Florida 2-15 Insurance License Exam: Questions and Answers with Rationales, Exams of Nursing

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FLORIDA 2-15 INSURANCE LICENSE EXAM

LATEST 2023-2024 ACTUAL EXAM 300

QUESTIONS AND CORRECT ANSWERS WITH

RATIONALES AGRADE NEW !!

In the insurance business, risk can best be defined as: - ANSWER>>>Uncertainty regarding financial loss

Joanna and her husband, Tom, have a $40,000 annuity that pays them $200 a month. Tom dies and Joanna continues receiving the $200 monthly check as long as she lives. When Joanna dies, the company ceases payment. This is an example of: - ANSWER>>>a joint and full survivor annuity

John stopped paying premiums on his permanent life insurance policy 8 years ago though he never surrendered it. He is still insurable and has no outstanding loan against the policy. The company probably will decline to reinstate the policy because the time limit for reinstatement has expired. The limit usually is: - ANSWER>>>3 years or as long as 7 years

Kevin, the insured in a $200,000 life insurance policy, and his sole beneficiary, Lynda, are killed instantly in a car accident. Under the Uniform Simultaneous Death Act, to whose estate will the policy proceeds be paid? - ANSWER>>>The policy proceeds will be paid to Kevin's estate

Leland elects to surrender his whole life policy for a reduced paid-up policy. The cash value of his new policy will: - ANSWER>>>continue to increase

A licensed agent legally represents: - ANSWER>>>the insurer

Mrs. Williamson purchases a 5-year, $50,000 term policy with an option to renew. Which of the following statements about the policy's renewability is CORRECT: - ANSWER>>>The premium for the renewal period will be higher than the initial period. - Premiums for the renewal period will be higher because of the insured's advanced age and, thus, increased risk.

Ron, the insured, dies during the grace period for his $100,000 life insurance policy. Considering that the premium on the policy has not been paid, what happens? - ANSWER>>>The amount of the premium is deducted from the policy proceeds paid to the beneficiary.

Statements made by an applicant for life insurance that are guaranteed to be true are: - ANSWER>>>warranties

To whom does the cash value of a life insurance policy belong? - ANSWER>>>Policy Owner

What constitutes "consideration" for a life insurance policy? - ANSWER>>>Application and initial premium

When a policyowner cannot exercise rights of ownership without the policy beneficiary's consent, the beneficiary is designated: - ANSWER>>>irrevocable

Which of the following best describes the function of insurance? - ANSWER>>>It spreads financial risk over a large group to minimize the loss to any one individual

Which of the following constitutes an insurable interest? - ANSWER>>>The policyowner must expect to suffer a loss when the insured dies or becomes disabled

Which of the following factors determines whether policy dividends will be paid on a participating policy? - ANSWER>>>Expenses & claim costs

Which of the following insurance companies is owned by its policyholders? - ANSWER>>>Mutual insurer

Which of the following is stated in the consideration clause of a life insurance policy? - ANSWER>>>Amount and frequency of premium payments

Which of the following legal terms indicates that a life insurance contract contains the enforceable promises of only one party? - ANSWER>>>unilateral

Which of the following risks is insurable? - ANSWER>>>Pure risks

Which of the following statements describes the parol evidence rule? - ANSWER>>>A written contract cannot be changed by oral evidence

Which provision of a life insurance policy states that the application is part of the contract?

• ANSWER>>>Entire contract clause

With regard to insurable risks, which of the following statements is NOT correct? - ANSWER>>>An insurable risk must involve loss that is within the insured's control

Which of the following insurance concepts is founded on the ability to predict the approximate number of deaths or frequency of disabilities within a certain group during a specific time. - ANSWER>>>Law of large numbers

The owner of a camera store is worried that her new employees may help themselves to items from inventory without paying for them. What kind of hazard is described. - ANSWER>>>Moral hazard

All of the following actions are examples of risk avoidance EXCEPT - ANSWER>>>paying insurance premiums

Which of the following statements is CORRECT - ANSWER>>>only pure risk is insurable

Which of the following statements does NOT describe an element of an insurable risk - ANSWER>>>The loss mist no be due to chance

A tornado is an example of: - ANSWER>>>peril

Tom buys his wife Mary a $50,000 diamond ring. When she is not wearing the ring, she keeps it in a safe deposit box at a local bank. This is an example of risk - ANSWER>>>reduction

Producers are expected to adhere to all of the following standards to protect consumers and promote suitable sales EXCEPT - ANSWER>>>assessing prospects' financial ability to pay commissions

Which of the following statements regarding types of insurers is NOT correct - ANSWER>>>Reinsurers usually deal with policy owners

Regarding landmark cases and laws involving the regulation of insurance, which of the following statements is NOT correct. - ANSWER>>>The Federal Trade Commission (FTC) directly supervises all insurance marketing activities.

