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Florida Life and Health Practice Test

T and S are named co-primary beneficiaries on a $500,000 Accidental Death and Dismemberment policy insuring their father. Their mother was named contingent beneficiary. Five years later, S dies of natural causes and the father is killed in a scuba accident shortly afterwards. How much of the death benefit will the mother receive?
$0
Which statement regarding the Change of Beneficiary provision is true?
The policyowner can change the beneficiary
What is the underlying concept regarding level premiums?
The early years are charged more than what is needed
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
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?
Insured’s contingent beneficiary
On a life insurance policy, who is qualified to change the beneficiary designation?
Policyowner
A policyowner is allowed to pay premiums more than once a year under which provision?
Mode of Premium
A life insurance application must be signed by all of these EXCEPT
Beneficiary
Any changes made on an insurance application requires the initials of whom?
Applicant
Which Federal law allows an insurer to obtain an inspection report on a potential insured?
Fair Credit Reporting Act
All of these are considered sources of underwriting information about an applicant EXCEPT
Rating Services
K applies for a life insurance policy on herself and submits the initial premium with the application. She is given a receipt by the agent stating that coverage begins immediately if the application is approved. What kind of receipt was used?
Conditional
P is a producer who notices 5 questions on a life application were not answered. What actions should P take?
Set up a meeting with the applicant to answer the remaining questions
An underwriter determines that an applicant’s risk should be recategorized due to a health issue. This life insurance policy may be issued with a(n)
extra premium
In order for coverage on a non-medical insurance application to take effect the same day, the producer must collect a signed application and
the initial premium
When does a life insurance contract become effective if the initial premium is not collected during the application process?
When producer delivers policy and collects initial premium
Why is an applicant’s signature required on a life insurance application?
To attest that the statements on the application are accurate to the best of the applicant’s knowledge
A Disability Income policyowner suffers a disability which was due to the same cause as a previous disability. Both disabilities occurred within a five-month period. The insurer may cover the second disability without a new elimination period under the
Recurrent Disability provision
Which of these statements is INCORRECT regarding the federal income tax treatment of life insurance?
Entire cash surrender value is taxable
Q would like to purchase $100,000 of permanent protection on his wife and $50,000 of Term coverage on himself under the same policy. What kind of policy should Q purchase?
Whole life policy with other insured rider
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
What is being delivered during a policy delivery?
Insurance contract to the proposed insured
Which of these actions should a producer take when submitting an insurance application to an insurer?
Inform insurer of relevant information not included on the application
Before a life insurance policy is issued, which of these components of the contract is required?
Applicant’s signature on application
Which requirement must be met for an association to be eligible for a group life plan?
Group was formed for a purpose other than acquiring insurance
G purchased a Family Income policy at age 40, The policy has a 20-year rider period. If G were to die at age 50, how long would G’s family receive an income?
10 years
What group term life feature permits an individual to depart from the group and continue to be covered without providing evidence of insurability?
Conversion
S recently received a $500,000 lump sum retirement buyout from her employer. She would like to buy an annuity that will immediately furnish her with a guaranteed income for life. What type of annuity is best suited for her situation?
Single Premium
The annuity that represents the largest possible monthly payment to an individual annuitant is a(n)
Straight Life annuity
An individual who purchases a Life annuity is given protection against
the risk of living longer than expected
What is considered to be a characteristic of an immediate annuity?
Benefit payments start within one payment period of purchase
An immediate annuity consists of a
single premium
What determines the full amount of Social Security retirement benefits a qualified individual is entitled to receive?
Primary Insurance Amount (PIA)
Which of these retirement plans can be started by an employee, even if another plan is in existence?
Individual Retirement Account (IRA)
Which of these is NOT a type of agent authority?
Principal
Which of the following statements is true about most Blue Cross/Blue Shield organizations?
They are nonprofit organizations
When a person returns to work after a period of total disability but cannot earn as much as he or she did before the disability, this situation is called which of the following?
Residual disability
An individual Disability Income insurance applicant may be required to submit all of the following information EXCEPT
spouse’s occupation
B is a teacher who was injured in a car accident and cannot work. She is now receiving monthly benefits as a result of this accident. Which type of policy does B have?
Disability Income
Disability policies do NOT normally pay for disabilities arising from which of the following?
War
T has Disability Income policy that pays a monthly benefit of $5000. If T becomes partially disabled, what can he likely expect?
