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Florida 215 Life, Health, Insurance Law Practice Exam
1. Who elects the governing body of a metal Insurance company?: The Policyholders
2. When a policy pays dividends to its policy holders is said to be?: Participating
3. Which of these describe a participating insurance policy?: Policy owners are entitled to receive dividends
4. An insurance applicant MUST be informed of an investigation regarding his/her reputation and character
according to the?: 1970 Fair credit reporting act
5. The Stated amount or percent of liquid assets that an insurer must have on hand that will satisfy future
obligations to its policyholders is called?: Reserves
6. The Part of a life insurance policy GUARANTEED to be true is called?: Warranty
7. At what point does an informal agreement become a binding contract?: When consideration is provided by one of the parties to
the contract
8. Who makes the legally enforceable promise in a unilateral insurance policy?-
: The Insurance Company
9. When a third-party ownership is involved, applicants who also happen to be the stated the primary beneficiary are
required to have?: Insurable interest in the proposed insured
10. A policy of adhesion can only be modified by whom?: The insurance company
11. Insurance policies are considered aleatory contracts because?: Performance is conditioned upon a future occurrence
12. Q purchase $500k life insurance policy and pays $900 in premiums over the first six months. Q dies
suddenly and the beneficiary is paid $500,000. This exchange of unequal values reflects which insurance contract
2 / 23 features?: Aleatory
13. What consists of an offer, acceptance, and consideration?: The Contract
14. A Principal is NOT a type agent authority?: True
15. Taking a receipt of premiums and holding them for the insurance company is an example of?: Fiduciary
responsibility
16. A Bilateral typically has characteristics describing the nature of an insurance contract.: False
17. In regards to representation or warranties?: If material to the RISK, false representations will void a policy
18. Statements made on an insurance application that are BELIEVED to be true to the best of the applicants
knowledge are called?: Representations
19. A variable insurance policy?: Does NOT guarantee a return on investment accounts
20. Whole life insurance is sometimes referred to as "Straight Life". What does the word "Straight" indicate
when using this phrase?: The duration of premium payments
21. What type of policy would offer a 40- year old the quickest accumulation of cash value?: A 20-pay life
22. Modified Whole Life: This life product is NOT considered interest sensitive?
23. Y Purchased $100,000 worth of permanent protection on himself and
$50,000 worth of 10-year Term coverage for his wife on the same policy. What did Y Purchase?: Whole life policy with an Other Insured Rider
24. Which of the following types of Term Life policies most likely contains a Renewability feature?: A
10 year convertibility Term
25. Modified Endowment Contract: This type of policy is considered to be overfunded, as stated by IRS guidelines?
26. A company that owns a life insurance policy on one of its key employees can't?: Change the policy's
4 / 23 $100. S dies 5 years later in 2008 and the insurer pays the beneficiary $10,500. What kind of rider did S include on the policy?: A return of Premium Rider
40. How do life insurance companies handle cases where the insured commits suicide within the contracts
stated contestable period?: Claims are denied under the Suicide clause of the policy
41. L takes out a life insurance policy and dies 10 years later. During the claim process, the insurer
discovers that L had understated her age on the appli- cation. Under the Misstatement of Age Provision, the insurer will:: Adjust the death benefit to a reduced amount
42. This statement is true in regards to a policy loan?: Past-due interest on a policy loan is added to the total debt
43. When a misrepresentation on a life insurance policy application is discov- ered, what action may an
insurance company take?: Void the policy only if it is discovered during the contestable period and proven to be material
44. When does a Guaranteed Insurability Rider allow the insured to buy addi- tional coverage?: At future dates
specified in the contract with no evidence of insurability required
45. The policy owner has the right to change a life insurance policy's beneficia- ry: TRUE
46. What does the insuring agreement in a life insurance contract establish?: An insurer's basic promise
47. The consideration clause in a life insurance contract contains what pertinent information?: Amount of premiums
paid and when they are due
48. The consideration clause in life insurance policy indicates that a policy own- er's consideration consists
of a completed application and?: The initial premium
49. P is the insured on a participating life policy. This statement is true if P's premiums are waived due
to a disability?: P will still receive declared dividends
50. Additional coverage can be added to a Whole Life Policy by adding an?: De- creasing term Rider
51. The Agreement in a life insurance contract that states a specific sum of money will be paid to a
5 / 23 designated person upon an insured's death is called an?: Insuring Agreement
52. A whole Life insurance policy owner does NOT have the right to?: Change The Grace Period
