwriting? - CORRECT ANSWERS- The Insurer Which of the two types of policy assignments requires transfer of all ownership rights in the policy to a third-party? - CORRECT ANSWERS- Absolute Assignment Who may share in the commissions from the sale of a life insurance policy? - CORRECT ANSWERS- Only producers properly licensed for the type of insurance transaction. (Ex. Life insurance agents may share commissions for life insurance transactions) Who must be a member of a state insurance guaranty association? - CORRECT ANSWERS- Any authorized insurer within a state.
When should an agent obtain a statement of good health from the insured? - CORRECT ANSWERS- When the premium was paid upon delivery rather that at the time of application. What is the main responsibility of a company's underwriting unit? - CORRECT ANSWERS- Risk Selection Conditions that increase the chance of a loss are known as what? - CORRECT ANSWERS- Hazards What is the purpose of the agent's report during the application process? - CORRECT ANSWERS- It provides the agent's observation about the proposed insured that may help in the underwriting process. If an underwriter requires extensive information about the applicants medical history, what report will best serve this purpose? - CORRECT ANSWERS- Attending Physician's statement. What are agents required to do in order to renew their license? - CORRECT ANSWERS- Complete required continuing education hours. Primary Beneficiary - CORRECT ANSWERS- A beneficiary who has the first claim to the policy proceeds after the death of the insured. Why are dividends in life insurance polices not taxable? - CORRECT ANSWERS- Dividends are not considered income for tax purposes; they are a return of unused premium. How soon can income payments begin in an immediate annuity? - CORRECT ANSWERS- No later that one year from the time of annuity purchase. What type of annuity requires an agent to have a securities license? - CORRECT ANSWERS- Variable Annuity What are some examples of Life qualified plans? - CORRECT ANSWERS- IRA, 401(k), HR 10 (keogh), SEP, SIMPLE Under what non-forfeiture option does the company pay the policy's surrender value and have no further obligations to the policy owner? - CORRECT ANSWERS- Cash Surrender What provision in a life insurance policy extends coverage beyond the premium due date? - CORRECT ANSWERS- Grace Period. In term policies, what happens to the premium throughout the term of the policy? - CORRECT ANSWERS- The premium remains level.
What type of whole life insurance policy only requires a payment of premium at its inception, provides insurance protection for the life of the insured, and endows at the insured's age 100? - CORRECT ANSWERS- Single premium whole life. What are the characteristics of the group that underwriters will consider before issuing a group life policy? - CORRECT ANSWERS- Groups purpose, size, financial strength, and turnover. What is the main advantage of converting from group life insurance to individual coverage? - CORRECT ANSWERS- Evidence of insurability is not required What is included in Part 2 of a life insurance application? - CORRECT ANSWERS- Medical information about the prospective insured. Term Insurance - CORRECT ANSWERS- Coverage for a specified period of time without cash values or living benefits. Lump Sum - CORRECT ANSWERS- A payout method that pays the beneficiary the entire benefit in one payment. What are the consequences of withdrawing funds from a traditional IRA prior to the age of 59 1/2? - CORRECT ANSWERS- 10% penalty Whose life expectancy is taken into consideration in an annuity contract? - CORRECT ANSWERS- Annuitant Who bears the investment risk in a fixed annuity? - CORRECT ANSWERS- The insurer What is the primary purpose of a 401(k) plan? - CORRECT ANSWERS- Provide retirement income. What does the term "double indemnity" mean? - CORRECT ANSWERS- The insurer will pay a benefit of twice the face amount. What type of beneficiary is next in line after the primary beneficiary? - CORRECT ANSWERS- Contingent Beneficiary. Who controls changes in premium payments, face changes, and loans in a life insurance policy? - CORRECT ANSWERS- Policy owners. When would a 20-pay whole life policy endow? - CORRECT ANSWERS- When the insured reaches age 100.