Which of the following statements regarding the National Association of Insurance Commissioners (NAIC) is NOT correct - ANSWER>>>the NAIC is empowered to prosecute and punish criminal violators in the insurance industry

In an insurance transaction, licensed agents legally represent which of the following? - ANSWER>>>Insurer

In Florida, properly licensed and appointed agents may act as brokers in insurance transactions, in which case they may legally represent - ANSWER>>>The applicant and the insured

Name 3 service providers - ANSWER>>>HMO, PPO, Benefit plans offering medical services to subscribers

A reinsurer is a company that - ANSWER>>>assumes a portion of the risk from another insurer

The head of a state office of insurance regulation is generally responsible for all of the following EXCEPT - ANSWER>>>making insurance laws

In addition to the state, the organization that regulates variable life and variable annuities is the - ANSWER>>>Securities and Exchange Commission (SEC)

The Buyer's Guide is intended to accomplish all of the following EXCEPT - ANSWER>>>ensure that buyers obtain the lowest price for insurance

The State Guaranty Association guarantees - ANSWER>>>that a claim will be paid if an insurer becomes insolvent

All of the following methods support the sale of insurance through agents and brokers EXCEPT - ANSWER>>>direct selling systems

What two fundamentals are insurance based on? - ANSWER>>>1 - Risk pooling (Loss sharing) 2 - Law of Large Numbers

What are the two classes of risk? - ANSWER>>>1 - Speculative (opportunity for loss/gain) 2 - Pure (only possibility is loss)

The authority that an insurer gives to its agent by means of the agent's contract is known as - ANSWER>>>Express

"An insurance contract is prepared by one party, the insurer, rather than by negotiations between the contacting parties." Which of the following statements explains this characteristic of insurance contracts. - ANSWER>>>The insurance contract is a contract of adhesion

Which of the following statements regarding insurable interest is NOT correct - ANSWER>>>A policy obtained by a person without an insurable interest in the insured can be enforced

Which of the following statements about authority is NOT correct - ANSWER>>>Express authority is determined by a principal's conduct

Which of the following statements regarding utmost good faith in insurance contracts is CORRECT - ANSWER>>>Most state insurance laws consider statements made in an application for an insurance policy to be representations

Which of the following statements describes an insurable interest - ANSWER>>>The policyowner must expect to suffer a loss when the insured dies or becomes disabled

Which of the following is NOT a distinguishing characteristic of an insurance contract - ANSWER>>>conditional

An insurer is considered competent if it - ANSWER>>>is licensed or authorized by the state

Competent parties who can enter into insurance contracts are - ANSWER>>>applicants, trust and estates, business entities AND/OR is licensed of authorized by the state

With life and health contracts, when must an insurable interest exist? - ANSWER>>>At the inception of the policy

An insurance company has how many years to challenge the validity of a life insurance contract - ANSWER>>>2 years

Which of the following terms is used for the voluntary relinquishment of a known right - ANSWER>>>Waiver

Bob and Tom enter into a contract in which Bob agrees to fraudulently induce sick people to sell their insurance contracts to Tom's company. Bob and Tom's contract can best be described as - ANSWER>>>Void

What is the difference between a peril and a hazard - ANSWER>>>Peril - the cause of loss; a fire Hazard - the conditions that increase the likelihood of a loss

Waht are the three types of hazards - ANSWER>>>Physical - wet floors, icy steps Moral - smoking or stealing Morale - not wearing seatbelt, driving abt speed limit

Name the four different options for treating risk - ANSWER>>>risk avoidance, risk reduction, risk retention (self-insuring), and risk transference

Name the elements of insurable risk - ANSWER>>>chance, measurable, predicable, non- catastrophic, large, random

Explain the Human Life Value - ANSWER>>>puts a value on people's earning and how the loss of that salary, through death, disability, or retirement would affect their dependents

