Florida Life and Health Final Exam
Questions and Correct Answers
Question 1
A prospective insured completes and signs an application for health insurance but
intentionally conceals information about a pre-existing heart condition. The company
issues the policy. Two months later, the insured suffers a heart attack and submits a
claim. While processing the claim, the company discovers the pre-existing condition.
In this situation, the company will
Correct Answer
continue coverage but exclude the heart condition.
If the insured did not cite the condition on the application and the insurer did not
exclude the conditon, the pre-existing condition provision still applies. Exclusions
are subject to the "time limit on certain defenses" provision, however.
Question 2
Who owns a stock company?
Correct Answer
A stock insurance company is owned by its stockholders.
Question 3
What type of renewability guarantees premium rates and renewability?
Correct Answer
Noncancellable.
Noncancellable policies provides guaranteed renewability and premium rates.
Page 1 of 40
,Question 4
K becomes ill after traveling overseas and is unable to work for 3 months. What kind
of policy would cover her loss of income?
Correct Answer
Disability Income would reimburse an insured for loss of earnings if the insured
became sick.
Question 5
If an insurance company issues a Disability Income policy that it cannot cancel or for
which it cannot increase premiums, the type of renewability that best desribes this
policy is called
Correct Answer
A noncancellable policy is one which the insurance company cannot cancel and
which premiums cannot be increased.
Question 6
The health insurance program which is administered by each state and funded by
both the federal and state governments is called
Correct Answer
Medicaid- is funded by both the federal and state governments and administered
by individual states.
Question 7
What is considered to be a characteristic of a Conditionally Renewable Health
Insurance policy?
Correct Answer
Premiums may increase at time of renewal.
A Conditionally Renewable Health Insurance policy can increase premiums at time
of renewal.
Page 2 of 40
,Question 8
When an insurance application is taken by a producer, which of these statements is
true?
Correct Answer
Any changes made on the application require the applicant's initials
Question 9
N is covered by a Term Life policy and does not make the required premium payment
which was due August 1. N dies September 15. What action will the insurer take?
Correct Answer
In this situation, the insurance company will deny the claim, as the policy would
have lapsed due to nonpayment by September 15.
Question 10
Which of the following is a characteristic of a variable annuity?
Correct Answer
Underlying equity investments.
Variable annuities involve underlying equity investments in a separate account.
Question 11
An agent who makes misleading statements that lead to the termination of an
existing insurance policy so that a new policy with another insurer can be taken out
has committed
Correct Answer
Twisting is knowingly making misleading statements that would cause an insured to
lapse, assign, or terminate an insurance policy in order to switch companies.
Page 3 of 40
, Question 12
A statement made by an insured in an insurance application that must be true to the
best of one's knowledge and which becomes a part of the contract is known as
Correct Answer
A representation is a statement made by an insured in an insurance application that
must be true to the best of one's knowledge and which becomes a part of the
contract.
Question 13
Which of the following statements about noncontributory employee group life
insurance is FALSE?
Correct Answer
A minimum number of employees is required to participate". Noncontributory
employee group life insurance plans must cover ALL eligible employees at all times
Question 14
Which of the following statements BEST describes how a policy that uses the
"accidental bodily injury" definition of an accident differs from one that uses the
"accidental means" definition?
Correct Answer
A policy that uses the "accidental bodily injury" definition of an accident is less
restrictive than the one that uses the "accidental means" definition.
Question 15
Which of these statements describe a Modified Endowment Contract (MEC)?
Correct Answer
Exceeds the maximum amount of premium that can be paid into a policy and still
have it recognized as a life insurance contract.
Policies that do not meet the 7-pay test are considered MEC's and will lose
favorable tax treatment. The test is designed to discourage premium schedules that
would result in a paid-up policy before the end of a seven year period.
Page 4 of 40
Questions and Correct Answers
Question 1
A prospective insured completes and signs an application for health insurance but
intentionally conceals information about a pre-existing heart condition. The company
issues the policy. Two months later, the insured suffers a heart attack and submits a
claim. While processing the claim, the company discovers the pre-existing condition.
In this situation, the company will
Correct Answer
continue coverage but exclude the heart condition.
If the insured did not cite the condition on the application and the insurer did not
exclude the conditon, the pre-existing condition provision still applies. Exclusions
are subject to the "time limit on certain defenses" provision, however.
Question 2
Who owns a stock company?
Correct Answer
A stock insurance company is owned by its stockholders.
Question 3
What type of renewability guarantees premium rates and renewability?
Correct Answer
Noncancellable.
Noncancellable policies provides guaranteed renewability and premium rates.
Page 1 of 40
,Question 4
K becomes ill after traveling overseas and is unable to work for 3 months. What kind
of policy would cover her loss of income?
Correct Answer
Disability Income would reimburse an insured for loss of earnings if the insured
became sick.
Question 5
If an insurance company issues a Disability Income policy that it cannot cancel or for
which it cannot increase premiums, the type of renewability that best desribes this
policy is called
Correct Answer
A noncancellable policy is one which the insurance company cannot cancel and
which premiums cannot be increased.
Question 6
The health insurance program which is administered by each state and funded by
both the federal and state governments is called
Correct Answer
Medicaid- is funded by both the federal and state governments and administered
by individual states.
Question 7
What is considered to be a characteristic of a Conditionally Renewable Health
Insurance policy?
Correct Answer
Premiums may increase at time of renewal.
A Conditionally Renewable Health Insurance policy can increase premiums at time
of renewal.
Page 2 of 40
,Question 8
When an insurance application is taken by a producer, which of these statements is
true?
Correct Answer
Any changes made on the application require the applicant's initials
Question 9
N is covered by a Term Life policy and does not make the required premium payment
which was due August 1. N dies September 15. What action will the insurer take?
Correct Answer
In this situation, the insurance company will deny the claim, as the policy would
have lapsed due to nonpayment by September 15.
Question 10
Which of the following is a characteristic of a variable annuity?
Correct Answer
Underlying equity investments.
Variable annuities involve underlying equity investments in a separate account.
Question 11
An agent who makes misleading statements that lead to the termination of an
existing insurance policy so that a new policy with another insurer can be taken out
has committed
Correct Answer
Twisting is knowingly making misleading statements that would cause an insured to
lapse, assign, or terminate an insurance policy in order to switch companies.
Page 3 of 40
, Question 12
A statement made by an insured in an insurance application that must be true to the
best of one's knowledge and which becomes a part of the contract is known as
Correct Answer
A representation is a statement made by an insured in an insurance application that
must be true to the best of one's knowledge and which becomes a part of the
contract.
Question 13
Which of the following statements about noncontributory employee group life
insurance is FALSE?
Correct Answer
A minimum number of employees is required to participate". Noncontributory
employee group life insurance plans must cover ALL eligible employees at all times
Question 14
Which of the following statements BEST describes how a policy that uses the
"accidental bodily injury" definition of an accident differs from one that uses the
"accidental means" definition?
Correct Answer
A policy that uses the "accidental bodily injury" definition of an accident is less
restrictive than the one that uses the "accidental means" definition.
Question 15
Which of these statements describe a Modified Endowment Contract (MEC)?
Correct Answer
Exceeds the maximum amount of premium that can be paid into a policy and still
have it recognized as a life insurance contract.
Policies that do not meet the 7-pay test are considered MEC's and will lose
favorable tax treatment. The test is designed to discourage premium schedules that
would result in a paid-up policy before the end of a seven year period.
Page 4 of 40
