Download FLORIDA 240 LICENSE EXAM | ALL QUESTIONS AND CORRECT ANSWERS | ALREADY GRADED A+ and more Exams Insurance Economics in PDF only on Docsity!
FLORIDA 240 LICENSE EXAM | ALL QUESTIONS
AND CORRECT ANSWERS | ALREADY GRADED
A+ | VERIFIED ANSWERS | LATEST VERSION
(JUST RELEASED)
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: ---------CORRECT ANSWER----------------- Recurrent Disability provision When an insured has the same disability within a specified time period and the insurance company provides the same benefits without a new waiting period, the second disability is covered under which of the following benefits? ---------CORRECT ANSWER-----------------Recurrent Disability P received Disability income benefits for 3 months then returns to work. She is able to work one month before her condition returns, leaving her disabled once again. What would the insurance company most likely regard this second period of disability as? ---------CORRECT ANSWER--------------- --Recurrent Disability A disability elimination period is best described as a ---------CORRECT ANSWER-----------------time deductible Z owns a Disability Income policy with a 30-day Elimination period. Z contracts pneumonia that leaves him unable to work from January 1 until January 15. Z then becomes disabled from an accident on February 1 and the disability lasts until July 1 the same year. Z will become eligible to
receive benefits starting on ---------CORRECT ANSWER-----------------March 1 A CEO's personal assistant suffered injuries at home and as a result, was unable to work for four months. Which type of policy will pay a monthly benefit to the personal assistant? ---------CORRECT ANSWER----------------- Disability income What is the primary factor that determines the benefits paid under a disability Income policy? ---------CORRECT ANSWER-----------------wages T was insured under an individual Disability Income policy and was severely burned in a fire. As a result, T became totally disabled. The insurer began making monthly benefit payments, but later discovered that the fire was set by T in what was described as arson. What actions will the insurer take? ---------CORRECT ANSWER-----------------The insurer will rescind the policy, deny the claim, and recover all payments made Bryce purchased a disability income policy with a rider that guarantees him the option of purchasing additional amounts of coverage at predetermined times without requiring to provide evidence of insurability. What kind of rider is this? ---------CORRECT ANSWER-----------------Guaranteed insurability rider A physician opens up a new practice and qualifies for a $7,000/month Disability Income policy. What rider would the physician add if he wants the ability to increase his policy benefit as his practice and income grow? ------- --CORRECT ANSWER-----------------Guaranteed Insurability Option rider
Medicare Part C is: ---------CORRECT ANSWER-----------------Available to those who are enrolled in Medicare Part A and Part B What is the MINIMUM number of Activities of Daily Living (ADL) an insured must be unable to perform to qualify for Long Term Care benefits? --------- CORRECT ANSWER----------------- 2 Long Term Care policies will usually pay for eligible benefits using which of the following methods? ---------CORRECT ANSWER-----------------Expense incurred Qualified Long-Term Care policies may take into consideration an applicant's pre-existing conditions for a maximum of not more than __ month(s) prior to the effective date of coverage. ---------CORRECT ANSWER----------------- 6 The guarantee of insurability option provides a long-term care policyowner the ability to ---------CORRECT ANSWER-----------------buy additional coverage at a later date A "reimbursement policy" pays what amount of covered Long-Term Care expenses? ---------CORRECT ANSWER-----------------Actual covered expenses up to the daily maximum Medicare Part B does NOT cover ---------CORRECT ANSWER----------------- inpatient hospital services
If a retiree on Medicare required five hospital stays in one year, which policy would provide the best insurance for excess hospital expenses? ------ ---CORRECT ANSWER-----------------Medicare Supplement 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 time period during which the company may dispute a claim's validity is called ---------CORRECT ANSWER-----------------Time Limit on Certain Defenses Which of the following is NOT included in the policy face? --------- CORRECT ANSWER-----------------Exclusions The clause in an Accident and Health policy which defines the benefit amounts the insurer will pay is called the ---------CORRECT ANSWER------- ----------Insuring clause What is the initial requirement for an insured to become eligible for benefits under the Waiver of Premium provision? ---------CORRECT ANSWER-------- ---------Insured must be under a physician's care Which of the following BEST describes a short-term Medical Expense policy? ---------CORRECT ANSWER-----------------nonrenewable An insurance company normally has 2 years to contest information provided on an accident and health application. This 2 year period begins