A large group of individuals sharing the possibility of a loss is a concepts known as: - ANSWER>>>Risk pooling

Which law protects the rights of workers covered under an employer sponsored retirement plan? - ANSWER>>>ERISA

All of the following can lead to an agent's license being suspended EXCEPT - ANSWER>>>Using a policy illustration for a life policy

An insurance salesperson who offers a $100 gourmet dinner in exchange for the purchase of a life insurance policy would be considered to have violated ethical sales practices by - ANSWER>>>rebating

In what phase of the selling process are serious problems of misrepresentation likely to occur? - ANSWER>>>Presentation of recommendations

Which of the following phrases can NOT be used when explaining policies to prospective applicants or clients - ANSWER>>>Vanishing premium

All of the following are involved in a product presentation EXCEPT - ANSWER>>>pressure

Which of the following is NOT part of the home office underwriting process? - ANSWER>>>Applicant's analysis report

The basis for many state statutes regulating insurance advertising is the NAIC's - ANSWER>>>Unfair Trade Practices Act

Ethics is best described as - ANSWER>>>instructions on how to interact with fellow members of a group or community

Which of the following is the goal of a sales presentation - ANSWER>>>To educated the client so the client can make her own decisions about what's right for her

Which of the following is NOT part of a sales presentation - ANSWER>>>Review the product application

Which of the following should a producer NOT do during a presentation - ANSWER>>>Sell a policy

All of the following are reasons why it is seldom in the best interest of a policyholder to replace a life insurance policy with a new on EXCEPT - ANSWER>>>the old policy, viewed objectively, no longer meets the stated needs and objective of the policyholder

Diverting insurance funds for personal use is an example of - ANSWER>>>misuse of premiums

Selling variable universal life insurance policies as mutual funds is an example of a prohibited practice called: - ANSWER>>>misrepresentation

When an agent spreads a false story that damages a competing agent's reputation, the offense is called - ANSWER>>>Defamation

When values of an insurance policy are used to purchase another policy with the same insurer for the sole purpose of earning additional premiums or commissions, this practice is called - ANSWER>>>churning

Which of the following is an objective of the NAIC - ANSWER>>>to encourage uniformity in state insurance laws and regulations

Which of the following is NOT a provision of NAIC's Life Insurance Illustrations Model Regulations? - ANSWER>>>each policy illustration should use the words vanish and vanishing premium sparingly

Which of the following is NOT part of a product presentation - ANSWER>>>asking for referrals

The use of preprinted material in a sales presentation is recommended for which of the following reasons - ANSWER>>>such material generally has been reviewed for compliance

The purpose behind full disclosure requirements is to - ANSWER>>>help client make an informed decision

Jim gives Bill a couple of tickets to a baseball game to thank him for purchasing a policy. This is an - ANSWER>>>rebating

Which of the following is an example of churning - ANSWER>>>replacing a policy for another with the same insurer with the intent of earning additional premiums or commissions

Melanie is a newly licensed producer. A customer calls and asks for some product recommendations, but Melanie thinks that she is not yet qualified to help the customer. Therefore, Melanie has an ethical responsibility to - ANSWER>>>seek help from a more experienced colleague or other professional before responding to the customer's questions

How is constructive delivery accomplished - ANSWER>>>the policy is mailed to the agent

which entity has the primary responsibility for organizing and licensing insurance companies - ANSWER>>>Office of Insurance Regulation

Underwriters take into consideration all of the following EXCEPT - ANSWER>>>education

Premiums will rise at what portion of the life of a whole policy - ANSWER>>>premiums will remain level for the policy's life

The amount of a whole life policy's cash value depends on all of the following except - ANSWER>>>intrest rates

Limited pay whole life policies extend until age - ANSWER>>>

Giving the impression that the policy dividends or cash value projections are guaranteed is called - ANSWER>>>misrepresentation

Insurance contracts are contracts of adhesion because - ANSWER>>>they are drawn up by one party

Which of the following are main principles of agency law - ANSWER>>>contract completed by an agent on behalf of the principal

What is the difference between compliance, ethics and market conduct - ANSWER>>>Compliance - conducting business within current rules and laws set by the government (Minimum Standards) Ethics - standards of conduct and moral judgment. Market Conduct - combination of both Ethics and Compliance

