Florida Life & Health Insurance Exam — All Questions

In an executive bonus (Section 162) plan, the employer:

• a.Owns the life insurance policy outright and names itself as the beneficiary, while the executive simply agrees to be the insured person
• b.Pays a bonus, deductible to the employer and taxable to the executive, that the executive uses to pay premiums on a policy they own✓
• c.Provides no real benefit to the executive
• d.Cannot deduct any part of the arrangement

In a Section 162 executive bonus plan, the employer pays a deductible bonus (taxable to the executive) and the executive owns the policy and pays its premiums. The employer does not own the policy.

A split-dollar life insurance arrangement is:

• a.An agreement in which an employer and employee share the costs and benefits of a life policy, such as premiums, cash value, and death benefit✓
• b.A type of deferred annuity
• c.A term insurance rider that an employer attaches to the executive's personal life insurance policy in order to provide extra temporary death benefit at a low cost
• d.A government insurance program

Split-dollar is an arrangement between an employer and employee (or two parties) to split the premium costs and policy benefits of a life policy. It is not a government program, annuity, or rider.

In Florida, which entity is primarily responsible for licensing individual insurance agents?

• a.The Office of Insurance Regulation (OIR)
• b.The Department of Financial Services (DFS)✓
• c.The Department of Business and Professional Regulation
• d.The Florida Life and Health Insurance Guaranty Association

The Florida Department of Financial Services (DFS), through its Division of Insurance Agent and Agency Services, licenses and disciplines agents. The Office of Insurance Regulation (OIR) is a separate body that regulates insurance companies (solvency, rates, and policy forms).

A Florida agent who wants to sell life insurance, health insurance, and variable annuities most commonly holds which license?

• a.2-40 Health Agent only
• b.2-14 Life (including Variable Annuity) only
• c.2-15 Life, Health and Variable Annuity Agent✓
• d.4-40 Customer Representative

The 2-15 Life, Health and Variable Annuity Agent license is the combined license authorizing life, health, and variable annuity sales. The 2-14 covers life and variable annuity, the 2-40 covers health, and the 4-40 is a customer representative license.

The Florida Department of Financial Services is headed by which elected state official?

• a.The Insurance Commissioner
• b.The Chief Financial Officer (CFO)✓
• c.The Governor
• d.The Attorney General

Florida's DFS is led by the Chief Financial Officer (CFO), an elected member of the state cabinet. Unlike many states, Florida does not have a separately elected 'Insurance Commissioner' overseeing agent licensing; that authority sits with the CFO's department.

Before a Florida-licensed agent may transact insurance for a particular insurer, the insurer must:

• a.Reimburse the agent's examination fee
• b.Appoint the agent and file that appointment with DFS✓
• c.Guarantee the agent a minimum annual salary
• d.Register the agent with the Office of Insurance Regulation

A Florida license lets a person act as an agent, but an insurer must appoint the agent and file the appointment with DFS before the agent may represent that company. Appointments are renewed on a periodic cycle tied to the agent's birth month.

Florida Statute 626.9541 sets out the state's list of:

• a.Approved insurance policy forms
• b.Unfair methods of competition and unfair or deceptive acts (unfair trade practices)✓
• c.Approved continuing education providers
• d.Insurers authorized to do business in Florida

Section 626.9541 of the Florida Insurance Code enumerates unfair methods of competition and unfair or deceptive acts, including misrepresentation, twisting, churning, sliding, and unlawful rebating. It is the core market-conduct statute for agents.

Florida law gives the purchaser of an individual life insurance policy a free-look period of at least how many days after delivery?

• a.3 days
• b.10 days
• c.14 days✓
• d.60 days

Florida requires at least a 14-day free-look (right-to-examine) period on individual life insurance policies, during which the buyer may return the policy for a full refund. Replacement transactions and certain senior or Medicare supplement policies carry longer periods.

The Florida Life and Health Insurance Guaranty Association exists primarily to:

• a.Sell insurance policies directly to Florida consumers
• b.Pay covered claims of policyholders when a member insurer becomes insolvent✓
• c.License and appoint insurance agents
• d.Set the premium rates insurers may charge

The Guaranty Association is a safety net that pays certain covered obligations to policyholders when a member insurer fails, subject to statutory dollar limits. Florida law bars agents from using the association as an inducement to buy insurance.

Unlike most states, Florida permits an agent to rebate part of a commission to a client, provided that:

• a.The rebate is given quietly only to the agent's preferred clients
• b.The rebate is offered under a schedule applied uniformly to all insureds in the same actuarial class and is not unfairly discriminatory✓
• c.The transaction involves a term life policy
• d.The client is age 65 or older

Florida is one of the few states that allow rebating. Under the state's rebating statute, an agent may rebate premium or commission only if it is done under a schedule that is uniformly applied to all insureds in the same actuarial class and is not unfairly discriminatory. Selective, secret rebates remain prohibited.

In Florida insurance law, using the values of an existing policy with the SAME insurer to buy a new policy through misrepresentation is known as:

• a.Twisting
• b.Churning✓
• c.Sliding
• d.Rebating

Churning is replacing a policy using the values of an existing policy with the same insurer through misrepresentation. Twisting involves the same misconduct but replaces a policy with a different insurer; sliding is adding coverage or fees without the buyer's informed consent. All are prohibited unfair practices.