53. Whose Life is covered on a life insurance policy that contains a payor benefit clause?: The Child
54. This is NOT considered to be a right given to a policy owner?: Modify a provision in the insurance contract
55. K's whole life insurance policy lapsed two months ago due to nonpayment. She would now like to reinstate
the policy this isn't true?: K will forfeit the right to use the automatic loan provision upon reinstatement
56. When is the face amount of a Whole policy paid?: When the insured dies or at the policy maturity date, whichever happens first
57. This statement regarding the Misstatement of Age provision is considered to be true?: Coverage will be adjusted to
reflect the insured's true age misstatement of age is discovered
58. B owns a Whole life policy with a guaranteed insurability option that allows him to purchase, without
evidence of insurability, state amounts of?: Additional whole life coverage at specified times
59. K has a life insurance policy where her husband is the beneficiary and her daughter is the contingent
beneficiary. Under the Common Disaster clause, if K and her husband are both killed in an automobile accident, where would the death proceeds be directed?: Her Daughter
60. C is trying to determine whether to convert her convertible term life policy to whole life insurance using her
original age or attained age. What factor would affect her decision the most?: The Cost
61. Who has the right to change a revocable beneficiary?: The Policy owner
62. J would like to maintain the right to change beneficiaries. Which beneficiary designation should be used?:
The Revocable
63. The Common Disaster clause provides that if not the insured and the sole named beneficiary were to die in
a common accident, this clause means?: The clause is payable to the insured's estate
64. T is covered by an Accidental Death and Dismemberment(AD&D) policy that has an irrevocable
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76. M completes an application for life insurance but does not pay the initial premium. This action must
occur before M's policy goes into effect?: Except when the free-look period has expired
77. When does a life insurance contract become effective if the initial premium is not collected during the
application process?: When the producer delivers the policy and collects initial premium
78. What is being delivered during a policy delivery?: Insurance contract to the proposed insured
79. The following correctly explains the actions an agent should take if a cus- tomer wants to apply for an
insurance policy?: Complete the application and review the information with the customer prior to obtaining the customers signature, then send the application ott to the insurance company
80. What action should a producer take if the initial premium is NOT submitted with the application?: Forward the
application to the insurer without the initial premium. However if a premium is not paid with the application, the policy will not become valid until the initial premium is collected
81. Agent J takes an application and initial premium from an applicant and sends the application and
premium check to the insurance company. The insurance company returns the check back to J because the check is made out to J instead of the insurance company. What action should J take?: Return the check to the customer, collect a new check made out to the insurance company, and send the new check to the insurance company
82. This following statement is correct about an agent who is taking an insurance application:: The agent who is taking the
insurance application should have applicant initial any changes made on the application
83. An incomplete life insurance application submitted to an insurer will result in what?: Application will be returned
to the writing agent, it usually returns to the producer
84. T applies for a life insurance policy and is told by the producer that the insurer is bound to the
coverage as of the date of the application or medical examination, whichever is later. Assuming that T is an acceptable risk, what item is given to T?: A Conditional Receipt ( A conditional receipt binds the insurer to coverage as of the date of the application or medical exam, provided the proposed insured is determined to be an acceptable risk.)
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85. A statement made by an insurance applicant that must be true to the best of ones knowledge and
which becomes a part of the contract is know as:: A representation
86. What is the purpose of the U.S.A Patriotic Act?: Detect and Deter Terrorism
87. Upon policy delivery, a signed good health statement is requested from the applicant. Why would this be
necessary?: The initial premium was NOT submitted with the application. On Delivery of a policy, a signed statement in good health is typically requested if the application was submitted without the initial premium
88. An employee with $25,000 group term life coverage was recently fired. This employee's group coverage may be
converted to a:: $25,000 whole life policy( A terminated employee may convert to a $25,000 individual whole life policy)
89. If its employees share in the cost of insurance, what type of group life insurance plan would a corporation
have?: Contributory (Employees share premium costs with contributory plans.)