What is an instrument that reflects a debtor relationship - ANSWER>>>Bonds

All of the following are principles of agency law EXCEPT - ANSWER>>>knowledge of the principle regarding business of the agent is presumed to be knowledge of the insurer

All of the following are objectives of the NAIC EXCEPT - ANSWER>>>to encourage each state to pass licensing laws that benefits their own state

What is the difference between twisting, churning, and coercion - ANSWER>>>Twisting - (External replacement) illegally inducing a person to drop existing insurance

coverage to buy similar coverage with another company Churning - (Internal replacement) Illegally replacing a policy within the same company, often by the same producer who sold the original policy Coercion - applying physical or mental force or threat of force to persuade another to transact insurance

Which law made it clear that continued regulation of insurance by the states was in the public's best interest - ANSWER>>>McCarran-Ferguson Act

Which of the following is considered a Moral Hazard - ANSWER>>>Alcohol addiction

All of the following are elements of insurable risks EXCEPT - ANSWER>>>loss is catastrophic

All are included under Unfair Methods of Competition EXCEPT - ANSWER>>>misappropriation of funds

When an agent compares one policy to another using fraudulent and misleading information this is known as - ANSWER>>>twisting

Which of the following terms best describes a life insurance policy that provides a straight $100,000 of coverage for a period of five years - ANSWER>>>level term

All of the following statements regarding term life insurance are correct EXCEPT - ANSWER>>>a 3-year renewable policy allows a term policyowner to increase coverage for the next 3 years

"When level premium insurance is renewed, the premium amount rises to reflect the increased mortality risk of the insured's older age." What phrase best describes this approach to increasing premiums - ANSWER>>>step rate

Which of the following statements describing whole life insurance is CORRECT - ANSWER>>>whole life insurance is designed to mature at age 100

The cash values of life insurance policies belong to which of the following - ANSWER>>>policyowner

All of the following statements regarding basic forms of whole life insurance are correct EXCEPT - ANSWER>>>limited payment life provides protection only for the years during which premiums are paid

Which of the following statements regarding modified endowment contracts (MEC's) is CORRECT - ANSWER>>>to avoid being classified as an MEC, a life insurance policy must satisfy the "7-pay test."

Which of the following whole life insurance policies attempts to make insurance premiums more manageable by offering lower premiums during the first few years following issue - ANSWER>>>modified whole life

What type of policy would be best used when the need for protection declines from year to year - ANSWER>>>decreasing term

All of the following statements about term insurance are correct EXCEPT - ANSWER>>>cash values build during the specified period

All of the following statements regarding term life insurance are correct EXCEPT - ANSWER>>>a 3-year renewable policy allows a term policyowner to increase coverage for the next 3 years

Mrs. Williamson purchases a 5-year $50,000 level term policy with an option to renew. At the end of the 5-year term, she renews the policy. Which of the following statements is CORRECT - ANSWER>>>the premium for the renewal period will be higher than the initial period

A policy that pays double or triple the face amount if death occurs during a specified period is - ANSWER>>>a multiple protection policy

In which of the following situations does the incontestable clause apply? - ANSWER>>>concealment of smoking

An error in age is discovered after the death of an insured but before any policy death proceeds are distributed. The insured was older than previously assumed. How would an insurance company handle such a situation? - ANSWER>>>The amount of death proceeds would be reduced to reflect whatever benefit the premium paid would have purchased at the correct age.

Which of the following allows 30 days during which premiums may be paid to keep policies in force? - ANSWER>>>Grace period

Which of the following is (are) a common life insurance policy exclusion? - ANSWER>>>Death from war

All of the following are standard life insurance policy nonforfeiture options except - ANSWER>>>1-year term insurance option

Which of the following statements best describes life insurance policy dividends? - ANSWER>>>Policy dividends are an intentional return of a portion of the premiums paid

The most common guaranteed insurability riders allow additional life insurance to be purchased on the insured within a range of ages. The common age range in which guaranteed insurability is available is from - ANSWER>>>25 to 40

Which life insurance provision allows the policyholder to inspect and, if dissatisfied, to return the policy for a full refund? - ANSWER>>>Free look

Which of the following statements regarding a cost of living (COL) rider on a life insurance policy is CORRECT? - ANSWER>>>An inflation index, usually the Consumer Price Index, determines the amount of inflation adjustment that is made to the policy up to a maximum percentage increase.