Less than $5,000 per month benefit regardless of the cause
With Disability Income insurance, an insurance company may limit the monthly benefit amount a prospective policy holder may obtain because of the insured’s
gross income at the time of purchase
K becomes ill after traveling overseas and is unable to work for 3 months. What kind of policy would cover her loss of income?
Disability Income
When determining the monthly benefit amount for a Disability Income policy, the factor that limits the amount a prospective insured may purchase is
Income
What does a Guaranteed Insurability rider provide a Disability Income policyowner?
The ability to periodically increase the amount of coverage without evidence of insurability
P, age 50, purchased an annuity that P will fund with $500/ month for 15 years. The annuity will then pay P retirement payments after the 15 years. Which type of annuity did P purchase?
Deferred
The underwriting process involves all of these EXCEPT for
Policy loan
Which parts of a life insurance policy are guaranteed to be true?
Warranty
P and Q are married and have three children. P is the primary beneficiary on Q’s Accidental Death and Dismemberment (AD&D) policy and Q’s sister R is the contingent beneficiary. P, Q, and R are involved in a car accident and Q and R are killed instantly. The Accidental Death benefits will be paid to
P only
An insured covered by life insurance has just died. What will happen if the primary beneficiary had already died before the insured and contingent beneficiary?
Proceeds will go to the contingent beneficiary
What type of renewability guarantees premium rates and renewability?
Guaranteed renewable
When does a Probationary Period provision become effective in a health insurance contract?
At the policy’s inception
The clause in an Accident and Health policy which defines the benefit amounts the insurer will pay is called the
Insuring clause
A Disability Income policyowner 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 of application. How will the insurer handle this claim?
Claim will be paid and coverage will remain in force
T files a claim on his Accident and Health policy after being treated for an illness. The insurance company believes that T misrepresented his actual health on the initial insurance application and is, therefore, disputing the claim’s validity. The provision that limits the period during which the company may dispute a claim’s validity is called
Time Limit on Certain Defenses
K failed to pay a renewal premium within the time granted by the insurer. K then sends in a payment which the insurer subsequently accepts. Which policy provision specifies that coverage may be restored in this situation?
Reinstatement
Which of these statements accurately describes the Waiver of Premium provision in an Accident and Health policy?
Premiums are waived after the insured has been totally disabled for a specified time period
Pre-hospitalization authorization is considered an example of
managed care
An agent takes an individual Disability Income application, collects the appropriate premium, and issues the prospective insured a conditional receipt. The next step the insurance company will take is to
determine if the applicant is an acceptable risk by completing standard underwriting procedures
Which of the following statements about the classification of applicants is INCORRECT?
Substandard applicants are never declined by underwriters
A prepaid application for individual Disability Income insurance was recently submitted to an insurer. When the insurer received the Medical Information Bureau (MIB) report, the report showed that the applicant had suffered a stroke 18 months ago, something that was not disclosed on the application. Which of the following actions would the insurance company NOT take?
Send a notice to the MIB that the applicant was declined
Health insurance benefits NOT covered due to an act of war are
excluded by the insurer in the contract provisions
Which Accident and Health policy provision addresses preexisting conditions?
Time Limit on Certain Defenses
The Notice of Claims provision requires a policyowner to
notify their physician of a claim within a specified time
According to the Time Payment of Claims provision, the insurer must pay Disability Income benefits no less frequently than which of the following options?
Monthly
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
The policy provision that entitles the insurer to establish conditions the insured must meet while a claim is pending is
Time Limit on Certain Defenses
When an insurance company sends a policy to the insured with an attached application, the element that makes the application part of the contract between the insured and the insurer is called the
Entire Contract provision
Which statement regarding third-party ownership of a life insurance policy is true?
It is used extensively in estate-planning as well as business circumstances
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
Who elects the governing body of a mutual insurance company?
Policyholders
S would like to use dividends from her life insurance policy to purchase paid-up additions. All of these would be factors that determine how much coverage can be purchased EXCEPT
beneficiary’s age
When an insurer issues a policy that refuses to cover certain risks, this is referred to as a(n)
Exclusion
Which provision prevents an insurer from changing the terms of the contract with the policyowner by referring to documents not found within the policy itself?
Entire Contract
What is the Suicide provision designed to do?
safeguard the insurer from an applicant who is contemplating suicide
The provision that can be used to put an insurance policy back in force after it has lapsed due to nonpayment is called
Reinstatement
What must the policyowner provide to the insurer for validation that a loss has occurred?
Proof of Loss
Which of these is considered a mandatory provision?
Payment of Claims
What provision in a life insurance policy states that the application is considered part of the contract?
