Insurance Policy Provisions and Regulations, Exams of Insurance law

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Florida 2-15 Final Exam|| 150 Questions||

Correct Answers(2024 Latest Update)

When life insurance proceeds are used to pay inheritance taxes and federal estate taxes, it is known as - ANSWER Estate conservation In group insurance, the primary purpose of the Coordination of Benefits provision is to - ANSWER Prevent overinsurance Which of the following statements is NOT true regarding health insurance policy provisions? - ANSWER All additional provisions written by insurers are cataloged by their respective states. The policyowner has an option to pledge the life insurance policy as collateral for a bank loan. This is called - ANSWER A collateral assignment A whole life policy is surrendered for a reduced-paid up policy. The cash value in the new policy will - ANSWER Continue to increase When filling out an application for insurance, the applicant makes a mistake. If a fresh application were not available, what could the applicant do to properly correct the mistake? - ANSWER Cross the incorrect answer out, write the correct one beside it, and initial the answer. Which of the following riders pays a beneficiary a death benefit that is double or triple the face amount if the insured's death was caused by an accident as defined in the policy? - ANSWER An Accidental Death Rider All of the following are consideration in an insurance policy EXCEPT - ANSWER The cash value in the policy. An individual has a $200,000 convertible term life insurance policy. If he chooses, he can - ANSWER Convert to a whole life policy for the same face amount without proof of insurability. Which of the following is NOT true regarding a deferred annuity? - ANSWER Income payments begin within 1 year from the date of purchase. A retail shop owner is insured under a business overhead expense policy that pays a maximum monthly benefit of $2,500. His actual monthly expenses are $3,000. If the owner becomes disabled, the monthly benefit payable under his policy will be - ANSWER $2,

Which federal act defines rules pertaining to protected health information? - ANSWER HIPAA The "stop-loss" feature on a major medical policy is intended to - ANSWER Establish a maximum amount of out-of-pocket expense that an insured will have to pay for medical expense in a calendar year. If a business wants to make sure it will be able to cover losses due to the disability of its top employee, the business should get which type of insurance? - ANSWER Key person disability income Life insurance creates an immediate estate. Which of the following best explains this statement? - ANSWER The face value of the policy is payable to the beneficiary upon the death of the insured. What is the maximum age that a disabled insured worker may receive Social Security disability benefits? - ANSWER 65 Whose responsibility is it to ensure that the application for health insurance is complete and accurate? - ANSWER The agent's Which of the following policies would NOT offer a policy loan option? - ANSWER Term Life Regarding the consideration clause, which of the following is NOT correct? - ANSWER Consideration of the insurer and insured must be equal. The guaranteed purchase option is also referred to as the - ANSWER Future increase option. When an insured terminates membership in the insured group, the insured can convert to - ANSWER Whole life without proof of insurability. Which dividend option will increase the death benefit? - ANSWER Paid-up additions What is the difference between a straight life policy and a 20-pay whole life policy? - ANSWER Premium payment period Which of the following policies can be described as a flexible premium adjustable life policy? - ANSWER Universal Life All of the following statements are true regarding an Ordinary (Straight) Life policy EXCEPT - ANSWER It does not have a guaranteed death benefit.

