214 FLORIDA INSURANCE EXAM 2024-2025 ACTUAL EXAM QUESTIONS AND CORRECT DETAILED ANSWERS WI, Exams of Insurance Economics

Download 214 FLORIDA INSURANCE EXAM 2024-2025 ACTUAL EXAM QUESTIONS AND CORRECT DETAILED ANSWERS WI and more Exams Insurance Economics in PDF only on Docsity! 214 FLORIDA INSURANCE EXAM 2024-2025 ACTUAL EXAM QUESTIONS AND CORRECT DETAILED ANSWERS WITH RATIONALES (VERIFIED ANSWERS) 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? - CORRECT ANSWERS 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 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? - CORRECT ANSWERS Errors and Omissions Insurance Which of the following terms is known as the voluntary relinquishment of a given right or privilege? - CORRECT ANSWERS 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? - CORRECT ANSWERS 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? - CORRECT ANSWERS 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? - CORRECT ANSWERS 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: - CORRECT ANSWERS 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? - CORRECT ANSWERS Waiver of premium and Disability Income Riders In a contributory group plan, what percentage of eligible employees must be covered? - CORRECT ANSWERS 75% 214 FLORIDA INSURANCE EXAM 2024-2025 ACTUAL EXAM QUESTIONS AND CORRECT DETAILED ANSWERS WITH RATIONALES (VERIFIED ANSWERS) Which statement regarding annuities is CORRECT? - CORRECT ANSWERS 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. - CORRECT ANSWERS 6 Social security is also known as: - CORRECT ANSWERS Old Age Survivors and Disability Insurance (OASDI) Insurance is not intended to protect against? - CORRECT ANSWERS Speculative Risk Under a family plan life insurance policy, coverage on the breadwinner is often provided by which of the following insurance types? - CORRECT ANSWERS Whole Life Which of the following statements regarding annuity settlement or payout options is NOT true? - CORRECT ANSWERS 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: - CORRECT ANSWERS Plans rarely have a matching contribution component by an employer All of the statements below pertaining to group life insurance are correct EXCEPT: - CORRECT ANSWERS 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: - CORRECT ANSWERS Coercion 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 214 FLORIDA INSURANCE EXAM 2024-2025 ACTUAL EXAM QUESTIONS AND CORRECT DETAILED ANSWERS WITH RATIONALES (VERIFIED ANSWERS) Cash value - CORRECT ANSWERS Which of the following is NOT associated with a term life policy? Pre-texting - CORRECT ANSWERS 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 - CORRECT ANSWERS 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. - CORRECT ANSWERS In the event that a policyowner surrenders his or her individual whole life policy, which outcome will likely occur? Occurence Policy - CORRECT ANSWERS 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 - CORRECT ANSWERS Which of the following is NOT a retirement vesting schedule? Spendthrift Clause - CORRECT ANSWERS 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 - CORRECT ANSWERS A paramedical exam includes all of the following EXCEPT The employer - CORRECT ANSWERS 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 - CORRECT ANSWERS 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 214 FLORIDA INSURANCE EXAM 2024-2025 ACTUAL EXAM QUESTIONS AND CORRECT DETAILED ANSWERS WITH RATIONALES (VERIFIED ANSWERS) Non-Medical - CORRECT ANSWERS 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) - CORRECT ANSWERS 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 - CORRECT ANSWERS 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. - CORRECT ANSWERS Loss ratio is defined as No minimum - CORRECT ANSWERS In the state of Florida, what is the minimum number of members required for a group life insurance policy? Controlled business - CORRECT ANSWERS 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 - CORRECT ANSWERS 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: - CORRECT ANSWERS 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 - CORRECT ANSWERS Insurance is not intended to protect against? At the time of application - CORRECT ANSWERS In determining the validity of an insurance contract, when must insurable interest be present? 214 FLORIDA INSURANCE EXAM 2024-2025 ACTUAL EXAM QUESTIONS AND CORRECT DETAILED ANSWERS WITH RATIONALES (VERIFIED ANSWERS) 60 days - CORRECT ANSWERS 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? 