Fl Life, Health and Annuities Licensing
2-15 Exam-Graded A
3 ways insurance contracts are different than other legally binding documents - ANS-
Number one. They are aleatory. Meaning the insured pays a premium but may not
receive anything back.
Number 2. They are contracts of adhesion meaning the contract was prepared by one
party.
number 3. They are unilateral meaning only the insurance company promises anything
in the contract
How long life insurance has to challenge the validity of a contract due to fraud - ANS-
Typically 2 years. Can't contest- after if found out fraud occurred during application.
Fiduciary - ANS-A person who holds a position of special trust and confidence.
Example: when they accept premium payments on behalf of the insurer that person is a
fiduciary.
Express authority - ANS-The intended power given by the principal to the agent.
Granted by the agency contract.
Ex: agent has the express authority to solicit applications for insurance on behalf of the
company.
Legal purpose - ANS-For a contract to be enforceable in court the object of it and its
intent must be legal.
Consideration - ANS-in exchange for a member's premium the insurer promises to pay
when there is a loss.
Perils, hazard, risk - ANS-A peril is the cause of a risk. A peril is the immediate specific
event causing loss and giving rise to risk. When a building burns, fire is the peril.
A hazard is the source of danger. The hazard is the underlying factor behind the peril
that leads to the probability of a particular loss to the insurer. It is the active ingredient
that could create a peril, which could then lead to a particular loss event
Independent agents - ANS-Cell all plans, Blue Cross Blue Shield, Humana, etc
Captive or career agent - ANS-Can only sell one companies insurance policies
Agent vs broker - ANS-Both are known as producers.
Agent: tied to an insurance company.
, Broker: represents the buyer and can sell many insurance carriers
HMOs are distinct because of what? - ANS-They provide the insurance and the health
care itself.
Reinsurers - ANS-Insurance for an insurance company
mutualization vs demutualization - ANS-Mutual: going from stock insurance company to
Mutual Insurance Company.
De mutual: the opposite
Aleatory contract - ANS-A contract that:
- there is an element of chance for both parties
- dollar values exchanged may not be equal.
Ex: member pays premium but may not receive benefit for a long time.
Variable annuities: accumulation units - ANS-earned during the accumulation period of
the annuity.
- premiums - expenses equal accumulation units.
ex: in 2014 A.U. are valued at $10.
- person makes payment of $200.
- person has purchased 20 A.U.
Variable annuity units - ANS-When the plan finally pays out, members accumulation
units convert to annuity units.
- when converted, the number of annuity units remain the same for the life of payout.
- however, value of the unit can vary
Joint and full survivor annuity payments - ANS-A two person annuity.
- one person dies survivor gets income payments.
- last person dies, benefit payments cease
Life with period certain option annuity payment - ANS-Pays the annuitant income for life,
but guarantees a minimum period of payments.
Ex: person has 10 year guarantee.
- person dies in 6 years
- beneficiary gets payment for 4 more years
Extended term option nonforfeiture - ANS-Use the whole life insurance policy's cash
value to purchase an extended term insurance policy in an amount equal to the current
plan
Installment refund annuity payment - ANS-Periodic dollar amount payout to the
annuitant.
- when person dies, remaining dollars paid in periodic payments to benificiary.
2-15 Exam-Graded A
3 ways insurance contracts are different than other legally binding documents - ANS-
Number one. They are aleatory. Meaning the insured pays a premium but may not
receive anything back.
Number 2. They are contracts of adhesion meaning the contract was prepared by one
party.
number 3. They are unilateral meaning only the insurance company promises anything
in the contract
How long life insurance has to challenge the validity of a contract due to fraud - ANS-
Typically 2 years. Can't contest- after if found out fraud occurred during application.
Fiduciary - ANS-A person who holds a position of special trust and confidence.
Example: when they accept premium payments on behalf of the insurer that person is a
fiduciary.
Express authority - ANS-The intended power given by the principal to the agent.
Granted by the agency contract.
Ex: agent has the express authority to solicit applications for insurance on behalf of the
company.
Legal purpose - ANS-For a contract to be enforceable in court the object of it and its
intent must be legal.
Consideration - ANS-in exchange for a member's premium the insurer promises to pay
when there is a loss.
Perils, hazard, risk - ANS-A peril is the cause of a risk. A peril is the immediate specific
event causing loss and giving rise to risk. When a building burns, fire is the peril.
A hazard is the source of danger. The hazard is the underlying factor behind the peril
that leads to the probability of a particular loss to the insurer. It is the active ingredient
that could create a peril, which could then lead to a particular loss event
Independent agents - ANS-Cell all plans, Blue Cross Blue Shield, Humana, etc
Captive or career agent - ANS-Can only sell one companies insurance policies
Agent vs broker - ANS-Both are known as producers.
Agent: tied to an insurance company.
, Broker: represents the buyer and can sell many insurance carriers
HMOs are distinct because of what? - ANS-They provide the insurance and the health
care itself.
Reinsurers - ANS-Insurance for an insurance company
mutualization vs demutualization - ANS-Mutual: going from stock insurance company to
Mutual Insurance Company.
De mutual: the opposite
Aleatory contract - ANS-A contract that:
- there is an element of chance for both parties
- dollar values exchanged may not be equal.
Ex: member pays premium but may not receive benefit for a long time.
Variable annuities: accumulation units - ANS-earned during the accumulation period of
the annuity.
- premiums - expenses equal accumulation units.
ex: in 2014 A.U. are valued at $10.
- person makes payment of $200.
- person has purchased 20 A.U.
Variable annuity units - ANS-When the plan finally pays out, members accumulation
units convert to annuity units.
- when converted, the number of annuity units remain the same for the life of payout.
- however, value of the unit can vary
Joint and full survivor annuity payments - ANS-A two person annuity.
- one person dies survivor gets income payments.
- last person dies, benefit payments cease
Life with period certain option annuity payment - ANS-Pays the annuitant income for life,
but guarantees a minimum period of payments.
Ex: person has 10 year guarantee.
- person dies in 6 years
- beneficiary gets payment for 4 more years
Extended term option nonforfeiture - ANS-Use the whole life insurance policy's cash
value to purchase an extended term insurance policy in an amount equal to the current
plan
Installment refund annuity payment - ANS-Periodic dollar amount payout to the
annuitant.
- when person dies, remaining dollars paid in periodic payments to benificiary.
