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Florida Life and Health Insurance Exam
Questions with Verified Solution
1. Insured: The person covered by the insurance policy.
2. Rider: A written modification attached to a policy that increases or decreases coverage and/or premiums.
3. What is a unilateral contract?: A contract in which only one of the parties is legally bound to fulfill its
obligations.
4. What law protects consumers from the circulation of inaccurate or obsolete
information?: The Fair Credit Reporting Act.
5. What are the three types of agent authority?: Implied, Express, and Apparent.
6. Agent: An individual who is licensed to sell, negotiate, or ettect insurance contracts on behalf of the insurer.
7. What is name of the process that insurance companies use to determine
whether or not an applicant is insurable?: Underwriting
8. The requirement that agents must account for and promptly remit all insur-
ance funds collected is known as what type of agent responsibility?: Fiduciary
9. What is a third-party ownership?: An insurance arrangement in which the policy owner and the insured
are not the same person.
10. Suitability: Factors that determine if an insurance product is appropriate for a particular customer.
11. Premium: A payment by the policy owner to the insurance company to keep the policy in force.
12. Disclosure: Providing suflcient information to help someone make informed decision.
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13. 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?: Rebating
14. If an insurer meets the states financial requirements and is approved
to transact business in the state, it is considered what type of insurer?: Authorized
15. What information are the members of the medical information bureau
required to report?: Adverse medical information about the applicants or insureds.
16. What type of beneficiary can be changed at any point by the policy owner?-
: Revocable
17. What document describes the specific information about a policy?: Policy
Summary
18. What is the term for the causes of loss insured against in an insurance
policy?: Peril
19. Whom does an insurance agent represent?: Insurance Company
20. What is an unfair trade practice?: Any fraudulent, deceptive, or dishonest business practice that is
prohibited by statutes and regulations.
21. Insurer: The company that issues an insurance policy.
22. Peril: Cause of loss
23. Contract of Adhesion: A contract prepared by one party that must be accepted as written or be rejected by
the other party.
24. What are the four elements of an insurance contract?: Agreement (Otter and Accep-
4 / 24 insurance application are answered?: The Agent's
34. What types of licensee represents the insurance company?: Agent
35. Who must be notified of the producers change of address?: The department of
Insurance
36. Certificate of Insurance: A document issued to insureds under a group plan that states the coverage
being issued, and indicates the coverage type and amounts.
37. Nonrenewal: Termination of a policy by an insurer on the anniversary or renewal date.
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38. Representation: A statement made by the applicant on the insurance application that is believed to be
true.
39. What is a warranty?: An absolutely true statement that, if breached, may viod an insurance contract.
40. In insurance, when is the offer usually made on a contract?: When the
insurance application is submitted.
41. When a change needs to be made on the application for insurance, which is
the best method for correcting the information?: Complete a new application or ask the applicant to initial the correction on the original application.
42. A situation in which a person can only experience a loss and no gain
represents what type of risk?: Pure Risk
43. Who is responsible for the contents of insurance advertisements?: The Insur-
ance Company
44. What is the entire contract in health insurance underwriting?: The policy
with riders and endorsements, plus a copy of the application.
45. What is the main purpose for requiring a person to be licensed to transact
insurance?: To protect the general public.
46. Who is an insurance agent?: A person authorized to sell, solicit, and negotiate insurance contracts.
47. What illegal act does a producer commit what representing a policy in a
more favorable light than the policy really is?: Misrepresentation
48. Field Underwriter: An insurance agent who conducts an initial policy solicitation and application. (The
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60. Who must be a member of a state insurance guaranty association?: Any
authorized insurer within a state.
61. When should an agent obtain a statement of good health from the in-
sured?: When the premium was paid upon delivery rather that at the time of application.
62. What is the main responsibility of a company's underwriting unit?: Risk
Selection
63. Conditions that increase the chance of a loss are known as what?: Hazards
64. What is the purpose of the agent's report during the application process?: It
provides the agent's observation about the proposed insured that may help in the underwriting process.
65. If an underwriter requires extensive information about the applicants med-
ical history, what report will best serve this purpose?: Attending Physician's statement.
66. What are agents required to do in order to renew their license?: Complete
required continuing education hours.
67. Primary Beneficiary: A beneficiary who has the first claim to the policy proceeds after the death of the
insured.
68. Why are dividends in life insurance polices not taxable?: Dividends are not
considered income for tax purposes; they are a return of unused premium.
69. How soon can income payments begin in an immediate annuity?: No later that
one year from the time of annuity purchase.