According to the Time Limit of Certain Defenses provision in an Individual Health Insurance Policy, non fraudulent misstatements first become incontestable: ---------CORRECT ANSWER-----------------Two years from the date of the policy was issued Health insurance benefits NOT covered due to an act of war are: --------- CORRECT ANSWER-----------------excluded by the insurer in the contract provisions The insuring clause ---------CORRECT ANSWER-----------------States the scope and limits of the coverage With Accidental Death and Dismemberment policies, what is the purpose of the Grace Period? ---------CORRECT ANSWER-----------------Gives the policyowner additional time to pay past due premiums When an insurance company sends a policy to the insured with an attached application, the element that makes the application part of the contract between the insured and the insurer is called the --------- CORRECT ANSWER-----------------Entire Contract provision An insured must notify an insurer of a medical claim within how many days after an accident? ---------CORRECT ANSWER----------------- 20
What is the purpose of Time of Payment if Claims provision? --------- CORRECT ANSWER-----------------Prevents delayed claim payments made by the insurer Which health policy clause specified the amount of benefits to be paid? ----- ----CORRECT ANSWER-----------------Insuring Which of these is considered a mandatory provision? ---------CORRECT ANSWER-----------------Payment of Claims The stated amount or percent of liquid assets that an insurer must have on hand that will satisfy future obligations to its policyholders is called: --------- CORRECT ANSWER-----------------Reserves An insurance applicant MUST be informed of an investigation regarding his/her reputation and character according to the: ---------CORRECT ANSWER-----------------Fair Credit Reporting Act A nonprofit incorporated society that does not have capital stock and operates for the sole benefit of its members is known as: ---------CORRECT ANSWER-----------------A fraternal benefit society What I the name of the law that requires insurers to disclose information gathering practices and where the information was obtained? --------- CORRECT ANSWER-----------------Fair Credit Reporting Act
What type of reinsurance contract involves two companies automatically sharing their risk exposure? ---------CORRECT ANSWER----------------- Treaty A group-owned insurance company that is formed to assume and spread the liability risks of its members is known as a: ---------CORRECT ANSWER-----------------risk retention group All of the following are considered to be typical characteristics describing the nature of an insurance contract, EXCEPT: ---------CORRECT ANSWER-----------------Bilateral The part of a life insurance policy guaranteed to be true is called a(n) --------
- CORRECT ANSWER-----------------warranty Statements made on an insurance application that are believed to be true to the best of the applicant's knowledge are called ---------CORRECT ANSWER-----------------representations Q purchases a $500,000 life insurance policy and pays $900 in premiums over the first six months. Q dies suddenly and the beneficiary is paid $500,000. This exchange of unequal values reflects which of the following insurance contract features? ---------CORRECT ANSWER----------------- Aleatory When must insurable interest be present in order for a life insurance policy to be valid? ---------CORRECT ANSWER-----------------When the application is made
A life insurance arrangement which circumvents insurable interest statutes is called: ---------CORRECT ANSWER-----------------Investor-Originated Life Insurance Stranger Originated Life Insurance (STOLI) has been found to be in violation of which of the following contractual elements? ---------CORRECT ANSWER-----------------Legal Purpose (Insurable Interest) Who makes the legally enforceable promises in a unilateral contract? ------- --CORRECT ANSWER-----------------Insurance company A policy of adhesion can only be modified by whom? ---------CORRECT ANSWER-----------------insurance company When third-party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have: ---------CORRECT ANSWER-----------------insurable interest in the proposed insured Which of these is considered a statement that is assured to be true in every aspect? ---------CORRECT ANSWER-----------------Warranty Which of these require an offer, acceptance, and consideration? --------- CORRECT ANSWER-----------------contract
E and F are business partners. Each takes out a $500,000 life insurance policy on the other, naming himself as primary beneficiary. E and F eventually terminate their business, and four months later E dies. Although E was married with three children at the time of death, the primary beneficiary is still F. However, an insurable interest no longer exists. Where will the proceeds from E's life insurance policy be directed to? --------- CORRECT ANSWER-----------------In this situation, the proceeds from E's life insurance policy will go to F. When must insurable interest exist for a life insurance contract to be valid? ---------CORRECT ANSWER-----------------Inception of the contract Life and health insurance policies are: ---------CORRECT ANSWER----------- ------unilateral contracts A policy of adhesion can only be modified by whom? ---------CORRECT ANSWER-----------------insurance company At what point does an informal contract become binding? ---------CORRECT ANSWER-----------------When one party makes an offer and the other party accepts that offer What is the consideration given by an insurer in the Consideration clause of a life policy? ---------CORRECT ANSWER-----------------Promise to pay a death benefit