Who owns a group life insurance contract? - CORRECT ANSWERS- The employer. In a joint life policy, when is the death benefit paid? - CORRECT ANSWERS- Upon the first death (if first-to-die policy), or upon the second death (if survivor ship policy) What is the blackout period for Social Security Benefits? - CORRECT ANSWERS- A period of time during which the surviving spouse does not receive social security benefits. What are the personal uses of life insurance? - CORRECT ANSWERS- Survivor protection, estate creation and conservation, cash accumulation and liquidity. Non-forfeiture Options - CORRECT ANSWERS- Methods of distribution of guaranteed values in a life insurance policy. With the interest-only settlement option, what happens to the policy's death benefit? - CORRECT ANSWERS- Policy proceeds are retained by the insurance company; only the interest is paid to the beneficiary. If there is no named beneficiary for the annuity benefits, where do the benefits go? - CORRECT ANSWERS- Annuitant's estate What is the general taxation rule for death benefits payable to the beneficiary of a life insurance policy? - CORRECT ANSWERS- Death benefits are generally not subject to income taxes. What is the purpose of the automatic premium loan provision? - CORRECT ANSWERS- To prevent the unintentional lapse of a policy because of nonpayment of premium. Which non-forfeiture option is automatically selected by the company if not chosen by the policy owner? - CORRECT ANSWERS- Extended Term. What life insurance policy provision prevents an insurer form disputing or denying a claim due to misstatements on the application after a certain period of time? - CORRECT ANSWERS- Incontestability In annually renewable term policies, what is the annual premium based upon? - CORRECT ANSWERS- The insured's attained age. In what type of life insurance policy can the policy owner skip premium payments without the policy lapsing? - CORRECT ANSWERS- Universal Life
What type of life insurance policy offers pure death protection? - CORRECT ANSWERS- Term At what point does coverage begin when an agent issues a conditional insurability receipt for a life insurance policy? - CORRECT ANSWERS- Either on the date of the application or the date of the medical exam, whichever occurs last. What are the three main factors that determine the premium for a life insurance policy? - CORRECT ANSWERS- Mortality, Interest, and Expense. Qualified Plan - CORRECT ANSWERS- A retirement plan that meets the IRS guidelines for receiving favorable tax treatment. Face Amount - CORRECT ANSWERS- The amount of benefit stated in the life insurance policy. What is the penalty for excessive contributions to a traditional IRA? - CORRECT ANSWERS- 6% What are the two phases of an Annuity? - CORRECT ANSWERS- Accumulation and Annuitization (Pay-in and Pay-out) What annuity settlement option provides income payments to the annuitant for the duration of his or his life, and also guarantees payment for a specified number of years? - CORRECT ANSWERS- Life income with period certain. For a retirement plan to be qualified, it must be designed for whose benefit?
What are the death benefit options in universal life policies? - CORRECT ANSWERS- Option A: Level Death Benefit Option B: Increasing Death Benefit Why are policy loans not available on term insurance? - CORRECT ANSWERS- There is no cash value to borrow against. What document must a producer provide to the insured during policy replacement? - CORRECT ANSWERS- Notice regarding replacement When must insurable interest exist in a life insurance policy? - CORRECT ANSWERS- At the time of application. Participating Policy - CORRECT ANSWERS- Insurance in which policy owners share in profits or losses and receive dividends when available. If a settlement option is not chosen by the policy owner or the beneficiary, what option will be used by the insurer? - CORRECT ANSWERS- Lump-Sum payment What type of annuity is purchased with multiple payments, and begins income payments no sooner than one year after the purchase? - CORRECT ANSWERS- Flexible premium deferred annuity According to the taxation rules of life insurance policies, how are cash value increases taxed? - CORRECT ANSWERS- Cash value growth is tax-deferred Who does the common disaster clause protect? - CORRECT ANSWERS- The contingent beneficiary Which non-forfeiture option provides coverage for the longest period of time?
What portion of a partial withdrawal from a universal life policy will be taxed?