90. An employee of 20 years recently retired at age 59 1/2. This employee's group life contract can be:: Converted to an
individual permanent policy at an individual rate
91. All individuals covered under a group contract will receive an?: Certificate
92. A noncontributory group term life plan is characterized by:: The entire cost of the plan is paid for by the employer. (When an
employer provides noncontributory group term life insurance, the employer pays the entire cost of the plan.)
93. Under a trustee group life policy, who would be eligible for a certificate
coverage?: The Employee
94. Group Life insurance policies are generally written as:: Annually renewable term
95. This is a false statement about noncontributory employee group life insur- ance:: A minimum number of employees
is required to participate (noncontributory employee group life insurance MUST cover ALL eligible employees at all times.)
96. The following is an important underwriting principle of group life insurance:-
: Everyone must be covered in the group
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111. Social Security does NOT provide benefits for: Dismemberment
112. Q is severely injured in an automobile accident and becomes totally dis- abled. How many months must
Q be disabled before being able to file for Social Security Benefits?: 5 Months
113. A 55 year old recently received $30,000 distribution from a previous employ- ers 401k plan, minus $6,
withholding. Which federal taxes apply if none of the funds were rolled over?: Income taxes plus 10% penalty tax on $30,000 (All withdraws from qualified retirement planner taxable as current income. In addition any withdraws made before 59 1/2 is subject to an additional tax penalty of 10% of the amount withdrawn
114. How are Roth IRA distributions normally taxed?: Distributions received are tax-free
115. This retirement plan can be started by an employee, even if another plan is in existence:: Individual Retirement
Account(IRA)
116. What does a 401(k) plan generally provide its participants?: A salary-deferral contributions
117. Which of the following is TRUE if the owner of an IRA names their spouse as beneficiary, but then
dies before and distributions are made?: The account can be rolled into the surviving spouses IRA(Individual Retirement Account)
118. With traditional individual retirement accounts(IRA) 10% penalty is applied to withdrawals before age
59 1/2: True
119. In a qualified retirement plan, the yearly contributions to an employee's account:: Are restricted to maximum
levels set by the IRS
120. An employer that offers a qualified retirement plan to its employees is eligible to:: Make tax-deductible
contributions to the plan
121. An employee requested that balance of her 401(k) account be sent directly to her in on lump sum.
Upon receipt of the distribution, she immediately has the funds rolled over into an IRA. What is the tax consequence of the distribution sent to this employee?: Distribution is
11 / 23 subject to federal income tax withholding.
122. How long does an individual have to "rollover" funds from an IRA or quali- fied plan?: 60 Days
123. Company Z has a cross purchase Buy-Sell Agreement in place among to its three founding
partners. If the agreement is funded with individual life insurance, what would it require?: Each partner must own a policy on the other partners
124. This factor does NOT influence an applicants need for life insurance:: Self maintenance expenses
125. C is a key employee at ABC incorporated. If a Key employee life policy is purchased on her life:: ABC is
the policy owner, C is the insured, and ABC is the beneficiary
126. When an individual is planning to protect his family with life insurance, once a method of doing so
is called need analysis. What does needs analysis involve?: Establishes the needs of the individual and his dependents.
127. This statement regarding third-party ownership of a life insurance policy is true:: It is used extensively in estate-
planning as well as business circumstances.
128. An accident policy will most likely pay a benefit for an:: Of the job accident
129. P is insured under a basic cancer plan. Which of the following conditions would be covered under this
plan?: Operation of malignant tumor
130. The following characteristics is associated with a large group os disability income policy:: No medical
underwriting ( A large group of disability income policy can be distinguished by no medical under writing)
131. The following is the reimbursement of benefits for the treatment of a beneficiary's injuries
caused by a third party:: Subrogation
132. If the insured and primary beneficiary are both killed in the same accident and it cannot be determined
who died first, where are the death proceeds to be directed under the Uniform Simultaneous Death Act?: Insureds contingent beneficiary (If this happens the claim will be paid to the secondary or contingent beneficiary.)
13 / 23 first.)