An elimination (waiting) period may NOT have to be satisfied for a disability in which of the following? - ANSWER An insured suffers a relapse of a prior disability within 6- months of the initial covered disability An insured was seriously injured in a skiing accident that required him to be hospitalized for 5 weeks. His medical expense policy covered all of the following EXCEPT - ANSWER Loss of income while hospitalized. b) Necessary medicine and Which of the following used to be called Medicare + Choice Plans? - ANSWER Medicare Advantage Plans How does insurance distribute the financial consequences of individual losses? - ANSWER It transfers the risk to all persons insured. According to the Fair Credit Reporting Act, all of the following statements are true EXCEPT - ANSWER If an applicant is declined for an insurance policy, he or she has no right to know what was in the report. Which of the following is a permissible reason for an insurance company to contest payment of a claim based on statements in the application? - ANSWER The application contains material misstatements. According to the metal level classification of health plans, what percentage of health care costs will be covered under a gold plan? - ANSWER 80% Your client is sole proprietor and wishes to include his family on a medical expense plan. How much of the cost of the medical expense plan can be deducted (since he is considered self-employed)? - ANSWER 100% Which of the following statements regarding HIV testing is NOT true? - ANSWER Test results must be sent to the Department of Insurance. To be valid, an insurance policy must have all of the following EXCEPT - ANSWER Countersignature If a basic medical insurance plan's benefits are exhausted, what type of plan will then begin covering those losses? - ANSWER Supplementary major medical Who is the annuity owner? a) The person who receives - ANSWER The person who purchases the annuity Under the Payment of Claims provision, to whom will the insured's benefits be paid if the insured is deceased? - ANSWER The insured's primary beneficiary An insured's cancelable health insurance policy is being cancelled. One day before the policy is scheduled to end, he is involved in a major accident and is hospitalized for a

week. Which of the following best describes the coverage that he would receive? - ANSWER Full benefits, as if the policy were still completely in effect A married couple wants to include the entire family in their whole life policy under one rider. Which of the following riders will help them achieve that goal? - ANSWER Family term Under the mandatory uniform provision Legal Actions, an insured is prevented from bringing a suit against the insurer to recover on a health policy prior to - ANSWER 60 days after written proof of loss has been submitted. An underwriter is reviewing an applicant with an extensive medical history. Which of the following would give the underwriter a better understanding of how the applicant has been treated for various illnesses? - ANSWER Attending Physician's Statement Jack's retirement plan meets all federal requirements and entitles him to certain tax benefits as the owner of the plan. What term best describes Jack's retirement plan? - ANSWER Qualified In a variable life insurance policy, all of the following assets are held in the insurance company's general account EXCEPT - ANSWER Cash surrender values. The Uniform Provision Law that prevents an insurance company from altering its agreement with a policyholder by referring to documents or other items not contained in the policy is called the - ANSWER Entire Contract Provision. When the owner of a participating whole life policy uses the dividend to provide more life insurance coverage, which of the following dividend options is being used? - ANSWER Paid-up additions b) Reduce the premium The entire contract includes all of the following EXCEPT - ANSWER A buyer's guide. Insureds have the right to do which of the following if they have NOT received the proper claim forms within 15 days of their notice to the insurer of a covered loss under a major medical policy? - ANSWER Insureds have the right to do which of the following if they have NOT received the proper claim forms within 15 days of their notice to the insurer of a covered loss under a major medical policy? A husband and wife both incur expenses that are attributed to a single major medical insurance deductible. Which type of deductible do they have in their policy?

. - ANSWER Family HMOs are known as what type of plans? - ANSWER Service

Which of the following is the primary source of information that an insurer uses to evaluate an insured's risk for life insurance? - ANSWER Insurance application b) Risk analysis c) The law of large numbers Decreasing Term insurance is often used to - ANSWER Cover a mortgage. Following a covered loss, the Time Payment of Claims Provision requires that an insurance company pay disability income benefits no less frequently than - ANSWER Monthly Which of the following is NOT mandatory under the Uniform Provisions Law as applied to accident and health policies? - ANSWER Probationary Period In health insurance, the length of the grace period varies according to the - ANSWER Mode of premium payment. All of the following are excluded from coverage in an individual health insurance policy EXCEPT - ANSWER Mental illness. Answers to questions in an insurance application are called representations and, as such, they are - ANSWER Believed to be true to the best of the applicant's knowledge. Which of the following describes the relationship between a capital sum and a principal sum? - ANSWER Capital sums are percentages of principal sums. In addition to participation requirements, how does an insurer guard against adverse selection when underwriting group health? - ANSWER By requiring that the insurance be incidental to the group Medicare is a health insurance program for all the following individuals EXCEPT - ANSWER Those with low income and low assets. Riley reads an agreement on the first page of her policy which includes a list of losses that will be covered by her insurer. What is the name of this agreement? - ANSWER Insuring Clause Which of the following types of care could be provided at a community center? - ANSWER Adult day care Which of the following would be TRUE of both the fixed-period and fixed-amount settlement options? - ANSWER Both guarantee that the principal and interest will be fully paid out. Which of the following statements is INCORRECT? - ANSWER The insurer does not have the right to conduct an autopsy