Entire Contract provision
What is considered to be a characteristic of a Conditionally Renewable Health Insurance policy?
Premiums may increase at time of renewal
J, an Accidental Death and Dismemberment (AD&D) policy holder, dies after injuries sustained in an accident. J’s age as stated on the application five years ago was found to be understated by ten years. Which of the following actions will the insurance company take?
The insurer will adjust the benefit to what the premiums paid would have purchased at the insured’s actual age
The incontestable clause allows an insurer to
contest a claim during the contestable period
M’s insurance company denied a reinstatement application for her lapsed health insurance policy. The company did not notify M of this denial. How many days from the reinstatement application date does the insurance company have to notify M of the denial before the policy will be automatically placed back in force?
45 days
Which of the following statements is CORRECT about accelerated death benefits?
Must have a terminal illness to qualify
With Optionally Renewable Health policies, the insurer may
review the policy annually and determine whether or not to renew it
Which of the following services is NOT covered under a hospitalization expense policy?
surgeon’s fees
For which of the following expenses does a Basic Hospital policy pay?
Hospital room and board
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?
$1,600
How do life insurance companies handle cases where the insured commits suicide within the contract’s stated Contestable period?
Claims are denied under the Suicide clause of the policy
N is a student pilot with a large life insurance policy. Which of these features would limit the insurer’s obligation in the event N was killed while flying as a student pilot?
Exclusion
B owns a Whole Life policy with a guaranteed insurability option that allows him to purchase, without evidence of insurability, stated amounts of
additional Whole Life coverage at specified times
Deductibles are used in health policies to lower
overuse of medical services
Whose life is covered on a life insurance policy that contains a payor benefit clause?
Child
Basic Hospital and Surgical policy benefits are
lower than the actual expenses incurred
A characteristic of Preferred Provider Organizations (PPOs) would be:
Discounted fees for the patient
The individual most likely to buy a Medicare Supplement policy would be a(n)
68-year old male covered by Medicare
An insured pays premiums on an annual basis for an individual health insurance policy. What is the MINIMUM number of days for the Grace Period provision?
31
Which of the following provisions specifies how long a policyowner’s health coverage will remain in effect if the policyowner does not pay the premium when it is due?
Grace Period
Which of the following statements BEST defines usual, customary, and reasonable (UCR) charges?
The maximum amount considered eligible for reimbursement by an insurance company under a health plan
How are surrender charges deducted in a life policy with a rear-end loaded provision?
Deducted when the policy is discontinued
S wants to open a tax-exempt Health Savings Account. To qualify for this type of account, Federal law dictates that S must be enrolled in a
High-deductible health plan
Which of these options can an individual use their medical flexible spending account to pay for?
Prescription drugs
Which of the following situations does a Critical Illness plan cover?
Leukemia
Major Medical policies typically
contain a deductible and coinsurance
What does the ownership clause in a life insurance policy state?
Who the policyowner is and what rights the policyowner is entitled to
Comprehensive Major Medical policies usually combine
Major Medical with Basic Hospital/Surgical coverage
A life insurance policy which ensures that the premium will be paid if the insured becomes disabled has what kind of rider attached?
Waiver of Premium
Which of these statements about a Guaranteed Insurability Option rider is NOT TRUE?
Evidence of insurability is required when the option is exercised
S buys a $50,000 whole life policy with a $50,000 Accidental Death and Dismemberment rider. S dies 1 year later of natural causes. How much will the insurer pay the beneficiary?
$50,000
An insured is past due on his life insurance premium, but is still within the Grace Period. What will the beneficiary receive if the insured dies during this Grace Period?
Full face amount minus any past due premiums
D is the policyowner and insured for a $50,000 life insurance policy. The beneficiary is D’s wife. D and his wife divorce and D remarries, transferring ownership of his policy to his new wife. If D dies without making any further changes, to whom will the policy proceeds be paid to?
Ex-wife
Which of these are NOT an example of a Nonforfeiture option?
Life Income
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 of $15,000 in covered medical expenses are incurred?
$7,000
A provision in a life insurance policy that pays the policyowner an amount that does not surpass the guaranteed cash value is called the
Policy Loan provision
When a misrepresentation on a life insurance policy application is discovered, what action may an insurance company take?
Void the policy only if it is discovered during the Contestable period and proven to be material
P is the insured on a participating life policy. Which statement is true if P’s premiums are waived due to a disability?
P will still receive declared dividends
T was treated for an ailment 2 months prior to applying for a health insurance policy. This condition was noted on the application and the policy was issued shortly afterwards.How will the insurer likely consider this condition?