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70. What type of annuity requires an agent to have a securities license?: Variable
Annuity
71. What are some examples of Life qualified plans?: IRA, 401(k), HR 10 (keogh), SEP,
SIMPLE
72. Under what non-forfeiture option does the company pay the policy's sur-
render value and have no further obligations to the policy owner?: Cash Surrender
73. What provision in a life insurance policy extends coverage beyond the
premium due date?: Grace Period.
74. In term policies, what happens to the premium throughout the term of the
policy?: The premium remains level.
75. What type of whole life insurance policy only requires a payment of premi-
um at its inception, provides insurance protection for the life of the insured, and endows at the insured's age 100?: Single premium whole life.
76. What are the characteristics of the group that underwriters will
consider before issuing a group life policy?: Groups purpose, size, financial strength, and turnover.
77. What is the main advantage of converting from group life insurance to
individual coverage?: Evidence of insurability is not required
78. What is included in Part 2 of a life insurance application?: Medical information about
the prospective insured.
79. Term Insurance: Coverage for a specified period of time without cash values or living benefits.
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92. What are the personal uses of life insurance?: Survivor protection, estate creation and
conservation, cash accumulation and liquidity.
93. Non-forfeiture Options: Methods of distribution of guaranteed values in a life insurance policy.
94. With the interest-only settlement option, what happens to the policy's
death benefit?: Policy proceeds are retained by the insurance company; only the interest is paid to the beneficiary.
95. If there is no named beneficiary for the annuity benefits, where do the
benefits go?: Annuitant's estate
96. What is the general taxation rule for death benefits payable to the benefi-
ciary of a life insurance policy?: Death benefits are generally not subject to income taxes.
97. What is the purpose of the automatic premium loan provision?: To prevent the
unintentional lapse of a policy because of nonpayment of premium.
98. Which non-forfeiture option is automatically selected by the company if not
chosen by the policy owner?: Extended Term.
99. 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?: Incontestability
100. In annually renewable term policies, what is the annual premium based
upon?: The insured's attained age.
101. In what type of life insurance policy can the policy owner skip premium
payments without the policy lapsing?: Universal Life
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102. What type of life insurance policy offers pure death protection?: Term
103. At what point does coverage begin when an agent issues a conditional
insurability receipt for a life insurance policy?: Either on the date of the application or the date of the medical exam, whichever occurs last.
104. What are the three main factors that determine the premium for a life
insurance policy?: Mortality, Interest, and Expense.
105. Qualified Plan: A retirement plan that meets the IRS guidelines for receiving favorable tax treatment.
106. Face Amount: The amount of benefit stated in the life insurance policy.
107. What is the penalty for excessive contributions to a traditional IRA?: 6%
108. What are the two phases of an Annuity?: Accumulation and Annuitization (Pay-in and
Pay-out)
109. What annuity settlement option provides income payments to the annu-
itant for the duration of his or his life, and also guarantees payment for a specified number of years?: Life income with period certain.
110. For a retirement plan to be qualified, it must be designed for whose
benefit?: Employees
111. What life policy rider allows the company to forgo collecting the premium
if the insured becomes disabled?: Waiver of Premium
112. What beneficiary designation has the first claim to the death proceeds of a
life insurance policy?: Primary Beneficiary
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122. According to the taxation rules of life insurance policies, how are cash
value increases taxed?: Cash value growth is tax-deferred
123. Who does the common disaster clause protect?: The contingent beneficiary
124. Which non-forfeiture option provides coverage for the longest period of
time?: Reduced paid-up
125. What provision allows the policy owner to reactivate a lapsed life insurance
policy within a specified period of time with proof of insurability?: Reinstatement
126. What does "level" refer to in level term insurance?: Face Amount
127. What elements of an adjustable life policy can be changed by the policy
owner?: The amount and payment period of the premium, and the period of protection.
128. In variable universal life insurance, to what policy component does the
term "variable" refer?: Cash value and face amount
129. What portion of a partial withdrawal from a universal life policy will be
taxed?: Interest earned on the withdrawn cash value
130. In calculating the amount of life insurance needed, on what is the needs
approach based?: The predicted needs of the family after the premature death of the insured.
131. Settlement Options: Methods used to pay the death benefits to a beneficiary upon the insured's death.
132. Insurable Interest: A financial interest in the life of another person with the possibility of losing
something of value if that person dies.
133. If someone wants to buy a life insurance policy that will provide lifetime
14 / 24 protection against premature death, what type of life insurance policy should it be?: Permanent
134. What is policy replacement?: A new policy is issued while an existing policy is terminated or
reissued with reduction in cash value.