If an insurance company determines that the insured is totally disabled, the policyowner is relieved of paying the policy premiums as long as the disability continues. This statement describes - ANSWER>>>the waiver of premium rider

To what period would a 14-day free-look provision apply in Florida? - ANSWER>>>The first 14 days after the issued policy has been delivered to the insured

All of the following statements regarding assignment of a life insurance policy are correct EXCEPT - ANSWER>>>the policyowner must obtain approval from the insurance company before the policy can be assigned

Ron, the insured under a $100,000 life insurance policy, dies during the grace period. What happens, considering that the premium on the policy has not been paid? - ANSWER>>>the amount of the premium is deducted from the policy proceeds paid to the beneficiary

Which of the following is stated in the policy consideration clause of a life insurance policy? - ANSWER>>>Amount and frequency of premium payments

All of the following statements pertaining to reinstatement of a life insurance policy are correct EXCEPT - ANSWER>>>a suicide exclusion period is renewed with a reinstated policy

Leland elects to surrender his whole life policy for a reduced paid-up policy. The cash value of his new policy will - ANSWER>>>continue to increase

If error is discovered after an insured dies and the insured was younger than the insurance policy stated, the insurance company will - ANSWER>>>increase the death benefits

Each of the following statements about the incontestable clause in a life insurance policy is correct EXCEPT - ANSWER>>>insurers can void a contract even after the specified period, provided they can prove the policy was purchased fraudulently

if an error is discovered while an insured is living and the insured is older than the policy states, the insurance company can - ANSWER>>>increase the premium

The rider that provides for a waiver of premiums on a juvenile policy if the adult payor dies or becomes disabled is - ANSWER>>>payor rider

Which of the following statements about a life insurance policy's cash value is CORRECT? - ANSWER>>>when a whole life insurance policy is active, the owner can borrower from the cash value

Sandra has a life insurance policy that states her husband, Gerald, is to receive the full death benefit. If he predeceases her, their 3 children are to share the benefit equally. If her husband and all 3 children predeceases her, the benefit is payable to the First Community Church. All of the following statements are correct EXCEPT - ANSWER>>>the designation of the First Community Church can be contested by an of Sandra's relatives who survive the children

The beneficiary on Walter's life insurance policy reads "Children of the Insured." Which of the following phrases best describes this type of beneficiary designation? - ANSWER>>>class beneficiaries

A ______ distribution means that a beneficiary's share of a policy's proceeds will be passed down to the beneficiary's living child or children if the name beneficiary predeceases the insured - ANSWER>>>per stirpes

If a irrevocable beneficiary dies before the policyowner, who of the following gains control of a life insurance policy with a reversionary irrevocable clause? - ANSWER>>>policyowner

Christine's policy has a clause that reads as follows: "Should the primary beneficiary and the insured die in the same accident and the primary beneficiary fails to survive the insured by 14 days, it will be assumed that the beneficiary predeceased the insured." Which of the following phrases best describes this clause? - ANSWER>>>common disaster provision

Kevin, the insured under a $200,000 life insurance policy, and his sole beneficiary, Lynda, are killed instantly in a car accident. Under the Uniform Simultaneous Death Act, to whose estate will the policy proceeds be paid? - ANSWER>>>Kevins estate

When a policyowner cannot exercise his rights of ownership without the policy beneficiary's consent, the beneficiary is designated - ANSWER>>>irrevocable

Mr. Williams names his son John a beneficiary of his life insurance policy. What designation should he use if he wants to make sure that John's children would receive John's share of the life insurance policy proceeds should John predecease his father? - ANSWER>>>Per stirpes

What is the beneficiary designation that can only be changed with the beneficiary's written agreement - ANSWER>>>irrevocable beneficiary

A clause that states that policy distributions payable to a beneficiary after the insured dies are not assignable or transferable and may not be attached in any way is called - ANSWER>>>a spendthrift clause

Mary names her husband, Rick, as primary beneficiary of her life insurance policy and her two children, Pam and Matt, as contingent beneficiaries. Rick dies in March. Pam and Matt are killed simultaneously in a car accident later that month. Hearing the news, Mary has a fatal heart attack. In this case, Mary's life insurance proceeds will be paid? - ANSWER>>>Mary's estate

