Health Insurance 214 Florida 2-40 Practice Exam Questions #2 Latest Update Questions with, Exams of Insurance law

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Health Insurance 214 Florida 2- 40

Practice Exam Questions #2 Latest

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Social security is also known as: - Correct Ans: ✔✔Old Age Survivors and Disability Insurance (OASDI) Insurance is not intended to protect against? - Correct Ans: ✔✔Speculative Risk Under a family plan life insurance policy, coverage on the breadwinner is often provided by which of the following insurance types? - Correct Ans: ✔✔Whole Life Which of the following statements regarding annuity settlement or payout options is NOT true? - Correct Ans: ✔✔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 Ans: ✔✔Plans rarely have a matching contribution component by an employer

All of the statements below pertaining to group life insurance are correct EXCEPT: - Correct Ans: ✔✔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 Ans: ✔✔Coercion 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 Ans: ✔✔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 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 completion, must be signed by the applicant and agent. Within what period of time must an agent submit this form to the insurer once it is complete? - Correct Ans: ✔✔Within 10 days

Shelly is considered to be terminally ill and has decided to sell her life insurance policy in exchange for living benefits to fulfill some final comforts and expenses before her death. In selling her life insurance policy, Shelly is referred to as a(n)_________and she will receive a percentage of her life policy's face amount in exchange for ownership of her policy. - Correct Ans: ✔✔Viator Which of the following is NOT a type of speculative risk? - Correct Ans: ✔✔Unemployment Which agency collects and provides reliable medical information regarding an applicant's health history? - Correct Ans: ✔✔The MIB Tonya failed to pay her life policy's premium on the date in which it is normally due and is currently 23 days late. As a result of her policy's grace period provision, which outcome will occur? - Correct Ans: ✔✔Tonya is within her grace period and can pay her premium up to 30 or 31 days after the date in which the premium is normally due; however, she does not need to pay back any outstanding loans to the insurer. 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? - Correct Ans: ✔✔Occurrence Policy

In a group life contract, evidence of insurability is - Correct Ans: ✔✔Required only after the enrollment period ends. Peril - Correct Ans: ✔✔For purposes of insurance, which of the following is NOT considered a hazard? The loss must be speculative - Correct Ans: ✔✔All of the following are characteristics of pure risk EXCEPT Twisting - Correct Ans: ✔✔When an agent persuades a client to cancel his or her current coverage for a policy from an entirely different company solely to produce another first year commission is called? Grace Period Provision - Correct Ans: ✔✔In the event a policy's premium is paid late, which of the following provisions will keep the policy in force for a short period of time thereafter to allow the policyowner to submit payment? Payor Rider - Correct Ans: ✔✔In the event that a parent dies or becomes disabled, which rider allows surviving child coverage to continue until the child reaches a specified age? 30 - 31 days - Correct Ans: ✔✔According to the NAIC Model Group Life Insurance Provisions, what is the standard grace period?

50% - Correct Ans: ✔✔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)? Interest is not taxed upon withdrawal due its funding from post-tax dollars - Correct Ans: ✔✔Which of the following statements is CORRECT in regards to a Roth IRA? Fails the 7-Pay Test - Correct Ans: ✔✔An insurance contract becomes a Modified Endowment Contract (MEC) if which of the following occurs? Buy-Sell agreement - Correct Ans: ✔✔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? The death of the insured due to an accident - Correct Ans: ✔✔In order for a beneficiary to receive double indemnity, which of the following scenarios must occur? Agents selling insurance products for an agency are not required to be individually licensed, as long as the agency itself is. - Correct Ans: ✔✔Which of the following statements regarding insurance agencies in Florida is INCORRECT?

100% - Correct Ans: ✔✔When an employee makes contributions into a pension plan, what percentage of his or her own contributions are vested? Cash value - Correct Ans: ✔✔Which of the following is NOT associated with a term life policy? Pre-texting - Correct Ans: ✔✔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 Ans: ✔✔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 Ans: ✔✔In the event that a policyowner surrenders his or her individual whole life policy, which outcome will likely occur? Occurence Policy - Correct Ans: ✔✔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 Ans: ✔✔Which of the following is NOT a retirement vesting schedule? Spendthrift Clause - Correct Ans: ✔✔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 Ans: ✔✔A paramedical exam includes all of the following EXCEPT The employer - Correct Ans: ✔✔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 Ans: ✔✔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 Non-Medical - Correct Ans: ✔✔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 Ans: ✔✔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 Ans: ✔✔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 Ans: ✔✔Loss ratio is defined as No minimum - Correct Ans: ✔✔In the state of Florida, what is the minimum number of members required for a group life insurance policy? Controlled business - Correct Ans: ✔✔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 Ans: ✔✔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 Ans: ✔✔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 Ans: ✔✔Insurance is not intended to protect against? At the time of application - Correct Ans: ✔✔In determining the validity of an insurance contract, when must insurable interest be present? 60 days - Correct Ans: ✔✔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? Annuity Funding plan - Correct Ans: ✔✔Which of the following qualified employer retirement plans is NOT recognized as a 'defined contribution' plan? 40 credits - Correct Ans: ✔✔What is the full amount of Social Security credits needed to be fully insured for benefits?