What is the purpose of a benefit schedule? - ANSWER To state what and how much is covered in the plan An insured purchased a health insurance policy with a renewability clause that states the policy is "Guaranteed Renewable." This means that as long as the required premiums are paid, the policy will continue until the insured - ANSWER Reaches 65 A married couple purchase a life insurance policy on their newborn baby. They are concerned about what would happen to the policy if either one of them were unable to continue making the premium payments due to death or disability. Which policy rider should their agent recommend? - ANSWER Payor benefit The Guaranteed Insurability Rider allows the owner to purchase additional amounts of life insurance without proof of insurability at all of the following EXCEPT - ANSWER Purchase of a new home In a noncontributory group policy - ANSWER 100% of eligible employees must participate An employee is covered under COBRA. His previous premium payment was $100 per month. His employer now collects $102 each month. Why does the employer collect an extra $2? - ANSWER To cover the employer's administration costs All of the following are true regarding the federal Fair Credit Reporting Act EXCEPT - ANSWER Reports may be sent to anyone who requests one. According to the Common Disaster clause, if the insured and primary beneficiary are killed in the same accident and it cannot be determined who died first, which of the following will be assumed? - ANSWER The primary beneficiary died before the insured When may HIV-related test results be provided to the MIB? - ANSWER Only if the individual is not identified Which of the following meets the insured's personal needs, and is provided by nonmedical personnel? - ANSWER Custodial Care When an agent delivered an insurance policy to the insured, he collected the initial premium, as well as a document verifying that the insured had not had any injuries or illness since the application date. What is this document called? - ANSWER Statement of Good Health Jacob is receiving fixed amount benefit payments from his late wife's insurance policy. He was told that if he dies before all of the benefits are paid, the remaining amount will go to the contingent beneficiary. Which settlement option did Jacob choose? - ANSWER Fixed amount

In life insurance, which of the following is NOT required to have an insurable interest in the insured? - ANSWER The beneficiary Considering the principles of liquidity, how would the policyowner use today's cash values in a life insurance policy? - ANSWER Use it for emergency expenses Which of the following best defines the Probationary Period in group health policies? - ANSWER A specified period of time that a person joining a group has to wait before becoming eligible for coverage Which of the following best describes a Major Medical Expense Policy? - ANSWER It provides catastrophic medical coverage beyond basic benefits on a usual, customary and reasonable basis. An applicant gives her agent a completed application and the initial premium. What can the agent issue her that acknowledges the initial premium payment? - ANSWER Conditional Receipt A viatical settlement is a transaction outside the life insurance company where the owner sells the life insurance policy for which of the following? - ANSWER A percentage of the face amount of the policy In order to reinstate a life insurance policy the insured must do all of the following EXCEPT - ANSWER Pay next year's premium in advance If a soliciting producer suspects that there could be misrepresentation on the part of the applicant for insurance, what must the producer do? - ANSWER Inform the insurance company All of the following statements about indexed whole life insurance are correct EXCEPT - ANSWER The death benefit is not guaranteed A limited health insurance policy that will pay a lump sum to an insured diagnosed with a heart attack, stroke, or renal failure is known as - ANSWER critical illness insurance An agent delivers a life policy. He explains a policy change was made and asks the applicant to sign a statement acknowledging the changes were explained. The agent says the premium has not been paid and must be paid before the policy goes into effect. He collects a Statement of Good Health, relinquishes the policy, and leaves. What did he do wrong? - ANSWER He left the policy with the insured without collecting the premium The presumptive disability provision assumes that the insured is totally disabled upon loss of all of the following EXCEPT - ANSWER Felling