What type of annuity is suitable for someone who wants the largest benefit amount only for as long as the annuitant lives? - CORRECT ANSWERS- Straight Life What is the main reason for purchasing an annuity? - CORRECT ANSWERS- To provide income that the annuitant cannot outlive. SIMPLE plans are available to groups of how many employees? - CORRECT ANSWERS- No more than 100 What type of health insurance would pay for hiring a replacement for a valuable employee who becomes disabled? - CORRECT ANSWERS- Key- person disability insurance What is a presumptive disability provision? - CORRECT ANSWERS- Provision found in most disability income policies that specifies the conditions that will automatically qualify for full disability benefits. Under an individual disability income policy, the benefits must be paid on at least what schedule? - CORRECT ANSWERS- Monthly What is a probationary period in group health insurance? - CORRECT ANSWERS- The period of time that must lapse before an employee is eligible for group health coverage. Who decides which optional provisions would be included in the health policy? - CORRECT ANSWERS- The insurance company Which Medicare part helps pay for inpatient hospital care, inpatient care in skilled nursing facility, home health care, and hospice care? - CORRECT ANSWERS- Part A Can Alzheimer's disease be excluded from coverage under a ling-term care policy? - CORRECT ANSWERS- NO, organic cognitive disorders, such as Alzheimer's or Parkinson's must be covered. How many consecutive months of coverage must long-term care insurance provide? - CORRECT ANSWERS- 12 Months Under a fully contributory health plan, how are the benefits received by the employee? - CORRECT ANSWERS- Income tax free How are the benefits of a group accidental death and dismemberment policy received? - CORRECT ANSWERS- Income Tax free
What is overinsurance? - CORRECT ANSWERS- An excessive amount of insurance that would result in over payment to the insured in the event of a loss. Most health policies will pay accidental death benefits if the death is caused by an accident and occurs within how many days? - CORRECT ANSWERS- 90 Days In health insurance, what is considered a sickness? - CORRECT ANSWERS- An illness that first arises while the policy is in force. What do individual insureds receive as proof of their group health coverage?
Under what employer sponsored plan are the benefits taxable to an employee in proportion to the amount of premium paid by the employer? - CORRECT ANSWERS- Disability income When are LTC benefits received tax-free by an individual? - CORRECT ANSWERS- LTC benefits are always received tax-free What is the gatekeeper model? - CORRECT ANSWERS- An HMO model that uses the insured's primary care physician as the initial contact for the insured for medical care and for referrals. What are the common exclusions in most health insurance policies? - CORRECT ANSWERS- War, self-inflicted injuries, elective cosmetic surgeries, injuries caused by participating in illegal activities, and workers compensation benefits. What is the term for a period of time immediately following a disability during which benefits are not payable? - CORRECT ANSWERS- Elimination Period How can health insurance policies be delivered to the insured? - CORRECT ANSWERS- Personally delivered by the agent or mailed. What is the purpose of respite care in long-term care insurance? - CORRECT ANSWERS- To provide relief for a caregiver. In what type of health insurance plans are providers paid for services in advance, regardless of the services provided? - CORRECT ANSWERS- Prepaid plans When an individual is covered under two health plans that have duplicate benefits, the benefit will be prorated to avoid what? - CORRECT ANSWERS- Overinsurance What is the main difference between coinsurance and co-pay? - CORRECT ANSWERS- Co-pay is a set dollar amount; coinsurance is a percentage of the expenses Which policy rider in a health insurance policy allows an insured to purchase additional amounts of disability income coverage without evidence of insurability? - CORRECT ANSWERS- Guaranteed Insurablility Rider What Medicare part provides prescription drug benefit? - CORRECT ANSWERS- Part D
How is Medicaid funded? - CORRECT ANSWERS- Medicaid is a federal and state funded program How are individually owned disability income benefits taxed once received by that insured? - CORRECT ANSWERS- Disability benefits are not taxed; they are received income tax free How long do short-term disability group plans pay benefits? - CORRECT ANSWERS- For a period of less than two years In health insurance, when would an excess plan pay benefits? - CORRECT ANSWERS- After the primary plan has paid it's full promised benefit, the excess plan will pay the balance. What is Long-Term Care? - CORRECT ANSWERS- Health and social services provided for individuals with chronic disease or disabilities who requires living assistance at home or in a nursing home facility. What type of health insurance plans cover all accidents and sicknesses that are not specifically excluded in the policy? - CORRECT ANSWERS- Comprehensive plans What is the purpose of managed care health insurance plans? - CORRECT ANSWERS- To control health insurance claims expenses. If an agent makes a correction on the application for health insurance, who must initial the correct answer? - CORRECT ANSWERS- The Applicant What is "own occupation" disability? - CORRECT ANSWERS- Insured's inability to perform duties of his or her current job or an occupation for which the insured is educated and trained. According to the reinstatement provision, once a lapsed policy is reinstated, how soon will coverage be available for accidents? - CORRECT ANSWERS- Immediately If the insured pays a monthly premium for health insurance, how long will the grace period be on the policy? - CORRECT ANSWERS- 10 Days What is a deductible in a health insurance policy? - CORRECT ANSWERS- A specified dollar amount that the insured must pay before the insurer pays any policy benefits. In which Medicare supplemental plans are the core benefits found? - CORRECT ANSWERS- All plans (A-N)