Long-term care rider - Correct Ans: ✔✔Which life rider allows for care in a convalescent or nursing home? Extended term option - Correct Ans: ✔✔If Jim decides to cancel his whole life insurance policy and uses his policy's cash value to purchase a term life policy with a face amount of equal value but with a likely shorter coverage period, he is utilizing which type of life insurance nonforfeiture option? Consideration Clause - Correct Ans: ✔✔Which provision or clause below will illustrate the frequency and amount of policy premiums? A term life policy builds cash value over the policy's term. - Correct Ans: ✔✔Which of the following statements describing term life insurance is INCORRECT? The insurance company evaluates the individuals within a group instead of the group as a whole, and then measures the individual's risks against its underwriting standards. - Correct Ans: ✔✔In regards to group insurance, which statement below is INCORRECT? Central Medical Bureau (CMB) - Correct Ans: ✔✔All of the following are sources for obtaining information regarding an applicant's insurability EXCEPT:

An insurer is required to disclose medical information to an applicant in the event the applicant is rejected due to findings in the report. - Correct Ans: ✔✔Which of the following is NOT required by the Fair Credit Reporting Act of 1970? Friends - Correct Ans: ✔✔Insurable interest exists between all of the following EXCEPT: The policy no longer meets the needs of the client - Correct Ans: ✔✔Which of the following reasons would justify a policy replacement? Usually 2 years, but in some states only 1 year - Correct Ans: ✔✔The Incontestable Clause states that the insurer cannot contest the validity of a life insurance policy as long as it remains in force after what period of time? Non-contributory plans - Correct Ans: ✔✔Group insurance plans that do not require employees to pay a portion of policy premiums are referred to as: 4 credits - Correct Ans: ✔✔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 Ans: ✔✔Under the 1035 policy exchange provision, which of the following will NOT receive favorable tax treatment? Stock - Correct Ans: ✔✔Which of the following insurers is best defined as a non-participating company? 100% - Correct Ans: ✔✔A non-contributory group policy requires which percentage of eligible employees to be covered? Revocable Designation - Correct Ans: ✔✔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 Ans: ✔✔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 Ans: ✔✔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 Ans: ✔✔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 Ans: ✔✔Leon currently receives $650 per month from his variable annuity. Since he is scheduled to receive payments from his variable annuity for the 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 Ans: ✔✔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 Ans: ✔✔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 Ans: ✔✔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 Ans: ✔✔Which of the following entities manages the National Do-Not-Call Registry? Actuary - Correct Ans: ✔✔Which of the following professions analyzes and predicts potential loss in order to set and maintain premium pricing for an insurance company? 7 - Correct Ans: ✔✔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 Ans: ✔✔Which of the following is established to fund a multiemployer plan? Misrepresentation - Correct Ans: ✔✔Overstating promises, using inaccurate or misleading information and guaranteeing insurance are types of: Interest-free option - Correct Ans: ✔✔The following life policy settlement options are available to the policy's beneficiary EXCEPT: Dividend - Correct Ans: ✔✔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 Ans: ✔✔Which of the following defines the period during which funds grow in an annuity? 50% - Correct Ans: ✔✔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 Ans: ✔✔All of the following are considered hazards EXCEPT: Buy-Sell Agreement - Correct Ans: ✔✔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 Ans: ✔✔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 Ans: ✔✔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 Ans: ✔✔All of the statements below pertaining to group life insurance are correct EXCEPT: 30 days - Correct Ans: ✔✔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? Individual Life insurance - Correct Ans: ✔✔Which of the following insurance contracts must follow the Florida Life Solicitation Law? Pension Benefit Guaranty Corporation (PBGC) - Correct Ans: ✔✔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? Home service system - Correct Ans: ✔✔Although most insurers no longer use this marketing approach, lower-valued life insurance products, called 'industrial' life insurance, is still marketed through the