Insurer will likely treat as a pre-existing condition which may not be covered for one year
The Consideration clause in a life insurance contract contains what pertinent information?
Amount of premium payments and when they are due
Which contract permits the remaining partners to buy-out the interest of a disabled business partner?
Disability Buy-Sell
Which of the following statements does NOT accurately describe the tax treatment of premiums and benefits of individual Accident and Health insurance?
Disability income policy premiums are tax-deductible
A medical care provider which typically delivers health services at its own local medical facility is known as a
Health Maintenance Organization
The individual who provides general medical care for a patient as well as the referral for specialized care is known as a
Primary Care Physician
J is a subscriber to a plan which contracts with doctors and hospitals to provide medical benefits at a preset price. What type of plan does J belong to?
Health Maintenance Organization
C was injured while deep sea diving and requires a hospital stay. C has a Major Medical policy with a 80/20 coinsurance clause and a $400 deductible. What is the MAXIMUM C will pay if the covered medical expenses are $2000?
$720
Which of these is NOT considered to be an element of an insurance contract?
Negotiating
Who makes the legally enforceable promises in a unilateral contract?
Insurer
The part of a life insurance policy guaranteed to be true is called a(n)
Warranty
A Business Overhead Expense policy would cover which of the following if a business owner becomes disabled?
Utilities and office rent
Under which of the following circumstances do the benefits under COBRA continuation coverage expire?
All group health plans are eliminated by the employer
Which statement is TRUE regarding a group accident & health policy issued to an employer?
The employer is the policyowner and each employee receives a certificate of coverage
Many small business owners worry how their business would survive financially if the owner becomes disabled. The policy which BEST addresses this concern is
Business Overhead Expense
What kind of special need would a policyowner require with an Adjustable Life insurance policy?
flexible premiums
Which of the following actions require a policyowner to provide proof of insurability in an Adjustable Life policy?
increase face amount
When a policyowner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply?
Conversion provision
How long does the coverage normally remain on a limited-pay life policy?
age 100
Which of these statements describe a Modified Endowment Contract (MEC)?
Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract
A variable insurance policy
does not guarantee a return on its investment accounts
Term insurance has which of the following characteristics?
Expires at the end of the policy period
Which of the following features of a group Term Life policy enables an individual to leave the group and continue his or her insurance without providing evidence of insurability?
Conversion privilege
When an employee is required to pay a portion of the premium for an employer/employee group health plan, the employee is covered under which of the following plans?
Contributory
The federal income tax treatment of employer-provided group health insurance can be accurately described as
Employee’s coverage paid for by the employer is tax-deductible to the employer as a business expenditure
The reason for a business having a Business Overhead Expense Disability Plan is to cover
fixed business expenses
What type of policy would offer a 40-year old the quickest accumulation of cash value?
20-pay life
A life insurance policy that provides a policyowner with cash value along with a level face amount is called
Whole life
Which of these characteristics is consistent with a Straight Life policy?
Premiums are payable for as long as there is insurance coverage in force
Which of these require an offer, acceptance, and consideration?
Contract
Which of these arrangements allows one to bypass insurable interest laws?
Investor-Originated Life Insurance
What is the consideration given by an insurer in the Consideration clause of a life policy?
Promise to pay a death benefit
When must insurable interest be present in order for a life insurance policy to be valid?
At the time of application
Insurance policies offered on a “take it or leave it” basis are considered what?
Contracts of Adhesion
Which statement about a whole life policy is correct?
Cash value may be borrowed against
Which statement is correct regarding the premium payment schedule for whole life policies?
Premiums are payable throughout the insured’s lifetime/ coverage lasts until death of the insured
T would like to be assured $10,000 is available in 10 years to replace a roof on his house. What kind of $10,000 policy should T purchase?
Ten-Year Endowment
What type of life policy has a death benefit that adjusts periodically and is written for a specific period of time?
Decreasing term
What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?
Family Maintenance Policy
What kind of premium does a Whole Life policy have?
Level
An insurance company licensed in Florida and domiciled in Pennsylvania is known as
a foreign company
A creditor who requires a debtor to obtain insurance from a particular company or agent as a condition for a loan is guilty of
Coercion
According to Florida law, how often must a variable annuity policyholder be informed of the accumulated value of the contract during the premium payment period?
At least once each year
In Florida, a foreign insurance company is a company that
is formed under the laws of a state other than Florida
Agents marketing variable life insurance must be licensed and appointed as a life and variable contract agent, and a
broker dealer
In the Outline of Coverage for a health policy, which of the following is NOT required?