146. Under what system do a group of doctors and hospitals in a designated area contract with an insurer to
provide services at a prearranged cost to the insured?: PPO (Preferred Provider Organization)
147. Medicare is intended for all of the following groups:: Those 65 and older, Those afflicted by chronic kidney failure, and those
receiving social security benefits for at least 24 months
148. A medical care provider which typically delivers health services at its own local medical facility is know
as a:: HMO (Health Maintenance Organization)
149. The individual who provides general medical care for a patient as well as the referral for a specialized care
is known as a:: Primary Care Physician
150. What is Medicare?: A hospital and medical expense insurance program
151. The Following organizations would make reimbursement payments directly to the insured individual for
a covered medical expenditure?: A Commercial Insurer
152. Medicaid is Funded by both the state and government: TRUE
153. J's Major Medical policy has a $2,000 deductible and an 80/20 Coinsurance clause. If J is hospitalized and
receives a bill for $10,000, J would Pay?: $3,600 the math is $2,000(Deductible) + 20% of the remaining bill = $3,
154. The Following costs would a Basic Hospital/Surgical policy likely cover?: Sur- gically removing a facial birthmark
(Basic hospital/surgical policy would most likely cover cosmetic surgery)
155. In order to establish a Health Reimbursement Arrangement(HRA) it must:-
: Be established by the employer
156. This is a characteristic of a Health Reimbursement Arrangement (HRA):: HRA is entirely funded by the employee
157. J was reviewing her Health Insurance Policy and noticed the phrase "This policy will only pay for a
semi-private room." This phrase is considered to be an?: Internal Limit
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158. Deductibles are used in health policies to lower:: Overuse in medical services
159. M has a Major Medical insurance policy with a $200 flat deductible and an 80% Coinsurance
clause. If M incurs a $2,200 claim for an eligible medical expense, how much will M receive in payment for this claim?: The Answer Is $1,600 Breakdown $2,200 - 200 deductible 80%= $1,
160. Which of these options can an individual use their medical flexible spending account pay for?: Prescription
drugs
161. An individual has a Major Medical policy with a $5,000 deductible and an 80/20 Coinsurance
clause. How much will the INSURED have to pay if a total $15,000 in covered medical expenses are incurred?: $7,000 breakdown $5,000 + 20% of the remaining bill = $7,
162. The individual Health Insurance policy that offers the broadest protection is an:: Major Medical Policy
163. Which of the following is NOT a limited benefit plan?: Life insurance policy
164. M is insured under a basic Hospital/Surgical Expense Policy. A physician performs surgery on M. What
determines the claim M is eligible for?: Determined by the terms policy
165. What type of policy would only provide coverage for specific types of illness- es (Cancer, Stroke, etc)?: Dread
Disease insurance
166. This type of deductible provision waives the deductible provision waives the deductible for all the
family members after some of them have satisfied individual deductibles within the same year:: Family Maximum deductible
167. In the event of an illness a disability income policy would reimburse an insured for:: Loss of earnings
168. An individual Disability Income Insurance applicant may be required to the following but NOT:: A
Spouses Income
169. A physician opens up a new practice and qualifies for a $7,000 a month Disability income policy.
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179. The following types of care not covered in Long-Term Care Policy?: Acupuncture
180. This Long Term Care plan will typically provide benefits for?: Home Health Care
181. Medicare Part C is:: Available to those who are enrolled in Medicare Part A and Part B
182. The following health policy clause stipulates that an insurance company must attach a copy of the
application to the policy to ensure that it is part of the contract?: The Entire Contract
183. The following statements BEST describes what the legal actions provision of an Accident and Health policy
requires?: An insured must wait at least 60 days after Proof of loss has been submitted before a lawsuit can be filed
184. What must the policy owner provide to the insurer for validation that a loss has occurred?: A Proof of loss
185. P is a Major Medical policy owner who is hospitalized as a result of injuries sustained from
participating in a carjacking. How will the insurer most likely handle this claim?: Claim will be denied (If a person is injured while committing an illegal act health insurance will not cover the expense of the injury
186. The Notice of claims provision requires a policy owner to:: Notify an insurer of a claim within a specified time
187. The following statement describes what an Accident and Health policy owner may NOT do?: Adjust
the premium payments
188. T sends proof of loss to her insurer for an acceptable medical expense claim under her individual Health
insurance policy. Upon receipt, the insurer must pay the benefits:: Immediately
189. The Section of an insurance contract which limit coverage are called:: Exclusions
190. A Disability Income policy owner recently submitted a claim for a chronic neck problem that has now
resulted in total disability. The original neck injury occurred before the application was taken 5 years prior. The Neck Injury was never disclosed to the insurer at the time go application How will the insurer handle this claim?: Claim will be paid and cover will remain in force.(After a policy has been in force for 2 sometimes 3 years, it enters the incontestable period, in which the insurer may not deny a claim based on information disclosed at the time of application.)