once an insurance contract, including its provisions and riders, is constructed and provided in written form to the insured, it cannot be modified by any oral, or verbal, statements made by either party. - Correct Ans: ✔✔The 'parol evidence rule' states that Deferred Vesting - Correct Ans: ✔✔Which of the following is NOT a retirement vesting schedule? At the time of the application - Correct Ans: ✔✔Insurable interest is required required only after the enrollment period ends. - Correct Ans: ✔✔In a group life contract, evidence of insurability is Enrollment period; 30-31 days - Correct Ans: ✔✔Richard has worked at J&J Printing Inc. for the past three months and wants to join the company's contributory group insurance plan. Which answer BEST describes the period is he entering and how long does he have to apply without proof of insurability? 6 - Correct Ans: ✔✔In a 3 partner cross-purchase plan, how many policies need to be purchased in order to protect each partner against the loss of any other partner?

Fiduciary - Correct Ans: ✔✔A person in a position of financial trust is known as a Spendthrift provision - Correct Ans: ✔✔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? Other (Additional) Insured(s) Rider - Correct Ans: ✔✔Which of the following life policy riders is also referred to as a 'child' rider? Annual Renewable Term - Correct Ans: ✔✔What is the most common type of employment-related group life insurance? Twisting - Correct Ans: ✔✔The practice of inducing a policyowner through misrepresentation to forfeit or change insurance from one company to another to gain commission for an agent or agency is called: Aleatory - Correct Ans: ✔✔The concept that an insurance contract is dependent on an uncertain outcome and that one party may receive more value than given it is said to be:

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. - Correct Ans: ✔✔Which of the following statements regarding annuity settlement or payout options is NOT true? 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 Ans: ✔✔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? 25 - year $85,000 Decreasing Term Life policy - Correct Ans: ✔✔Charles has a $85,000 25-year mortgage and wants to purchase a life insurance policy that would cover any outstanding balance on the mortgage if he were to pre-maturely die, which of the following policies would be the most logical for him to purchase? A receipt given to an applicant when an agent collects both the application and initial premium. Under a conditional receipt, the applicant is covered against loss, should it occur, before the policy becomes effective, on the 'condition' that the applicant is found to be insurable as applied for by the insurer's underwriting department upon completion of its underwriting process. - Correct Ans: ✔✔How is a conditional receipt BEST described?

Preferred risk - Correct Ans: ✔✔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 Ans: ✔✔Which formula is used to compute the taxable portion of an annuity payment? Sliding - Correct Ans: ✔✔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 Ans: ✔✔All of the following are true in regards to the rights of ownership in a life insurance contract EXCEPT Family Needs Assessment - Correct Ans: ✔✔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 Ans: ✔✔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 Ans: ✔✔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 Ans: ✔✔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? Per stiripes rule - Correct Ans: ✔✔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 Ans: ✔✔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 Ans: ✔✔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 Ans: ✔✔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 Ans: ✔✔Which of the following is NOT considered to be a life policy settlement option? Insured - Correct Ans: ✔✔Which of the following is NOT involved in an annuity contract? State Guarantee Association - Correct Ans: ✔✔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 Ans: ✔✔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 Ans: ✔✔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 Ans: ✔✔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? Mutual - Correct Ans: ✔✔Which of the following insurers is considered a participating company? Analyzing risk - Correct Ans: ✔✔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 Ans: ✔✔In regards to group insurance, which of the following statements below is correct? Irrevocable designation - Correct Ans: ✔✔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 Ans: ✔✔Which of the following qualified employer retirement plans is NOT recognized as a 'defined contribution' plan? Morbidity Rate - Correct Ans: ✔✔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 Ans: ✔✔An insurance contract is considered Aleatory for the following reasons EXCEPT: 24 - Correct Ans: ✔✔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 Ans: ✔✔Which of the following statements regarding insurance agencies in Florida is INCORRECT?

Mutual/Par - Correct Ans: ✔✔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. Extended term option - Correct Ans: ✔✔Linda now owns a $120,000 term life policy after she forfeited her whole life policy and reinvested its cash value. As described by her actions, which nonforfeiture option did Linda exercise? A term life policy builds cash value over the policy's term. - Correct Ans: ✔✔Which of the following statements describing term life insurance is INCORRECT? Fixed-period option - Correct Ans: ✔✔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 60 days - Correct Ans: ✔✔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? 30 days - Correct Ans: ✔✔Within what period of time must an agent notify the Florida Department of Financial Services of any change in address?