new test

Question 1

Which of the following documents must an agent submit to the replacing insurance company during the replacement of an existing life insurance policy?

A copy of the agent’s insurance license
A list of all policies the agent has replaced in the last 3 years
Notice to existing and replacing insurers of intention to replace
A statement made by the agent that NAIC guidelines have been met during the replacement process

Answer 1

The correct answer is “Notice to existing and replacing insurers of intention to replace”. When replacing an existing life insurance policy, an agent must submit notice to existing insurer and replacing insurer of intentions.

Question 2

Which organization was established to provide funds to protect an insured in the event of an insurer’s insolvency?

Florida Insurance Guaranty Fund Association
Office of Insurance Regulation
Department of Financial Services
National Association of Insurance Commissioners (NAIC)

Answer 2

The correct answer is “Florida Insurance Guaranty Fund Association”. The Florida Insurance Guaranty Fund Association exists to protect an insured in the event of an insurer’s insolvency.

Question 3

A __ day notice to the policyholder is required for any health insurer that wishes to cancel a health insurance policy.

45
60
90
30

Answer 3

The correct answer is “45”. A health insurer that wishes to cancel a health insurance policy must provide a 45 day notice to the policyholder.

Question 4

All of the following are eligibility requirements for an association group EXCEPT

Must have been organized for some reason other than to obtain group insurance
Group must hold regular meetings at least on an annual basis
Group must have been in existence for two years
Contributory plans require a minimum of 25 participants

Answer 4

The correct answer is “Contributory plans require a minimum of 25 participants”. This is inaccurate. At least 100 members must participate if the premium is contributory.

Question 5

Association Plans that are designed to provide health benefits to their members are regulated by the state because

they require a certain level of member participation
they conduct business in Florida
they provide a service to their members
they are insured by an authorized insurer

Answer 5

The correct answer is “they are insured by an authorized insurer”. Association Plans must be fully insured by an authorized insurer. The insurer is subject to state regulation.

Question 6

The insurer must provide a prospective buyer with a(n)

actuarial table
Buyer’s Guide and Policy Summary
A.M. Best report
copy of the application

Answer 6

The correct answer is “Buyer’s Guide and Policy Summary”. The insurer must provide a prospective buyer with a Buyer’s Guide and Policy Summary.

Question 7

Which statement regarding a Key Employee Life policy is NOT true?

The application must be signed by the key employee
The company purchases, owns, pays the premiums and is the beneficiary
Its purpose is to prevent the financial loss that may ensue if a key employee dies
The beneficiary is named by the key employee

Answer 7

The beneficiary is named by the key employee”. The company names the beneficiary, not the employee.

Question 8

One becomes eligible for Social Security disability benefits after having been disabled for:

3 months
12 months
5 months
6 months

Answer 8

The correct answer is “5 months”. Disability income benefits are paid to the covered worker in the amount of the PIA after a 5-month waiting period.

Question 9

In an individual retirement account (IRA), rollover contributions are:

partially limited by dollar amount
subject to capital gains tax
not limited by dollar amount
subject to ordinary income tax

Answer 9

The correct answer is “not limited by dollar amount”. Rollover contributions to an individual retirement annuity (IRA) are not limited by dollar amount.

Question 10

Which type of plan allows an employer to give money to an employee for buying a life insurance policy and also permits the employee to select the beneficiary?

Deferred compensation plan
Split-dollar plan
Key employee plan
Employer purchase plan

Answer 10

The correct answer is “Split-dollar”. A split-dollar plan is an arrangement where an employer and an employee share in the cost of purchasing a life insurance policy on the employee. The employee is also allowed to name the policy beneficiary.

Question 11

Which of the following Life insurance policies combine term insurance with an investment element?

Universal Life
Decreasing Term Life
Graded Life
Increasing Term Life

Answer 11

The correct answer is “Universal Life.” A Universal Life policy combines term insurance and an investment element.

Question 12

The cash value in a(n) ____________ Life policy may fluctuate to reflect changing assumptions regarding mortality cost, interest, and expense factors.

Universal
Graded
Endowment
Term

Answer 12

The correct answer is “Universal”. A Universal Life policy has a cash value that may fluctuate to reflect changing assumptions regarding mortality cost, interest, and expense factors.

Question 13

Under a Graded Premium Whole Life policy,

the premium decreases each year during the early years of the contract and remains the same after that time
the premium increases each year during the early years of the contract and remains the same after that time
the premium always remains the same while the death benefit increases during the early years
the premium can be adjusted by the policyowner at anytime

Answer 13

The correct answer is “the premium increases each year during the early years of the contract and remains the same after that time”. With a graded premium whole life policy, the premium increases each year during the early years of the contract (usually five years) and remains the same after that time.

Question 14

An individual participant personally received eligible rollover funds from a profit-sharing plan. What is the income tax withholding requirements for this transaction?

20% is withheld for income taxes
Nothing is withheld
30% is withheld for income taxes
10% is withheld for income taxes

Answer 14

The correct answer is “20% is withheld for income taxes”. A plan sponsor must withhold 20% of the distribution in federal taxes on a rollover. Once the rollover takes place to a new custodian, the remainder of the distribution is made.

Question 15

Which of the following statements is CORRECT about accelerated death benefits?