The method used today to change beneficiaries is known as - ANSWER>>>recording method

What are the four broad objectives of the NAIC? - ANSWER>>>- To encourage uniformity in state insurance laws and regulations

• To assist in the administration of those laws and regulations by promoting efficiency
• To protect the interests of policyowners and consumers
• To preserve state regulation of the insurance business

Which law made if clear that continued regulation of insurance by the states was in the public's best interest? - ANSWER>>>McCarran-Ferguson Act

Name the 6 elements of insurable risk. - ANSWER>>>Chance, measurable, predictable, non-catastrophic, large, random

Some of the duties of the Department of Financial Services include - ANSWER>>>Investigating insurance agents, Collect, propose, publish information regarding their imposed duties, Enforce the Insurance Code

FICA Tax Rate for self-employee - ANSWER>>>15.3%

Which type of insurer is licensed and doing business in states others than the one in which it is incorporated? - ANSWER>>>Foreign

An answer given by the applicant that they believe is true is called a - ANSWER>>>representation

which clause sets forth the company's promise to pay benefits? - ANSWER>>>Insuring Clause

How many days from delivery of a life insurance policy does the Free-Look Provision give the policyowner? - ANSWER>>>14 days

Misrepresentation can be - ANSWER>>>verbal, altered brochure, written communication

Spreading the risk over many members is called - ANSWER>>>risk pooling

The most effective way to handle a risk is called - ANSWER>>>Risk transference

The agent represents the interest of the - ANSWER>>>insurance company

The principle that the larger and more homogeneous the group the more certain the mortality predictions will be is called - ANSWER>>>law of large numbers

Deciding not to skydive is an example of which treatment of risk - ANSWER>>>avoidance

Insurance company that is owned by the policyholders is called - ANSWER>>>mutual insurer

Which court decision nullified state laws that were in conflict with federal regulation - ANSWER>>>US vs Southeastern UW Association

Speculative risk involve both - ANSWER>>>loss and gain

If the applicant makes a mistake on their application the applicant - ANSWER>>>can have an agent correct it

Insurable interest must exist between the applicant and the - ANSWER>>>Individual being insured

Making the applicant aware of all the facts is called - ANSWER>>>full disclosure

Which Act establishes procedures for the collection and disclosure of information obtained on consumers through investigations and credit reports - ANSWER>>>Fair Credit Reporting Act

The agent explaining the policy and how it meets the policyowner's objectives helps avert the following - ANSWER>>>potential lapses, policy returns, misunderstanding

Regulates the banks, credit unions, and other financial institutions in the state of Florida - ANSWER>>>Office of Financial Regulation

Underwriting is the process of - ANSWER>>>selection, classification, and rating of risks

If a medical report is required on an applicant, it is completed by: - ANSWER>>>a paramedic or examining physician

Elaine signs an application for a $50,000 nonmedical life policy, pays the first premium, and receives a conditional insurability receipt. If Elaine were killed in an auto accident two days later then - ANSWER>>>her beneficiary would receive $50,000, if Elaine qualified for the policy as applied for.

Generally, the party who delivers an insurance policy to the new policyowner is - ANSWER>>>the sales agent

The primary distinction between the insurability and approval types of conditional receipts is when - ANSWER>>>the coverage goes into effect

A mortality table reveals which of the following - ANSWER>>>it shows the average number of deaths that are expected each year in any age group

Art, the owner and insured under a $75,000 life policy, is killed in an accident. He has paid a total premium of $26,000. How much of the death benefit will be included in his gross estate for estate tax purposes? - ANSWER>>>$75,

Art, the owner and insured under a $75,000 life policy, is killed in an accident. He had paid total premium of $26,000. How much of the $75,000 death benefit that was paid to Art's wife in a lump sum is taxable income to her? - ANSWER>>>$

Sarah, age 65, the owner of a $150,000 whole life policy, decides to surrender the policy and take the $90,000 cash value in a lump sum. Over the years, she has paid a total of $54,000 in premiums. How much, if any, of the payments will be taxed as income? - ANSWER>>>$36,

Beth, age 50, the beneficiary of her late husband's life insurance policy, has elected to receive the proceeds in monthly installments over the next 5 years. Due to the insurer's interest earnings, Beth notices that the amount of the payments is often more than what she was guaranteed. What kind of settlement option did Beth select? - ANSWER>>>Fixed- period