When is the initial enrollment period for Medicare part A? - CORRECT ANSWERS- When an individual first becomes eligib;e for Medicare, starting three months before turning age 65 and ending three months after the 65th birthday. What part of Medicare is known as medical insurance? - CORRECT ANSWERS- Part B What type of disabilities will be covered by occupational coverage? - CORRECT ANSWERS- Disabilities that result from accidents or sicknesses on OR off the job How are benefits received by the business from a key person disability insurance? - CORRECT ANSWERS- Income tax free What is a service plan? - CORRECT ANSWERS- An insurance plan in which benefits are provided to subscribers in the form of services instead of monetary benefits. What is the elimination period? - CORRECT ANSWERS- A waiting period imposed on the insured from the onset of disability until benefit payments begin. Who are the parties in a group health contract? - CORRECT ANSWERS- The employer and the Insurer A waiver of premium provision may be included with what type of health insurance policies? - CORRECT ANSWERS- Disability income and LTC What type of hospital policy pays a fixed amount each day that the insured is in the hospital? - CORRECT ANSWERS- Hospital Indemnity How can AD&D coverage be written? - CORRECT ANSWERS- As a rider to a health insurance policy, or as a seperate policy. What is a fee-for-service health plan? - CORRECT ANSWERS- Under a fee-for- service plan, providers receive payments for each service provided. The insured on a health policy misstated his age on the insurance application. If this misrepresentation is discovered, what will happen to the policy? - CORRECT ANSWERS- The benefit amount payable under the policy will be adjusted to the insured's correct age. What is the purpose of the coinsurance provision in health insurance policies? - CORRECT ANSWERS- To prevent overutilization of the policy benefits.
How will changing one's occupation to be more hazardous, affect the health insurance policy in force? - CORRECT ANSWERS- Claim benefits will be reduced to what the premium would have brought for a more hazardous occupation. How is Medicare part B funded? - CORRECT ANSWERS- By monthly premiums and from the general revenues of the federal government. What are the activities of daily living? - CORRECT ANSWERS- Bathing, Dressing, Eating, Transferring, Toileting, and Continence. What benefits are provided by Medicare part C? - CORRECT ANSWERS- Expanded benefits for a fee through private insurance programs such as HMO's or PPO's. What is a tax advantage of the employer paying disability insurance premiums for its employees? - CORRECT ANSWERS- Premiums are deductible as a business expense. How are excess funds in an employee's health savings account (HSA) handled? - CORRECT ANSWERS- The funds can be carried forward to the next year. What is Major medical insurance? - CORRECT ANSWERS- Health insurance that provides coverage for catastrophic losses, and features deductibles and coinsurance, and high limits of coverage. What are two types of expenses that are covered by health plans? - CORRECT ANSWERS- Medical expenses and loss of income expenses If the insureds share in the cost of health insurance premiums with the employer, this would be known as what type of group health plan? - CORRECT ANSWERS- Contributory Who must sign a health insurance application? - CORRECT ANSWERS- The agent and the insured (and the policy owner if different from the insured) What is the time requirement for terminated employees to covert the group health coverage to an individual plan without evidence of insurability? - CORRECT ANSWERS- 31 days after termination of the employment According to the time limit on certain defenses provision in health insurance policies, when can an insurer contest fraudulent misstatements on a health insurance application? - CORRECT ANSWERS- Any time while the policy is in force.
What health policy renewal ability provision allows the insurer to terminate coverage for any reason, and to increase the premiums for any class of insureds? - CORRECT ANSWERS- Optionally renewable What health policy provision defines the insured's duty to provide the insurer with reasonable notice in the event of a loss? - CORRECT ANSWERS- Notice of Claim Which term describes the specific dollar amount beyond which the insured no longer participates in the sharing of expenses? - CORRECT ANSWERS- Stop-Loss What is the purpose of Medicare supplement plans? - CORRECT ANSWERS- To fill the gaps in Medicare coverage Who qualifies for Medicare coverage? - CORRECT ANSWERS- People age 65 of older, or anyone who has been entitled to Social Security disability income benefits for two years, of who has chronic kidney disease. According to the coordination of benefits provision, if both parents have coverage for a child and their employers' policies, which policy would pay first? - CORRECT ANSWERS- The order of payment will be determined by the birthday rule. In group medical and dental expense insurance, what percentage of premium paid by the employer is deductible as a business expense? - CORRECT ANSWERS- 100%