What does an annuity protect the annuitant against? - ANSWER Living longer than expected All of the following are true of annually renewable term insurance Except - ANSWER Proof of insurability must be provided at each renewal. When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option? - ANSWER Extended Term An insured had a heart attack while jogging but, is expected to return to work in approximately 6 weeks. The insured's Disability income policy will - ANSWER Replace a percentage of his lost income Insurance contracts are unilateral in nature. What does that mean? - ANSWER Only one party makes a promise What advantage does the "recurrent disability" provision provide to the insured under a disability income policy? - ANSWER It eliminates the imposition of a second elimination period for the same disability. If an insured pays a health insurance premium each month, how long would the grace period be under the policy? - ANSWER 10 Days An applicant misstates his age on his application for a health insurance policy. He states that he is 39, but his actual age is 49. When he files a claim, what will most likely happen? - ANSWER Benefits paid will be those that would have been purchased at the correct age. An insurer is attempting to determine the insurability of an applicant and decides to obtain medical information from several different sources. Which of the following must be notified of the investigation? - ANSWER The applicant What happens to the copy of the application for health insurance once the policy is issued? - ANSWER It becomes part of the entire contract. An annuity owner receives the same guaranteed payment every month. What type of annuity is it? - ANSWER Fixed Life Insurance can provide which of the following? - ANSWER Survivor protection Which statement best describes agreement as it relates to insurance contracts? - ANSWER One party accepts the exact terms of the other party's offer. When agents, brokers, or solicitors handle premiums for an insurer, they are acting in which capacity? - ANSWER As a fiduciary

An insurer recently collected information from a senior consumer, and used that information to make recommendations regarding insurance transactions. For how many years must this information be maintained after the transaction has been completed? - ANSWER 5 What is the only difference between blanket insurance and group health insurance? - ANSWER The insured members are not named. What is the minimum age requirement to enter into a life insurance contract in this state? - ANSWER 15 What is the latest point at which an Outline of Coverage may be presented? - ANSWER At the time of policy delivery What is the maximum amount of individual life insurance coverage that a person can convert to if the existing group policy has been terminated? - ANSWER $10, All of the following are true regarding a producer's fiduciary responsibilities EXCEPT - ANSWER Producers may commingle personal funds with company funds. A stock insurer is defined as an insurer - ANSWER Owned by its stockholders In individual health policies, proof of loss must be provided by the insured to the insurer within how many days of a loss? - ANSWER 90 Insurers CANNOT transact insurance in this state without a - ANSWER Certificate of Authority A licensee may have their license suspended, terminated or revoked for all of the following EXCEPT - ANSWER Unknowingly overinsuring any property insurance risk Which of the following groups is NOT eligible for group life insurance? - ANSWER Social Groups What Florida insurance regulation established an outline of appropriate and inappropriate business behavior for life insurance agents? - ANSWER The Code of Ethics of the Florida Association of Insurance and Financial Advisors Which of the following terms refers to solicitation, negotiation, effectuation or advising related to an insurance contract? - ANSWER Insurance transaction An agent has completed 28 hours of continuing education to renew her license. Upon renewal, she realizes she has 4 extra hours of credit. What will happen to those extra hours? - ANSWER They will be carried over to the next 2-year period

