FLORIDA INSURANCE 2-14 FINAL PAPER 2025 QUESTIONS
WITH ANSWERS GUARANTEE A+
✔✔Guaranteed Insurability Rider - ✔✔Permits Insured to buy specific amounts of
additional insurance at specified intervals (usually 3 years) without evidence of
insurability
✔✔Waiver of Premium - ✔✔- exempts the owner from paying premiums while they're
disabled.
✔✔Automatic Premium Loan Rider (AVC) - ✔✔- If the premium is not paid after grace
period, the cash value of the policy can be used to pay the premium
- Creating reduced paid-up insurance
✔✔Payor Rider - ✔✔- provides an additional safeguard for life insurance taken out on a
minor.
- If the adult premium payor dies or becomes totally disabled, premium payments will be
waived until the child's a specific age of adulthood, such as 21.
✔✔Accidental Death Benefit Rider - ✔✔- "Double Indemnity"
- Provide an additional amount usually equal to the face amount if death occurs under
certain conditions stated in the policy.
- Can be written to triple the policy's face amount.
✔✔Return of Premium Rider - ✔✔- The beneficiary could receive the paid premiums as
well as the death benefit
- Also, with ROP the premium payments paid could go to the living owner.
✔✔Cost of Living Adjustment Rider (COLA) - ✔✔- Based on the Consumer Price Index
(CPI).
- If inflation increases, so does the value of the policy.
- Limited to 5% increase per year.
✔✔Other Insureds Rider - ✔✔Allows owners to add other family members the base
policy.
✔✔Factors That Determine Premium Costs - ✔✔Mortality
Interest
Expenses
✔✔Net Single Premium - ✔✔Amount needed today to fund the future benefits
✔✔Net Level Premiums - ✔✔Premium payments over the number of years
,✔✔Gross Premiums - ✔✔Amount policyowner is required to pay after the addition of the
expense factor
✔✔Net Single Premium = - ✔✔Mortality Cost - Interest
✔✔Gross Premium = - ✔✔Net Single Premium + Expenses
✔✔Policy Reserves - ✔✔Intangible and belong to the insurer
✔✔Extra Percentage Tables - ✔✔- Most commonly used method of Rating Substandard
Risks
- Numerical system that calculate premium rates for those who present a higher health
risk for the insurer
✔✔Single Premium Payment - ✔✔Lump Sum Method
- Used to be the only way
- Nowadays there are too many people that lack financial knowledge to handle this
much money at once
✔✔Interest Only Payments - ✔✔- The insurance company gives the money out at a
certain rate
- The beneficiary can take the money out at anytime
✔✔Installment Payments - ✔✔- The shorter the payout period, the larger each payment
amount
- Equal number of money at intervals from the proceeds
✔✔Income For Life - ✔✔- Allows the beneficiary to receive a guaranteed income for the
rest of their life.
✔✔Joint Life Income - ✔✔- Paid to two beneficiaries in equal monthly installments.
✔✔Special Payment Plans - ✔✔- The policyowner and insurance company can get
together and figure out how they want to payout to the beneficiary
- As long as they both agree
✔✔Viatical Settlements - ✔✔- Able to sell the insurance policy for up to 50-80% of face
value if you have a life-threatening illness.
✔✔Life Settlements - ✔✔- Don't have to be terminally or chronically ill
- Can be sold for more than cash surrender value but less than face value
✔✔Tax Treatment - ✔✔- Whenever a policy terminates for any reason other than a
death benefit, any excess income over the cost basis is taxable.
, ✔✔Recording Method - ✔✔o Main way that the changing of beneficiaries is dealt with
o Policyowner must notify the company in writing
o The effective date is the date the policyowner signed and dated the notice
✔✔Uniform Simultaneous Death Act - ✔✔- When there is a situation were the
policyowner and primary beneficiary die at same time. The proceeds go to secondary
beneficiary
- Proceeds will be given out as if the primary beneficiary die first
✔✔Common Disaster Provision - ✔✔- to provide a sequence of beneficiaries for the
distribution of proceeds in the event of the simultaneous death of both the insured and
the primary beneficiary
✔✔Facility-of-Payment Provision - ✔✔- found most often in industrial policies and
grants the insurer permission to pay out benefits to any person appearing entitled
✔✔Underwriting - ✔✔- The process by which an insurer determines whether, and on
what basis, an insurance application will be accepted
✔✔Important Factors of Underwriting - ✔✔o Is the proposed insured insurable?
o Does insurable interest exist?
o If the applicant and insured are two different people, does an insurable interest exist
between the two of them
o Is the proposed insured a standard risk?
✔✔Part I The General - ✔✔- Type of policy, amount of insurance, name address,
birthdates, gender, marital status, smoker or nonsmoker, occupation, and income
✔✔Part III Agents Report - ✔✔- Agent becomes eyes and ears of the underwriter
- Agent must also state if the policy being applied for is a replacement policy
- Write down observations and anything that is important to the underwriting process
✔✔Term Insurance for Interim Coverage - ✔✔- Usually allowed to defer the policy 1-11
months
- Will issue premiums based on the time of app
- When principal policy is issued, premiums will be based on the insured's age at the
end of the interim coverage
✔✔Insurability Conditional Receipt - ✔✔o Most common and is based on that the
applicant proves to be insurable
o Effective date of policy is the policy on this receipt
✔✔Approval Receipt - ✔✔o States that the effective date of the policy is the date of
approval.
