Insurance Concepts and Terminology, Exams of Insurance Economics

Download Insurance Concepts and Terminology and more Exams Insurance Economics in PDF only on Docsity! Florida 2-15 Insurance License Exam/ 149 Q&A/ 2024-2025. "ACC" refers to the type of disability that prevents someone from performing the job he was performing prior to the disability. - Answer: FALSE Which statement is CORRECT about the Department of Financial Services' right to examine an agent's records? - Answer: An examination can be conducted at any time to discover any unfair trade practices. Bill gives Jim a couple of tickets to a Florida Gators game to thank him for purchasing a policy. This is an example of: - Answer: rebating ____________ term insurance provides a level amount of protection for a specified period, after which the policy expires. - Answer: Level Page 1 of 20 Business overhead expense (B.O.E.) insurance does not provide benefits to cover the business owner's salary. - Answer: TRUE Level, decreasing, and increasing insurance are all basic forms of ____________ insurance. - Answer: term Hospice services are covered under Medicare Part A. - Answer: TRUE Under Florida law, group health insurers must offer mental and nervous disorder insurance to policyowners. - Answer: TRUE Deductibles under a group major medical plan usually run from $250 to $500; whereas individual health plans usually run from: - Answer: $1,000 plus. Every HMO subscriber must receive a benefits package that includes a copy of the HMO contract and certificate, and: - Answer: a member's handbook. A life insurance policy will not be reinstated if it has been: - Answer: surrendered for its cash value. Which of the following is NOT a type of permanent life insurance? - Answer: Term Life In Florida, a ______________ must sign for and on behalf of a minor purchasing life insurance. - Answer: parent or legal guardian Page 2 of 20 If an insurance company reimburses the insured for medical expenses, can the insured deduct that amount from their federal income tax? - Answer: NO Which of the following is NOT a benefit to key person insurance? - Answer: Wage control The "currently insured" classification under Social Security limits survivorship benefits. In order to be eligible for Social Security survivor benefits, a person must have earned _________________ period ending with the quarter in which the worker died. - Answer: six credits during the 13-quarter A prospectus for an individual variable insurance contract: - Answer: must accompany every sales presentation. Most group disability policies use the ___________ method to calculate the amount of the insured's earnings prior to the accident. - Answer: percentage Group health plans that are issued on an experience-rated basis can make both premium reductions and premium increases retroactive for 12 months. - Answer: FALSE Employees may be classified for group life insurance in all of the following categories EXCEPT which? - Answer: Gender Page 5 of 20 Lauren wants to purchase an annuity that will pay her a guaranteed income for the remainder of her life once she retires. Which type of annuity should she purchase? - Answer: Straight Life Income Annuity According to Florida's Standard Valuation Law, the __________________ is mandatory. - Answer: legal reserve Equity indexed annuities are a form of: - Answer: fixed rate annuity. Of the following, who would most likely pay a lower premium amount? - Answer: A preferred risk client The Statute of Limitations states that if a lawsuit is to be filed, it must be brought within ______ years after Proof of Loss is furnished to the insurance company. - Answer: five Which type of life insurance is sold by home service insurers? - Answer: Industrial life insurance Social Security provides welfare benefits to all citizens. - Answer: FALSE In general, the standard life insurance Incontestable Clause means that a policy is incontestable after: - Answer: two years. Page 6 of 20 A medical expense policy states that it will pay a flat $200 a day for each day of hospitalization. The policy pays benefits on what basis? - Answer: Indemnity Basic Medical Expense insurance limits coverage to specific types of medical care. - Answer: TRUE A _____________ group involves combining several parties into a group for the purpose of obtaining insurance. - Answer: fictitious The ____________________ Act mandated once and for all that insurance would be regulated by the states. - Answer: McCarran-Ferguson The type of annuity that provides a guaranteed rate of return is called a variable annuity. - Answer: FALSE Mathew purchased an annuity naming his wife, Cher, beneficiary. Upon Mathew's death, Cher will receive the proceeds: - Answer: taxed as ordinary income above Mathew's cost basis. Policy reserves are the intangible amounts set aside by the _____________ out of the insurer's assets at the beginning of the policy period. - Answer: insurer SIMPLE plans can be structured as an IRA or a 401(k). - Answer: TRUE Page 7 of 20 In Florida, which of the following groups are eligible for group life insurance? - Answer: Typically, any type of legitimate group is eligible to purchase a group life insurance policy. In a guaranteed renewable health policy, the company may increase premiums: - Answer: only for an entire class of insureds. Under the Uniform Provisions Law, which of the following provisions are optional for a health policy? - Answer: Change of Occupation The person who has a health maintenance contract is referred to as the: - Answer: subscriber In order to qualify for