All advertisements, regardless of their source of creation, are the responsibility of the - ANSWER Insurer Which of the following best defines the unfair trade practice of rebating? - ANSWER Offering an inducement of something of value not specified in the policy Which of the following is NOT considered eligible for group life insurance? - ANSWER A credit union that needs coverage only for its top 10 employees A producer advises a policyholder that he should replace his life insurance policy with another, similar policy. The agent is advising this, however, for the sole purpose of earning a commission. What violation has the agent committed? - ANSWER Churning An insurance company that is owned by the policyholders is called a - ANSWER Mutual insurer HMO contracts may only be sold by a licensed and appointed health insurance agent or a full-time salaried employee or officer of an HMO who devotes most of his or her services to - ANSWER Activities other than soliciting HMO contracts from the public and who receives no commissions or compensation for procuring such contracts. Two individuals of the same age, health status, and life expectancy apply for individual insurance coverage. When policies are issued by the same insurer, the premium rates are different based on the insured's race. What practice does this describe? - ANSWER Unfair discrimination Who regulates the minimum standards for coverage in health insurance? - ANSWER Florida Law All of the following could qualify as a group for the purpose of purchasing group life insurance EXCEPT - ANSWER An association formed 1 year ago. An insurer who transacts insurance in this state but whose articles of incorporation are registered in Canada is considered what type of insurer? - ANSWER Alien In a group life policy with a death benefit of more than $50,000 a) Premium cost above $50,000 is taxable as income to the employee. - ANSWER Premium cost above $50, is taxable as income to the employee Which of the following would be an example of an insurer participating in the unfair trade practice of discrimination? - ANSWER Changing the insured higher premiums based on her race Premiums collected on behalf of the insurance company by an agent will be held in what capacity? - ANSWER Fiduciary

An employee has just started working for a small group corporation and works 25 hours per week. The employee is - ANSWER Eligible to receive full health coverage What is the maximum value of an item an insurer may gift a prospective insured as an advertisement? - ANSWER $ A policyowner who purchases an individual insurance policy and then asks for a refund within 2 weeks after the policy was delivered will receive - ANSWER A full refund of the premium Which of the following statements about HMOs in Florida is FALSE? - ANSWER HMOs can engage in selling insurance contracts. Why does Florida have state laws regulating Medicare Supplement Insurance? - ANSWER States cannot enforce and prosecute federal laws Which of the following would make a child over the age of 5 INELIGIBLE for Florida Healthy Kids coverage? - ANSWER Qualifying for Medicaid When one insurer buys insurance from another company to minimize the effects of catastrophic losses, they are - ANSWER Reinsuring If a life policy insured is 64 years of age or older, the insurer must advise him or her of which of the following? - ANSWER The insured's right to designate a secondary addressee to receive a copy of a policy lapse notice Which of the following sources would explain the state policies regarding appropriate agent conduct? - ANSWER Code of Ethics of the Florida Association of Insurance and Financial Advisers Which of the following actions does NOT constitute false advertising? - ANSWER Stating that dividends are not guaranteed An individual long-term care policy cannot be issued until the insurer has received from the applicant a written designation of at least - ANSWER 1 person According to the terms of the policy or an agreement between the insured, the group policyholder, and the insurer, the insured person may not do which of the following? - ANSWER Assign an appropriate premium based on preference During policy solicitation, an insurer exaggerates the financial condition of one of its competitors, and makes it sounds worse than it is. This is an example of - ANSWER Defamation Within how many days after receiving a written communication of replacement must an existing insurer provide a policyowner with a policy summary? - ANSWER 10 Days

Maternity benefits include all of the following EXCEPT - ANSWER Coverage without cost sharing. What Florida law governs group health insurance provisions provided by insurers and HMOs to small employers? - ANSWER Florida Employee Health Care Access Act All of the following statements regarding the Life insurance Policy Summary are correct EXCEPT - ANSWER It must illustrate all guaranteed policy dividend values. Which of the following statements is INCORRECT? - ANSWER Medicare and Medigap policies provide coverage for long-term custodial or nursing home care. Which of the following entities is considered the Principal? - ANSWER The insurer issuing a policy An insurance agent visits a potential client and explains various types of policies. The customer displays a lack of interest, so the agent guarantees higher dividends than he knows would be possible. Which term describes what the agent has done? - ANSWER Misrepresentation On individual health insurance policies, an insurer must furnish the claimant with claim forms within how many days? - ANSWER 15 Days