Under which option does the insurer hold the death proceeds for a specified period of time and, at regular intervals, pay the beneficiary interest on the proceeds? - ANSWER>>>interest-only

Which of the following factors is most important when computing basic premium for life insurance? - ANSWER>>>Mortality

Life insurance premiums are typically based on what increment of the face value? - ANSWER>>>$1,

A practice in which the policy values in an insurance policy are used to purchase another policy with the same insurer for the sole purpose of earning additional commissions is called - ANSWER>>>Churning

When someone in the insurance business applies physical force to persuade another to transact insurance is called - ANSWER>>>Coercion

Telling the policyowner that a coverage is included in the policy without an additional charge when such a charge is required is called - ANSWER>>>Sliding

Attempting to settle claims on altered documents the insured was unaware of is considered - ANSWER>>>unfair claim practice

Controlled business means life and health contracts covering - ANSWER>>>family members

Who may accept any commission or other valuable compensation for soliciting or negotiating insurance? - ANSWER>>>licensed and appointed agents

Giving the buyer of insurance any part of the agent's commission as an inducement to purchase a policy is called - ANSWER>>>rebating

Human Life Value - ANSWER>>>puts a value on people's earning and how the loss of that salary, through death, disability, or retirement would affect their dependents

How long can an agent go without having an appointment with an insurer? - ANSWER>>>48 months

A mutual insurance company formed to insure people in the same business, occupation, or profession is called a - ANSWER>>>Risk retention group

When an insurance company transfer some of its risk to another insurer this is called - ANSWER>>>Reinsurance

Intentionally concealing a material fact for the purpose of misleading another is best described as - ANSWER>>>fraud

An unauthorized insurer does not have a - ANSWER>>>certificate of authority

Conducting business with an unauthorized insurer commits a - ANSWER>>>third degree felony

An agent must make available to the Department all records regarding insurance transactions. Who can maintain the documentation for the agent? - ANSWER>>>Insurer

Pure risk involves - ANSWER>>>chance of loss

The value today of an individual's future earnings devoted to the individual's dependents is called - ANSWER>>>human life value

A private organization organized for the purpose of making a profit for its stockholders is called a - ANSWER>>>stock insurance company

Insurers that insure the risk of other policyholders is called a - ANSWER>>>reciprocal insurer

If a risk does not materialize, benefits are not going to be paid. This is referred to as a _______________ contract. - ANSWER>>>conditional

The key to avoiding misrepresentation is - ANSWER>>>knowledge

Ambiguity in an insurance contract usually favors the - ANSWER>>>the applicant

The voluntary giving up of a legal given right is called - ANSWER>>>waiver

The act that prohibits insurance companies from unfair discrimination, unlawfully, rebating, sliding, and defamation is called - ANSWER>>>Unfair Trade Practices

Which practice is not prohibited if the statute is followed - ANSWER>>>rebating

A contract that has the element of chance for both parties is called - ANSWER>>>aleatory

The right of the insurance company to take action against a negligent third party is called - ANSWER>>>subrogation

Before delivering the policy the agent must - ANSWER>>>review that rating or rejection

In the insurance business, risk can be best defined as - ANSWER>>>uncertainty regarding financial loss

Buying insurance is one of the most effective ways of - ANSWER>>>transferring risk

Which of the following best describes the function of insurance - ANSWER>>>it spreads financial risk over a large group to minimize the loss to any one individual

The amount of money an insurer sets aside to pay future claims is called - ANSWER>>>reserve

Which of the following statements describes the parol evidence rule - ANSWER>>>written contract cannot be changed by oral edivence

Which of the following factors determines whether policy dividends will be paid on a participating policy - ANSWER>>>expenses and claims cost

A licensed agent legally represents - ANSWER>>>the insurer

On August 9, Albert made an application for life insurance that his agent submitted a day later without a premium payment. On August 21, the insurer issued the policy as applied for and on August 24, the agent delivered the policy and collected the initial premium. On what day was the contract offer made? - ANSWER>>>Aug 21

To whom does the cash value of life insurance policy belong? - ANSWER>>>Policyowner

Frank is the insured in a $40,000, 5-year level term policy issued in 2003. He died in 2009. His beneficiary received - ANSWER>>>nothing