What is the consideration given by an insurer in the Consideration clause of life policy? ---------CORRECT ANSWER-----------------Promise to pay a death benefit to a named beneficiary Insurance policies are considered aleatory contracts because: --------- CORRECT ANSWER-----------------performance is conditioned upon a future occurrence Taking receipt of premiums and holding them for the insurance company is an example of ---------CORRECT ANSWER-----------------fiduciary responsibility The Consideration clause in a life insurance contract contains what pertinent information? ---------CORRECT ANSWER-----------------The schedule and amount of premium payments Which of the following consists of an offer, acceptance, and consideration? ---------CORRECT ANSWER-----------------Contract Which of the following consists of an offer, acceptance, and consideration? ---------CORRECT ANSWER-----------------contract Which of these is NOT considered to be an element of an insurance company? ---------CORRECT ANSWER-----------------Negotiating
What is issued to each employee of an employer health plan? --------- CORRECT ANSWER-----------------certificate The benefits under a Disability Buy-Out policy are ---------CORRECT ANSWER-----------------payable to the company or another shareholder A policy owner would like to change the beneficiary on a Life insurance policy and make the change permanent. Which type of designation would fulfill this need? ---------CORRECT ANSWER-----------------irrevocable Which contract permits the remaining partners to buy-out the interest of a disabled business partner? ---------CORRECT ANSWER----------------- Disability Buy-Sell T and S are named co-primary beneficiaries on a $500,000 Accidental Death and Dismemberment policy insuring their father. Their mother was named contingent beneficiary. Five years later, S dies of natural causes and the father is killed in a scuba accident shortly afterwards. How much of the death benefit will the mother receive? ---------CORRECT ANSWER------ -----------$ Which of the following medical expenses does Cancer insurance NOT cover? ---------CORRECT ANSWER-----------------arthritis The difference between group insurance and blanket health policies is: ----- ----CORRECT ANSWER-----------------Blanket health policies do not issue certificates
Which type of policy would pay an employee's salary if the employer was injured in a bicycle accident and out of work for six weeks? --------- CORRECT ANSWER-----------------Business Overhead Expense On an Accidental Death and Dismemberment (AD&D) insurance policy, who is qualified to change the beneficiary designation? ---------CORRECT ANSWER-----------------Policyowner The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives workers (and their families) whose employment has been terminated the right to: ---------CORRECT ANSWER-----------------continue group health benefits K is the insured and P is the sole beneficiary on an Accidental Death and Dismemberment (AD&D) insurance policy. Both are involved in a fatal accident where K dies before P. Under the Common Disaster provision, which of these statements is true? ---------CORRECT ANSWER----------------
- Proceeds will be paid to P's estate How would a contingent beneficiary receive the policy proceeds in an Accidental Death and Dismemberment (AD&D) policy? ---------CORRECT ANSWER-----------------If the primary beneficiary dies before the insured Which mode of payment is NOT used by health insurance policies? --------- CORRECT ANSWER-----------------Single Premium
An insurance company would MOST likely pay benefits under an Accidental Death and Dismemberment policy for which of the following losses? ---------CORRECT ANSWER-----------------Loss of eyesight due to an accidental injury Health Insurance Portability and Accountability Act (HIPAA) gives privacy protection for: ---------CORRECT ANSWER-----------------health information Under which of the following circumstances will the benefits under COBRA continuation coverage end? ---------CORRECT ANSWER-----------------All group health plans are terminated by the employer The provision in a Group Health policy that allows the insurer to postpone coverage for a covered illness 30 days after the policy's effective date is referred to as the ---------CORRECT ANSWER-----------------waiting period 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--------- --------Less restrictive Which type of policy pays benefits to a policyholder covered under a Hospital Expense policy? ---------CORRECT ANSWER----------------- reimbursement The federal income tax treatment of employer-provided group Medical Expense insurance can be accurately described as: ---------CORRECT
ANSWER-----------------Employee's premiums paid by the employer is tax- deductible to the employer as a business expenditure 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 ---------CORRECT ANSWER-----------------P only J has an Accidental Death and Dismemberment policy with a principal sum of $50,000. While trimming the hedges, J cuts off one of his fingers. What is the MAXIMUM J will receive from his policy? ---------CORRECT ANSWER-----------------$25, Which of the following characteristics is associated with a large group disability income policy? ---------CORRECT ANSWER-----------------No medical underwriting K has an Accidental Death and Dismemberment (AD&D) insurance policy where her husband is beneficiary and her daughter is contingent beneficiary. Under the Common Disaster clause, if K and her husband are both killed in an automobile accident, where would the death proceeds be directed? ---------CORRECT ANSWER-----------------daughter Which of the following statements does NOT accurately describe the tax treatment of premiums and benefits of individual Accident and Health insurance? ---------CORRECT ANSWER-----------------Disability income policy premiums are tax-deductible