135. What type of life insurance is best suited to cover a mortgage?: Decreasing Term
136. When the amount of insurance is increased in an adjustable life policy,
what will the insurer require from the insured?: Evidence of Insurability.
137. What are the "living benefits" of whole life insurance?: Cash Value
138. Statements on the application made by an applicant for a life insurance
policy are known as what?: Representations
139. What dividend option can increase the death benefit of the existing life
policy>: Paid-up additions
140. What are the most common exclusions in life insurance policies?: War and
Military service, hazardous occupation, and Aviation.
141. If the beneficiary of a life insurance policy receives death benefit payments
that consist of principal and interest, which portion, if any, will be taxed?: Interest Only
142. What type of annuity is suitable for someone who wants the largest benefit
amount only for as long as the annuitant lives?: Straight Life
143. What is the main reason for purchasing an annuity?: To provide income that the
annuitant cannot outlive.
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154. How are the benefits of a group accidental death and dismemberment
policy received?: Income Tax free
155. What is overinsurance?: An excessive amount of insurance that would result in over payment to the
insured in the event of a loss.
156. Most health policies will pay accidental death benefits if the death is
caused by an accident and occurs within how many days?: 90 Days
157. In health insurance, what is considered a sickness?: An illness that first arises while
the policy is in force.
158. What do individual insureds receive as proof of their group health cover-
age?: Certificate of Insurance
159. In health insurance contracts, the insured is not legally bound to any
particular action; however, the insurer is obligated to pay for losses covered by the policy. What contract characteristic does this describe?: Unilateral
160. How do insurers determine that cost for a group health policy?: The main
variables are the ration of men and women in the group, and the average age of the group.
161. Who is responsible for making premium payments in an HMO plan?: Sub-
scribers
162. What health policy provision describes the insured's right to cancel cover-
age?: Renewability Provision
163. When can an irrevocable beneficiary be changed?: With the written consent of the
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164. Under the uniform required provisions for health insurance policies, proof of
loss usually needs to be filed within how many days?: 90 Days
165. What is the required free-look period for Medicare supplement policies?: 30
Days
166. Who qualifies for Medicaid?: People with insuflcient income and insuflcient assets.
167. What type of insurance covers an employee who is hurt on the job?: Worker's
Compensation
168. Under what employer sponsored plan are the benefits taxable to an em-
ployee in proportion to the amount of premium paid by the employer?: Disability income
169. When are LTC benefits received tax-free by an individual?: LTC benefits are always
received tax-free
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179. What Medicare part provides prescription drug benefit?: Part D
180. How is Medicaid funded?: Medicaid is a federal and state funded program
181. How are individually owned disability income benefits taxed once received by
that insured?: Disability benefits are not taxed; they are received income tax free
182. How long do short-term disability group plans pay benefits?: For a period of less
than two years
183. In health insurance, when would an excess plan pay benefits?: After the primary
plan has paid it's full promised benefit, the excess plan will pay the balance.
184. What is Long-Term Care?: Health and social services provided for individuals with chronic disease or
disabilities who requires living assistance at home or in a nursing home facility.
185. What type of health insurance plans cover all accidents and sicknesses that are
not specifically excluded in the policy?: Comprehensive plans
186. What is the purpose of managed care health insurance plans?: To control health
insurance claims expenses.
187. If an agent makes a correction on the application for health insurance, who
must initial the correct answer?: The Applicant
188. What is "own occupation" disability?: Insured's inability to perform duties of his or her current job
or an occupation for which the insured is educated and trained.
189. According to the reinstatement provision, once a lapsed policy is reinstat-
ed, how soon will coverage be available for accidents?: Immediately
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190. If the insured pays a monthly premium for health insurance, how long will
the grace period be on the policy?: 10 Days
191. What is a deductible in a health insurance policy?: A specified dollar amount that the
insured must pay before the insurer pays any policy benefits.
192. In which Medicare supplemental plans are the core benefits found?: All plans
(A-N)
193. When is the initial enrollment period for Medicare part A?: When an individual
first becomes eligib;e for Medicare, starting three months before turning age 65 and ending three months after the 65th birthday.
194. What part of Medicare is known as medical insurance?: Part B
195. What type of disabilities will be covered by occupational coverage?: Disabilities
that result from accidents or sicknesses on OR ott the job
196. How are benefits received by the business from a key person disability
insurance?: Income tax free
197. What is a service plan?: An insurance plan in which benefits are provided to subscribers in the form of
services instead of monetary benefits.
198. What is the elimination period?: A waiting period imposed on the insured from the onset of
disability until benefit payments begin.
199. Who are the parties in a group health contract?: The employer and the Insurer
200. A waiver of premium provision may be included with what type of health