After a family's breadwinner dies, the "blackout period" generally can be defined as the period - ANSWER>>>that begins when the youngest child turns 16 and ends when the surviving parent retires

Joanna and her husband, Tom, have a $40,000 annuity that pays them $200 a month. Tom dies and Joanna continues receiving the $200 monthly check as long as she lives. When Joanna dies, the company ceases payment. This is an example of - ANSWER>>>a joint and full suvivor annuity

In determining Social Security retirement benefits, which of the following statements is CORRECT? - ANSWER>>>The PIA is a determination of the amount equal to the worker's full retirement benefits at the worker's full retirement age

Rudy is eligible for full death, retirement, and disability benefits under Social Security. His worker status is - ANSWER>>>fully insured

Having Social Security benefits, Jan, a single, working mother, dies at age 40. Dave, her only son, would receive a one-time lump-sum benefit of - ANSWER>>>$255

Medicaid provides - ANSWER>>>funds to states to assist their medical public assistance programs

Marty just received his first Social Security disability payment. From this, we can assume - ANSWER>>>his disability is expected to last at least 12 months

The waiting period before qualifying for Social Security disability benefits is how many months? - ANSWER>>>5 months

Which of the following individuals would probably qualify for Social Security disability benefits? - ANSWER>>>John, who experiences serious early-onset Alzheimer's and is unable to remember how to get tot work

When calculating Social Security benefits, the primary insurance amount is equal to - ANSWER>>>the workers full retirement benefits at age 65

Which of the following riders provides for changes in the benefit payable based on changes in the Consumer Price Index (CPI)? - ANSWER>>>cost-of-living adjustment rider

Benefit periods for individual short-term disability policies typically vary from - ANSWER>>>6 months to 2 years

This type of rider, also called future increase option, guarantees the insured the right to purchase additional amounts of coverage at times in the future without evidence of insurability. - ANSWER>>>guaranteed insurability rider

This type of disability benefit is based on the proportion of income actually lost due to the partial disability, taking into account the fact that the insured is able to work and earn some income. Example if insured suffered a 40% loss of income because of partial disability, the benefit would be 40% of what the policy would provide for total disability. - ANSWER>>>Residual amount benefit

This provision specifies a period of time during which the recurrence of a disability is considered a continuation of the prior disability. - ANSWER>>>recurrent disability provision

This type of Medicare coverage is compulsory hospitalization insurance that provides specified inpatient hospitalization, posthospital care and home care for the first 60 days during any one benefit period. They automatically receive benefits once they qualify for Social Security benefits. - ANSWER>>>Medicare Part A

This type of medicare coverage is voluntary and designed to provide supplementary medical insurance to cover physician services and medical services. It is financed by monthly premiums and by tax revenues. Participants are responsible for annual deductible. After they deductible the plan will pay 80% of covered expenses. - ANSWER>>>Medicare Part B

This type of medicare plan is also called Medicare Advantage and includes managed care plans, PPO's, private fee-for-service plans, and specialty plans. To be eligible, the beneficiary must be enrolled in both Medicare Part A and B. - ANSWER>>>Medicare Part C

This medicare plan is also known as Prescription Drug Plan. The beneficiary is required to pay a monthly premium and annual deductible along with a copay once the deductible has been met. The period when there is not coverage is often referred to as the donut hole. Coverage is available only through private plans that are either stand alone prescription drug plans (PDP) or Medicare private plans such as HMO's, PPO's, or PFFSs. - ANSWER>>>Medicare Part D

Alice has a major medical policy with a $500 deductible and an 80/20 coinsurance provision. If she receives a hospital bill for $7,500 of covered expenses, how much of that bill will she have to pay? - ANSWER>>>$1,900

As it pertains to group health insurance, COBRA stipulates that - ANSWER>>>group coverage must be extended for terminated employees up to a certain period of time at the employee's expense

Individual health insurance policies are typically written on which basis? - ANSWER>>>nonparticipating

Worker's compensation covers income loss resulting from - ANSWER>>>work-related disabilities

Which of the following reimburses its insureds for covered medical expenses? - ANSWER>>>commercial insurers

Which renewability provision allows an insurer to terminate a policy for any reason, and to increase the premiums for any class of insureds? - ANSWER>>>optionally renewable

The time of payment of claims provision requires that - ANSWER>>>claims must be paid after the insurer is notified and receives the proof of loss