Study Guide

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Review Missed Questions
Take some time to review the questions you missed in the session you just completed. This list shows all of the questions that you missed in the session you just completed. The answer you selected is in bold. The correct answer is highlighted in yellow.| |

#1. | Which nonforfeiture option provides coverage for the longest period of time?| |
a)| Extended term|
b)| Paid-up option|
c)| Accumulated at interest|
d)| Reduced paid-up|
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 | The reduced paid-up nonforfeiture option would provide protection until the insured reaches 100, but the face amount is reduced to what the cash would buy.| |
#2. | What is a definition of a Unilateral Contract?|
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a)| One author: the company wrote it, they are stuck with it.| b)| If one party makes a condition, the other party can counter-offer.| c)| One-sided, only one party makes an enforceable promise.| d)| Two or more parties go into a contract understanding there may be an unequal exchange of value.| |

 | An insurance contract is unilateral in that only one of the parties to the contract is legally bound to do anything.| |
#3. | How often are life insurance companies required to submit complete financial statements to the Director for examination?| |
a)| Bi-annually|
b)| Every 3 years|
c)| Every 5 years|
d)| Annually|
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 | Life insurance companies, by law, must submit financial statements annually.| |
#9. | Which of the following is the most common way to transfer risk?| |
a)| Purchase insurance.|
b)| Increase control of claims.|
c)| Lessen the possibility of loss.|
d)| Name a beneficiary.|
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 | The most effective way to handle risk is to transfer it so that the loss is borne by another party. Insurance is the most common method of transferring risk from an individual or group to an insurance company.| |

#11. | Which of the following is NOT true regarding Basic Surgical Expense coverage?| |
a)| There is no deductible.|
b)| Contracts include a surgical schedule.|
c)| It is commonly written in conjunction with Hospital Expense policies.| d)| Coverage is unlimited.|
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 | Basic Surgical Expense Coverage is commonly written in conjunction with Hospital Expense policies. These policies pay for the costs of surgeons’ services, whether the surgery is performed in or out of the hospital. Coverage includes surgeons’ fees, anesthesiologist, and the operating room when it is not covered as a miscellaneous medical item. As with the other types of basic medical expense coverage, there is no deductible, but coverage is limited.| |

#15. | Which of the following is NOT a way to determine the interest rate in a Universal Life Policy?| |
a)| Tie current interest rates to Treasury Bills|
b)| Maintain a profit margin between the interest credited on in-force policies and the interest earned on their own investment portfolio| c)| Estimate market conditions for the life of the policy| d)| Declare the annual rate by the company's board of directors| |

 | Some insurers tie their current interest rates to Treasury Bills, while others maintain a specified spread (profit margin) between the interest that they credit on their in-force policies and the interest that they are earning on their own investment portfolio. Some insurers have their current interest rate declared by the company's board of directors each year, if not more frequently.| |

#16. | A customer with an existing life insurance contract is considering exchanging it for a newer contract. What Florida insurance regulation should the customer’s insurance agent consult?| |

a)| The Code of Ethics of the Florida Association of Insurance and Financial Advisors| b)| The Florida Life Insurance Solicitation Law|
c)| The Florida Insurance Guaranty Association|
d)| The Florida Replacement...
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