WITH ANSWERS GUARANTEE A+
✔✔Guaranteed Insurability Rider - ✔✔Permits Insured to buy specific amounts of
additional insurance at specified intervals (usually 3 years) without evidence of
insurability
✔✔Waiver of Premium - ✔✔- exempts the owner from paying premiums while they're
disabled.
✔✔Automatic Premium Loan Rider (AVC) - ✔✔- If the premium is not paid after grace
period, the cash value of the policy can be used to pay the premium
- Creating reduced paid-up insurance
✔✔Payor Rider - ✔✔- provides an additional safeguard for life insurance taken out on a
minor.
- If the adult premium payor dies or becomes totally disabled, premium payments will be
waived until the child's a specific age of adulthood, such as 21.
✔✔Accidental Death Benefit Rider - ✔✔- "Double Indemnity"
- Provide an additional amount usually equal to the face amount if death occurs under
certain conditions stated in the policy.
- Can be written to triple the policy's face amount.
✔✔Return of Premium Rider - ✔✔- The beneficiary could receive the paid premiums as
well as the death benefit
- Also, with ROP the premium payments paid could go to the living owner.
✔✔Cost of Living Adjustment Rider (COLA) - ✔✔- Based on the Consumer Price Index
(CPI).
- If inflation increases, so does the value of the policy.
- Limited to 5% increase per year.
✔✔Other Insureds Rider - ✔✔Allows owners to add other family members the base
policy.
✔✔Factors That Determine Premium Costs - ✔✔Mortality
Interest
Expenses
✔✔Net Single Premium - ✔✔Amount needed today to fund the future benefits
✔✔Net Level Premiums - ✔✔Premium payments over the number of years
,✔✔Gross Premiums - ✔✔Amount policyowner is required to pay after the addition of the
expense factor
✔✔Net Single Premium = - ✔✔Mortality Cost - Interest
✔✔Gross Premium = - ✔✔Net Single Premium + Expenses
✔✔Policy Reserves - ✔✔Intangible and belong to the insurer
✔✔Extra Percentage Tables - ✔✔- Most commonly used method of Rating Substandard
Risks
- Numerical system that calculate premium rates for those who present a higher health
risk for the insurer
✔✔Single Premium Payment - ✔✔Lump Sum Method
- Used to be the only way
- Nowadays there are too many people that lack financial knowledge to handle this
much money at once
✔✔Interest Only Payments - ✔✔- The insurance company gives the money out at a
certain rate
- The beneficiary can take the money out at anytime
✔✔Installment Payments - ✔✔- The shorter the payout period, the larger each payment
amount
- Equal number of money at intervals from the proceeds
✔✔Income For Life - ✔✔- Allows the beneficiary to receive a guaranteed income for the
rest of their life.
✔✔Joint Life Income - ✔✔- Paid to two beneficiaries in equal monthly installments.
✔✔Special Payment Plans - ✔✔- The policyowner and insurance company can get
together and figure out how they want to payout to the beneficiary
- As long as they both agree
✔✔Viatical Settlements - ✔✔- Able to sell the insurance policy for up to 50-80% of face
value if you have a life-threatening illness.
✔✔Life Settlements - ✔✔- Don't have to be terminally or chronically ill
- Can be sold for more than cash surrender value but less than face value
✔✔Tax Treatment - ✔✔- Whenever a policy terminates for any reason other than a
death benefit, any excess income over the cost basis is taxable.
, ✔✔Recording Method - ✔✔o Main way that the changing of beneficiaries is dealt with
o Policyowner must notify the company in writing
o The effective date is the date the policyowner signed and dated the notice
✔✔Uniform Simultaneous Death Act - ✔✔- When there is a situation were the
policyowner and primary beneficiary die at same time. The proceeds go to secondary
beneficiary
- Proceeds will be given out as if the primary beneficiary die first
✔✔Common Disaster Provision - ✔✔- to provide a sequence of beneficiaries for the
distribution of proceeds in the event of the simultaneous death of both the insured and
the primary beneficiary
✔✔Facility-of-Payment Provision - ✔✔- found most often in industrial policies and
grants the insurer permission to pay out benefits to any person appearing entitled
✔✔Underwriting - ✔✔- The process by which an insurer determines whether, and on
what basis, an insurance application will be accepted
✔✔Important Factors of Underwriting - ✔✔o Is the proposed insured insurable?
o Does insurable interest exist?
o If the applicant and insured are two different people, does an insurable interest exist
between the two of them
o Is the proposed insured a standard risk?
✔✔Part I The General - ✔✔- Type of policy, amount of insurance, name address,
birthdates, gender, marital status, smoker or nonsmoker, occupation, and income
✔✔Part III Agents Report - ✔✔- Agent becomes eyes and ears of the underwriter
- Agent must also state if the policy being applied for is a replacement policy
- Write down observations and anything that is important to the underwriting process
✔✔Term Insurance for Interim Coverage - ✔✔- Usually allowed to defer the policy 1-11
months
- Will issue premiums based on the time of app
- When principal policy is issued, premiums will be based on the insured's age at the
end of the interim coverage
✔✔Insurability Conditional Receipt - ✔✔o Most common and is based on that the
applicant proves to be insurable
o Effective date of policy is the policy on this receipt
✔✔Approval Receipt - ✔✔o States that the effective date of the policy is the date of
approval.