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? - CORRECT ANSWERS Errors and Omissions Insurance Which of the following terms is known as the voluntary relinquishment of a given right or privilege? - CORRECT ANSWERS 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? - CORRECT ANSWERS 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? - CORRECT ANSWERS 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? - CORRECT ANSWERS 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: - CORRECT ANSWERS 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? - CORRECT ANSWERS Waiver of premium and Disability Income Riders In a contributory group plan, what percentage of eligible employees must be covered? - CORRECT ANSWERS 75% Which statement regarding annuities is CORRECT? - CORRECT ANSWERS Variable annuity units are fixed but the annuity payment will vary according to the value of the annuity unit. 214 FLORIDA INSURANCE EXAM 2024-2025 ACTUAL EXAM QUESTIONS AND CORRECT DETAILED ANSWERS WITH RATIONALES (VERIFIED ANSWERS) Non-contributory plans - CORRECT ANSWERS Group insurance plans that do not require employees to pay a portion of policy premiums are referred to as: 4 credits - CORRECT ANSWERS What is the maximum number of Social Security credits an individual can earn per year? An annuity contract exchanged for a life insurance policy - CORRECT ANSWERS Under the 1035 policy exchange provision, which of the following will NOT receive favorable tax treatment? Stock - CORRECT ANSWERS Which of the following insurers is best defined as a non-participating company? 100% - CORRECT ANSWERS A non-contributory group policy requires which percentage of eligible employees to be covered? Revocable Designation - CORRECT ANSWERS 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 - CORRECT ANSWERS 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 - CORRECT ANSWERS 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 = ? - CORRECT ANSWERS 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 - CORRECT ANSWERS Leon currently receives $650 per month from his variable annuity. Since he is scheduled to receive payments from his variable annuity for the 214 FLORIDA INSURANCE EXAM 2024-2025 ACTUAL EXAM QUESTIONS AND CORRECT DETAILED ANSWERS WITH RATIONALES (VERIFIED ANSWERS) 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 - CORRECT ANSWERS 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 - CORRECT ANSWERS 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) - CORRECT ANSWERS 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 - CORRECT ANSWERS Which of the following entities manages the National Do-Not-Call Registry? Actuary - CORRECT ANSWERS Which of the following professions analyzes and predicts potential loss in order to set and maintain premium pricing for an insurance company? 7 - CORRECT ANSWERS 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 - CORRECT ANSWERS Which of the following is established to fund a multiemployer plan? Misrepresentation - CORRECT ANSWERS Overstating promises, using inaccurate or misleading information and guaranteeing insurance are types of: Interest-free option - CORRECT ANSWERS The following life policy settlement options are available to the policy's beneficiary EXCEPT: 214 FLORIDA INSURANCE EXAM 2024-2025 ACTUAL EXAM QUESTIONS AND CORRECT DETAILED ANSWERS WITH RATIONALES (VERIFIED ANSWERS) Dividend - CORRECT ANSWERS 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 - CORRECT ANSWERS Which of the following defines the period during which funds grow in an annuity? 50% - CORRECT ANSWERS 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 - CORRECT ANSWERS All of the following are considered hazards EXCEPT: Buy-Sell Agreement - CORRECT ANSWERS 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 - CORRECT ANSWERS 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 - CORRECT ANSWERS 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 - CORRECT ANSWERS All of the statements below pertaining to group life insurance are correct EXCEPT: 30 days - CORRECT ANSWERS 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? 214 FLORIDA INSURANCE EXAM 2024-2025 ACTUAL EXAM QUESTIONS AND CORRECT DETAILED ANSWERS WITH RATIONALES (VERIFIED ANSWERS) insurer's underwriting department upon completion of its underwriting process. - CORRECT ANSWERS How is a conditional receipt BEST described? Preferred risk - CORRECT ANSWERS Patricia has good health, good habits and even good credit. If she were to apply for an insurance policy, which classification would she most likely be labeled? Exclusion ratio - CORRECT ANSWERS Which formula is used to compute the taxable portion of an annuity payment? Sliding - CORRECT ANSWERS Representing to an applicant that a rider or policy add-on with the purchase of insurance is required by law is a form of: In a term life insurance contract, the policyowner has the right to take out loans against his or her policy's cash value, or use it as collateral on a loan. - CORRECT ANSWERS All of the following are true in regards to the rights of ownership in a life insurance contract EXCEPT Family Needs Assessment - CORRECT ANSWERS Which approach is more commonly used when assessing the correct amount of life insurance, taking into account medical deductibles, final expenses, surviving family maintenance income such as mortgage payments and cost-of-living expenses, as well as future income needs such as college tuition and spousal retirement income? National