Medicaid benefits, applicants must be at least age ____, blind or disabled, and meet other eligibility requirements. - Answer: 65 Under the Unfair Trade Practices Act, claim forms must be sent to the insured within _______ from the date a claim is reported. - Answer: 15 DAYS A life insurance policy's cash value belongs to the insured. - Answer: FALSE Agents should check with _________________ to determine if the insurer they are representing is a properly authorized insurer. - Answer: the Department of Financial Services Page 10 of 20 Supplemental Medical Insurance, Medicaid, and U.S. Armed Services and Veterans Insurance are all examples of what type of insurer? - Answer: Government Insurers Section 1035 Exchanges are a way to move annuity funds: - Answer: income tax free. Which of the following titles can a life insurance agent use when conducting business - Answer: Neither financial planner, consultant, or investment advisor Group health insurers must either provide or offer chiropractic coverage. - Answer: TRUE A term life insurance policy's cash value builds during a specifically limited period of time. - Answer: FALSE Insurable interest must exist at: - Answer: the time of application. Who regulates retirement plans in Florida? - Answer: ERISA Employee Retirement Income Security Act What type of insurance is most frequently used in group life plans? - Answer: Annual Renewable Term Page 11 of 20 What is a Medicare supplement (Medigap) policies? - Answer: Medigap policies pay for some healthcare services not covered by Medicare, pay most, if not all, Medicare deductibles and copayments, and supplement Medicare benefits. Anyone under the age of _____ who has earned income may open a traditional IRA. - Answer: 70 1/2 Which of the following types of insurance contracts are NOT considered valued contracts? - Answer: Medical expense plans Disability insurance provides an income stream for an individual who is unable to continue working due to accident or illness. However, if a person is under ______ disabled, he/she does not qualify for benefits. - Answer: 20% Under the Law of Agency, an agent is the lawful representative of the: - Answer: principal Group health plans that are issued by mutual companies usually provide dividends, which are most likely to be paid if __________________ are less than anticipated. - Answer: expenses and claims costs Which of the following reimburses its insureds for covered medical expenses? - Answer: Commercial insurers Page 12 of 20 Toni decides to take a special vacation on her 40th birthday and withdraws $4,000 from her IRA. What penalty will she be subject to on the amount withdrawn? - Answer: $400 An immediate annuity is designed to provide income: - Answer: Immediately. Henry has a Life with Period Certain annuity (life or ten years) in which is wife, Harriet, is beneficiary. If Henry dies after 5 years, what will Harriet receive? - Answer: Payments for the remaining five years Buy-sell agreements can only be drafted by: - Answer: an attorney. HMOs and PPOs are required under Florida law to provide members direct access to which of the following? - Answer: All - Dermatologists and chiropractors, optometrists and OB gynecologists, and podiatrists Insurance is a contract of: - Answer: utmost good faith. The Deficit Reduction Act gives governors more flexibility to design _____________ benefits that efficiently and affordably meet their states' needs. - Answer: Medicaid The health policy that always renews without an increase of premium could be identified as: - Answer: noncancelable Page 15 of 20 __________________ are the two most important factors in the health insurance underwriting process. - Answer: Medical history and occupation Which of the following is TRUE about a Limited Pay Whole Life policy? - Answer: Provides level premiums limited to certain time period, less than life In Florida, a child must be at least ____ years of age to sign a life insurance application. - Answer: 15 The ________________ means that the life insurance policy along with the application represents the complete contract. - Answer: Entire Contract provision A man commits suicide 30 months after purchasing a life insurance policy and his wife is the named beneficiary. What amount will his wife receive? - Answer: The face amount of the policy Which type of insurer insures groups of individuals who are of the same class? - Answer: Risk Retention Groups Rachel owns a major medical health policy which requires her to pay the first $300 of covered expenses each year before the policy pays its benefits. The $300 is the policy's: - Answer: deductible Self-insuring is an example of what type of risk? - Answer: Risk Retention Page 16 of 20 When might a Statement of Continued Good Health be required regarding a life insurance policy? - Answer: When there is no premium accompanying the application Changing one's lifestyle to minimize a known risk is an example of: - Answer: Risk Reduction. A health plan with a $5-per-point conversion factor would pay _______ for a 200- point procedure. - Answer: $1,000 The disadvantage of naming an estate as beneficiary is that proceeds will be included in the insured's: - Answer: estate All statements made on an application are considered ________________ because there can be no guarantee that they are true. - Answer: representations Which of the following is NOT a typical permanent exclusion in life insurance policies? - Answer: Suicide ___________ refers to the monies set aside by insurers for future claims costs. - Answer: Reserve funds Page 17 of 20