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191. When an insurance company send a policy to the insured with an attach-
ment application, the element that makes the application part of the contract between the insured and the insurer is called the:: Entire Contract Provision
192. With Optionally Renewable Health Policies, The insurer may:: Review the policy annually and determine whether or
not to renew it
193. According to the Mandatory Uniform Policy Provisions, what is the max- imum amount of time
after the premium die date during which the policy remains in force even though the premium has not been paid?: 31 Days
194. The provision that defines to whom the insurer will pay benefits to is called:-
: Payment of claims
195. Which health policy clause specifies the amount of benefits to be paid?: In- suring
196. K failed to pay a renewal premium within the time granted by the insurer. K then send in a payment which
the insurer subsequently accepts. Which policy provision specifies that coverage may be restored in this situation?: Reinstatement
197. Under an individual Health Insurance Policy, the Time limit of certain de- fenses provision states that
non-fraudulent misstatements first become incon- testable two years:: From the date the policy was issued
198. If an individual is covered under an Accidental Death Policy and dies, an autopsy cannot be performed::
When the states prohibits this by law
199. What type of rider would be added to an Accident and Health policy if the policy owner wants to ensure
the policy will continue if he/she ever becomes totally disabled?: Waiver of Premium Rider
200. What should an insured do if the insurer does not send claims forms within the time period set forth in a
health policy's claims forms provision?: Submit the claim in any form
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FALSE
211. The following actions an insurance company most likely NOT take if an applicant, who has diabetes,
applies for disability income policy:: Issue the policy with an altered time of payment of claims provision
212. What is the name of the law that requires insurers to disclose information gathering practices and where
the information was obtained?: Fair Credit Reporting Act
213. At What point must a life insurance applicant be informed of their rights that fall under the fair credit
reporting act?: Upon completion of the application
214. A group-owned insurance company that is formed to assume and spread the liability risks of its
members is known as?: Risk Retention Group
215. Participating insurance policies:: States Policy Owners are entitled to receive dividends
216. What type of reinsurance contract involves two companies automatically sharing their risk
exposure?: Treaty
217. A nonprofit society that does not have capital stock and operates for the sole benefit of its members is
known as:: Fraternal benefit society
218. A life insurance policy would be considered a wagering contract WITHOUT-
: Insurable Interest
219. Insurance policies are offered on a "take it or leave it" basis: Contracts Of Adhesion
220. What is the consideration given by an insurer in the Consideration clause of a life policy?: Promise to pay a
death to named beneficiary
221. Insurance contracts are known as conditional because certain future condi- tions or acts must occur before
any claims can be paid: TRUE
222. Stranger Originated Life Insurance (STOLI) has been found to be in violation of which of the following
20 / 23 contractual elements?: Legal Purpose
223. Insurance policies are considered aleatory contracts because: Performance is conditioned upon a future occurrence
224. If a contract of adhesion contains complicated language, to whom would the interpretation be in favor
of?: Insured
225. In an insurance contract, the insurer is the only party who makes a legally enforceable promise. What
kind of contract is this?: Unilateral
226. Life and health insurance policies are: Unilateral contracts
227. The consideration clause of an insurance contract includes:: The schedule and amount of premium payments
228. When must insurable interest exist for a life insurance contract to be valid?-
: When the contract is made
229. What type of life insurance gives the greatest amount of coverage for a limited period of time?:
Term life
230. A Universal Life Policy is sometimes referred to as an unbundled Life Policy because the owner can see
the interest earned, cost of insurance and the:: Ex- pense Charges
231. What type of life policy covers two people and pays upon the death of the last insured?: Survivorship
232. Single Premium is a type of permanent life insurance policy that offers the highest initial cash value:
TRUE
233. P owns a $25,000 Life Policy that pays the face amount to him if he lives to age 70, or to his
beneficiary if he dies before age 70. What kind of policy does P own?: Endowment at Age 70
234. The combination of Whole Life and Decreasing Term insurance is referred to as a Family Income
Policy: TRUE
235. A life insurance policy that provides a policy owner with cash value along with a level face amount is