Association of Insurance Commissioners (NAIC) - CORRECT ANSWERS 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? Her insurer will issue a paid-up term life policy with the same face value as the original whole life policy and a term length based on the amount of cash value that the forfeited whole life policy can purchase. - CORRECT ANSWERS Susan has been paying premiums on her whole life policy for the past 14 years. Recently, she decided to stop making payments, but did not select a nonforfeiture option. Since she did not select such option, what actions will her insurer take? Adhesion - CORRECT ANSWERS Which characteristic of insurance means that only one party, the insurer, defines and prepares the insurance contract, which is non-negotiable by the other party? 214 FLORIDA INSURANCE EXAM 2024-2025 ACTUAL EXAM QUESTIONS AND CORRECT DETAILED ANSWERS WITH RATIONALES (VERIFIED ANSWERS) Per stiripes rule - CORRECT ANSWERS Benefits that are passed to a beneficiary's child or children in equal shares in the event that the beneficiary dies is known as the: Irrevocable Designation - CORRECT ANSWERS Linda has decided to make her husband John the beneficiary to her life insurance policy. She has chosen a beneficiary designation that can only allow her to change beneficiaries with the written consent of her husband. This type of beneficiary designation is known as a(n): general buyer's guide; policy summary - CORRECT ANSWERS According to the NAIC Life Insurance Solicitation Model, when soliciting life insurance, a producer is required to provide a prospect with a ______ and a _______ specific to the product being marketed. Fixed-Period Option - CORRECT ANSWERS In the event a whole life policy is cancelled or lapses due to nonpayment, all of the following nonforfeiture options are available to the policyowner EXCEPT Extended term option - CORRECT ANSWERS Which of the following is NOT considered to be a life policy settlement option? Insured - CORRECT ANSWERS Which of the following is NOT involved in an annuity contract? State Guarantee Association - CORRECT ANSWERS In the event an insurance company becomes insolvent, this type of association ensures unpaid claims will be paid for covered policyowners? general buyer's guide; policy summary - CORRECT ANSWERS According to the NAIC Life Insurance Solicitation Model, when soliciting life insurance, a producer is required to provide a prospect with a ______ and a _______ specific to the product being marketed. Spendthrift provision - CORRECT ANSWERS Mr. Baker has named his son as the beneficiary to his life insurance policy, but he is worried about his son's spending habits and the money his son might already owe when he receives the death benefit. Which policy provision, clause or rider best fits his situation? Guaranteed Insurability rider - CORRECT ANSWERS Which rider, also known as an 'insurance protection' rider, states that at certain dates in the future, the insured can purchase additional insurance without evidence of insurability? 214 FLORIDA INSURANCE EXAM 2024-2025 ACTUAL EXAM QUESTIONS AND CORRECT DETAILED ANSWERS WITH RATIONALES (VERIFIED ANSWERS) Mutual - CORRECT ANSWERS Which of the following insurers is considered a participating company? Analyzing risk - CORRECT ANSWERS Which of the following is NOT a method of handling risk? A master contract is issued by the insurer to the employer, while employees are given certificates of insurance - CORRECT ANSWERS In regards to group insurance, which of the following statements below is correct? Irrevocable designation - CORRECT ANSWERS Linda has decided to make her husband John the beneficiary to her life insurance policy. She has chosen a beneficiary designation that can only allow her to change beneficiaries with the written consent of her husband. This type of beneficiary designation is known as a(n): Annuity Funding Plan - CORRECT ANSWERS Which of the following qualified employer retirement plans is NOT recognized as a 'defined contribution' plan? Morbidity Rate - CORRECT ANSWERS In reference to health insurance, which of the following is a factor when determining health insurance premiums? The insured always receives more from the contract than the insurer - CORRECT ANSWERS An insurance contract is considered Aleatory for the following reasons EXCEPT: 24 - CORRECT ANSWERS How many hours of continuing education must a life and/or health insurance agent complete who has held an insurance license for a period of less than 6 years? Agents selling insurance products for an agency are not required to be individually licensed, as long as the agency itself is. - CORRECT ANSWERS Which of the following statements regarding insurance agencies in Florida is INCORRECT? Mutual/Par - CORRECT ANSWERS In addition to being a policyowner, Allison shares in her insurer's success and receives dividends from the company's annual profits. This is because she purchased an insurance policy through a ________ insurer, also referred to as a ________ company.