The full face amount is available as an accelerated benefit
Must have a terminal illness to qualify
This provision is usually provided with an increase in premium
Those on Social Security disability automatically qualify for this benefit

Answer 15

The correct answer is “Must have a terminal illness to qualify”. Accelerated death benefits provide for the early payment of some portion of the policy face amount should the insured suffer from a terminal illness or injury.

Question 16

All of these are characteristics of an Adjustable Life policy, EXCEPT:

adjustable premium payment period
adjustable premiums
combination of term and whole life insurance
face amount can be adjusted using policy dividends

Answer 16

The correct answer is “face amount can be adjusted using policy dividends”. An insured may make all of these actions with an adjustable life policy EXCEPT “face amount can be adjusted using policy dividends”.

Question 17

The free-look provision begins

upon receipt of the policy by the producer
upon the date of the sales presentation
upon receipt of the policy by the policyowner
upon the completion of the application

Answer 17

The correct answer is “upon receipt of the policy by the policyowner”. When delivering the policy, the agent needs to explain that the free-look provision begins upon receipt of the policy by the policyowner.

Question 18

What type of life policy covers two lives and pays the face amount after the first one dies?

Joint Life Policy
Group Life
Last Survivor Policy
Family Income Policy

Answer 18

The correct answer is “Joint Life Policy”. A policy that promises to pay the face amount on the death of first of two lives covered by the policy is called a Joint Life Policy.

Question 19

Which of these life insurance riders allows the applicant to have excess coverage?

Guarantee Insurability rider
Term rider
Automatic Premium Loan rider
Waiver of Premium rider

Answer 19

The correct answer is “Term rider”. Term riders allow an applicant to have excess life insurance coverage.

Question 20

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?

Free-look
Grace Period
Consideration
Reinstatement

Answer 20

The correct answer is “Reinstatement”. In this situation, coverage may be restored under the reinstatement provision.

Question 21

C is the policyowner of a Comprehensive individual Major Medical policy. C pays an annual premium which is due September 1. If C forgets to pay the premium and is hospitalized September 10, how will the insurer handle this claim?

Cancel the policy and deny the claim
Pay the claim in full minus the premium due
Pay half the claim and keep remaining balance until premium is paid
Deny the claim

Answer 21

The correct answer is “Pay the claim in full minus the premium due”. Because the grace period is 31 days for individual Accident and Health policies paid annually, this claim will be paid minus the premium due.

Question 22

Which health policy clause specifies the amount of benefits to be paid?

Consideration
Insuring
Free-look
Payment mode

Answer 22

The correct answer is “Insuring”. In an Accident & Health policy, the insuring clause states the amount of benefits to be paid.

Question 23

A contract owner terminates an annuity before the income payment period begins. The owner will then receive

the premiums paid to date
nothing
the current contract surrender value
half of the current surrender value

Answer 23

The correct answer is “the current contract surrender value”. If an annuity is terminated prior to beginning of the income payment period, the contract owner receives the contract surrender value at that time.

Question 24

An employee of 20 years recently retired at age 59 1/2. This employee’s group life contract can be:

converted to an individual permanent policy at a group rate
converted to an individual permanent policy at an individual rate
continued at a group rate
continued at an individual rate

Answer 24

The correct answer is “converted to an individual permanent policy at an individual rate”. In this situation, the insured can convert to a permanent policy at the individual rates.

Question 25

The payments on Q's annuity are no less than $250 quarterly. Which of the following annuities does Q own? Flexible Installment Deferred Adjustable Deferred Immediate Fixed Quarterly Flexible

Answer 25

The correct answer is "Flexible Installment Deferred". This is an example of a Flexible Installment Deferred annuity.

Question 26

T sends proof of loss to her insurer for an acceptable medical expense claim under her individual Health Insurance policy. Upon receipt, the insurer must pay the benefits at the insurer's discretion within 6 months within 3 months immediately

Answer 26

The correct answer is "immediately". Under the Time of Payment of Claims provision, the insurer must pay the benefits immediately after receiving proof of loss.

Question 27

Which of the following is an alternative method of providing health insurance? TRI-CARE Consumer Cooperative Medicaid Medicare

Answer 27

The correct answer is "Consumer Cooperative." Consumer Cooperative is an alternative method of providing health insurance. QUID: ACFBE571-3988-46DD-B96A-BCB4B7FDA750

Question 28

Asset protection can be provided by a long-term care partnership policy if the policyholder qualifies for Social Security Medicare Part C Medicaid Disability

Answer 28

The correct answer is "Medicaid". Asset protection can be provided by a long-term care partnership policy if the policyholder qualifies for Medicaid.

Question 29

Which statement is true regarding a minor beneficiary? Normally, a guardian is required to be appointed in the Beneficiary clause of the contract Normally, the death proceeds are required to be held in trust until the beneficiary reaches the age of 21 The minor is entitled to receive the death proceeds immediately The minor must pay the debts of the insured's estate before receiving any of the proceeds

Answer 29

The correct answer is "Normally, a guardian is required to be appointed in the Beneficiary clause of the contract". In most cases, insurers require that a guardian be appointed in the Beneficiary clause of the policy or that a guardian be designated in the will.

Question 30

Variable Life products require a producer to guarantee not more than a 12% return per annum hold a Life and Health Insurance license be regulated solely by State Law hold a Life Insurance license and a Securities license

Answer 30

The correct answer is "hold a Life Insurance license and a Securities license". Variable Life products require a producer to hold a Life Insurance license and a Securities license.