Table indicating the policy’s projected future costs
A newly licensed agent MUST satisfy a continuing education requirement of how many hours every two years?
24
Which type of insurance company is domiciled and incorporated under the laws of the state in which its home office is located?
Domestic
An agent who makes a statement that is maliciously critical of another person’s financial condition is guilty of
Defamation
Which of the following is a nonprofit provider of life insurance that is covered by a special section of the Florida insurance code?
Fraternal life insurance organizations
What is the primary difference between a mutual insurance company and a stock insurance company?
A stock company is owned by shareholders and a mutual is owned by its policyholders
Under Florida law, adjustable rates for life insurance policy loans are based on
Moody’s corporate bond index
Florida law requires an agent who is recommending to a person the purchase of an annuity to obtain information regarding all of the following EXCEPT the person’s
marital status
What statement about conversion privileges in Group Life policies sold is CORRECT?
Conversion at regular rates on an attained-age basis without a medical exam is a standard provision
Which statement is CORRECT about an admitted mail order insurance company in Florida?
It may solicit and accept business by mail without the aid of a licensed agent
Under a Medicare Supplement policy, the waiting period for pre-existing conditions may not EXCEED
6 months
What is the maximum contestability period for most life insurance policies?
2 years
An agent’s license will terminate if the agent allows what period of time to elapse without being appointed for the class or classes of insurance listed on the license?
48 months
Florida’s Replacement Rule applies to all of the following situations EXCEPT
the existing policy is kept in force and an additional policy is purchased from the same company
Agents can help prospective insureds understand and purchase the most appropriate product by delivering
a buyer’s guide
According to the insurance code, an agent’s controlled business may NOT exceed a maximum of
50%
Under certain circumstances, in addition to treatment by medical doctors, health insurance policies in Florida must also cover payment to all of the following practitioners EXCEPT
Naturopaths
The Life and Health Insurance Guaranty Association is
an association that protects policyowners against the insolvency of an insurance company
Florida insurance law requires that if a Medicare Supplement policy is sold, the agent must deliver an Outline of Coverage to the applicant no later than
when the application is taken
All of the following are possible consequences for placing with an unauthorized insurer EXCEPT
conviction of a first degree misdemeanor
What is normally given to an applicant who pays the initial premium at the time of application?
Conditional receipt
Florida law provides for a grace period of NOT less than how many days for a monthly-premium health insurance policy?
10
Which of the following qualifications is NOT a prerequisite for becoming a licensed agent?
Having a high school diploma
When an employee covered on a Group Life policy leaves the group, the conversion privilege gives the employee the right to
convert to an individual policy upon termination of employment
All of the following are unfair claim settlement practices EXCEPT
requiring written documentation of claim details
Which of the following statements about unfair trade practices is true?
Twisting is a misrepresentation made by an agent in order to induce a policyholder to lapse a policy and switch insurance companies
Z gave Z’s age as 40 when Z purchased a Life policy. At the time of Z’s death six years later, the company discovered Z’s true age at issue had been 49. What would the normal procedure be under the misstatement of age provision in regard to the payment of the death claim?
The proceeds will be reduced based on whatever the premium would have been purchased at age 49
According to Florida statutes, all of the following provisions must be contained in a Medicare Supplement policy EXCEPT
A 12-month limitation on pre-existing conditions
Under Florida insurance law, deceptive advertising is considered a form of
Misrepresentation
When a stock life insurance company issues both participating and nonparticipating policies, the company is doing business on a(n)
mixed plan
Which type of life policy contains a monthly mortality charge as well as self-directed investment choices?
Variable Universal Life
C is a key employee at ABC Incorporated. If a Key Employee life policy is purchased on her life, which of these statements would be true?
ABC is the policyowner, C is the insured, and ABC is the beneficiary
Under federal tax laws, what is the tax treatment for an employer providing $50,000 of a contributory group Term Life plan to all its eligible employees?
Portion of the premiums paid for by the employer may be a tax deduction
Which of these types of life insurance allows the policyowner to have level premiums and to also choose from a selection of investment options?
Variable Life
Additional coverage can be added to a Whole Life policy by adding a(n)
decreasing term rider
B has a $100,000 Accidental Death and Dismemberment policy that pays triple indemnity for common carrier death. If B is killed from an accident on a commercial flight, what will the policy pay B’s beneficiary?
$300,000
In a Disability Income policy, which of these clauses acts as a deductible?
Elimination Period

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