Florida Life & Health Insurance Practice Test Correct 100%

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? - Answer $0 Which statement regarding the Change of Beneficiary provision is true? - Answer The policyowner can change the beneficiary What is the underlying concept regarding level premiums? - Answer 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? - Answer 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? - Answer Insured's contingent beneficiary On a life insurance policy, who is qualified to change the beneficiary designation? - Answer Policyowner A policyowner is allowed to pay premiums more than once a year under which provision? - Answer Mode of Premium A life insurance application must be signed by all of these EXCEPT - Answer Beneficiary Any changes made on an insurance application requires the initials of whom? - Answer Applicant Which Federal law allows an insurer to obtain an inspection report on a potential insured? - Answer Fair Credit Reporting Act All of these are considered sources of underwriting information about an applicant EXCEPT - Answer 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? - Answer Conditional P is a producer who notices 5 questions on a life application were not answered. What actions should P take? - Answer 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) - Answer 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 - Answer the initial premium When does a life insurance contract become effective if the initial premium is not collected during the application process? - Answer When producer delivers policy and collects initial premium Why is an applicant's signature required on a life insurance application? - Answer 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 - Answer Recurrent Disability provision Which of these statements is INCORRECT regarding the federal income tax treatment of life insurance? - Answer 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? - Answer Whole life policy with other insured rider What action should a producer take if the initial premium is NOT submitted with the application? - Answer Forward the application to the insurer without the initial premium What is being delivered during a policy delivery? - Answer Insurance contract to the proposed insured Which of these actions should a producer take when submitting an insurance application to an insurer? - Answer 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? - Answer Applicant's signature on application Which requirement must be met for an association to be eligible for a group life plan? - Answer 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? - Answer 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? - Answer 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? - Answer Single Premium The annuity that represents the largest possible monthly payment to an individual annuitant is a(n) - Answer Straight Life annuity An individual who purchases a Life annuity is given protection against - Answer the risk of living longer than expected What is considered to be a characteristic of an immediate annuity? - Answer Benefit payments start within one payment period of purchase An immediate annuity consists of a - Answer single premium What determines the full amount of Social Security retirement benefits a qualified individual is entitled to receive? - Answer Primary Insurance Amount (PIA) Which of these retirement plans can be started by an employee, even if another plan is in existence? - Answer Individual Retirement Account (IRA) Which of these is NOT a type of agent authority? - Answer Principal Which of the following statements is true about most Blue Cross/Blue Shield organizations? - Answer 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? - Answer Residual disability An individual Disability Income insurance applicant may be required to submit all of the following information EXCEPT - Answer 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? - Answer Disability Income Disability policies do NOT normally pay for disabilities arising from which of the following? - Answer War T has Disability Income policy that pays a monthly benefit of $5000. If T becomes partially disabled, what can he likely expect? - Answer 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 - Answer 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? - Answer 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 - Answer Income What does a Guaranteed Insurability rider provide a Disability Income policyowner? - Answer 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? - Answer Deferred The underwriting process involves all of these EXCEPT for - Answer Policy loan Which parts of a life insurance policy are guaranteed to be true? - Answer 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 - Answer 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? - Answer Proceeds will go to the contingent beneficiary What type of renewability guarantees premium rates and renewability? - Answer Guaranteed renewable When does a Probationary Period provision become effective in a health insurance contract? - Answer 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 - Answer 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? - Answer 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 - Answer 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? - Answer Reinstatement Which of these statements accurately describes the Waiver of Premium provision in an Accident and Health policy? - Answer Premiums are waived after the insured has been totally disabled for a specified time period Pre-hospitalization authorization is considered an example of - Answer 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 - Answer 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? - Answer 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? - Answer Send a notice to the MIB that the applicant was declined Health insurance benefits NOT covered due to an act of war are - Answer excluded by the insurer in the contract provisions Which Accident and Health policy provision addresses preexisting conditions? - Answer Time Limit on Certain Defenses The Notice of Claims provision requires a policyowner to - Answer notify their physician of a