8 – Florida Laws and Rules Pertinent to Insurance

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A mutual insurance company and a stock insurance company have one main difference between them. What is this major contrast?

Stock company is owned by its shareholders. Mutual company is owned by its policyholders.

Which of the following situations does NOT apply to the Florida Replacement Rule?

*An existing policy is reissued with a reduction in cash value
*A new policy is issued while an existing one is surrendered
*An existing policy is subject to extensive borrowing
* An existing policyholder purchases an additional policy from the same insurer

An existing policyholder purchases an additional policy from the same insurer Florida’s Replacement Rule applies to all of these situations EXCEPT "An existing policyholder purchases an additional policy from the same insurer".

An example of an unfair claims practice would be

failing to effectuate prompt, fair, and equitable settlements of a claim

In Florida, an insurer domiciled and incorporated in this state is called a(n)

domestic company

Which of the following is NOT considered rebating?

* Sharing commissions with an agent licensed in the
same line of business
* Returning premium to a client as an inducement for purchasing a policy
* Giving something of value to an insured in exchange for their business
* Offering special dividends

Sharing commissions with an agent licensed in the same line of business

Which of the following is NOT a consequence for placing business with an unauthorized insurer?

*Third degree felony
*First degree misdemeanor
* Insurance license revoked
*Responsible for unpaid claims

The correct answer is "First degree misdemeanor". All of these are possible consequences for placing business with an unauthorized insurer EXCEPT the conviction of a first degree misdemeanor.

In Florida, a health policy that is paid on a quarterly basis requires a grace period of

31 days

During the course of an insurance transaction, if an agent makes a false or incomplete statement, he/she could be found guilty of


The coordination of benefits (COB) provision exists in order to

avoid duplication of benefit payments The purpose of the coordination of benefits (COB) provision, found only in group health plans, is to avoid duplication of benefit payments.

In Florida, when agents recommend changes be made for existing coverage, the agent must follow established procedures. The name of this rule is called the

Florida Replacement Rule

When is a Group Health policy required to provide coverage for a newborn child?

At the moment of birth

What is Florida’s definition of Life insurance replacement?

A transaction in which a new policy is bought and an old policy is terminated

What is required in the Florida Employee Health Care Access Act?

Small group benefit plans are to be issued on a "guarantee-issue" basis

What do families pay that are covered by the Florida Healthy Kids Corporation?

A portion of the premium

When replacing or exchanging an annuity, the agent must disclose to the annuitant

the possible tax ramifications as a result of the transaction An agent must disclose the possible tax consequences of replacing or exchanging an existing annuity or life insurance policy.

Which of the following factors is NOT considered when the Department of Financial Services determines if an agent’s home is an insurance agency?

The amount of premium collected at this location

All of the following will result in the suspension of an agent’s license EXCEPT

acting with fiduciary responsibility

What type of insurance company is domiciled in England, but conducts business in Florida?


Employers with less than __ employees are affected by Florida’s Health Insurance Coverage Continuation Act (Mini COBRA).


What is the purpose of the Life and Health Insurance Guaranty Association?

Protects policyowners against insolvent insurance companies

One definition of replacement is "the act of replacing an existing insurance policy with another". Replacement is

closely regulated and requires full disclosure

An agent’s license can be suspended or revoked by

writing primarily controlled business

The minimum age at which a person can sign a life insurance application is

15 years

A life policy loan in Florida cannot charge a fixed rate of interest higher than


An example of unfair discrimination would be

offering different terms of coverage for different policyowners having the same risk classification

Which two entities regulate variable annuities?

Variable annuities are regulated by both the Department of Financial Services and the Securities Exchange Commission.

What is the required minimum percentage of employee participation for a noncontributory group health insurance plan according to Florida Law?

The correct answer is "0%". Most noncontributory group health plans require 100% participation by eligible members. Under Florida law, there is no specific minimum percentage participation for employees covered by employee group health insurance.

Group Life policies in Florida are required to contain a conversion privilege that allows for conversion

to an individual policy for a stated period of time

A person insured under a health policy is required to give the insurance company a Notice of Claim within how many days after a covered loss?

Twenty Written notice of a claim must be given to the insurer within 20 days.

What are adjustable rates for life policy loans in Florida based on?

Moody’s corporate bond index

Florida requires that coverage for newborns begins "from the moment of birth" and continues for

18 months

A license may be denied, suspended, or revoked if the licensee

Being found guilty of misrepresentation may result in the Department of Financial Services denying, suspending, revoking, or not renewing any license.

An example of an unfair trade practice is

an agent making a material misrepresentation to the insured

The waiting period for a pre-existing condition under a Medicare Supplement policy may NOT go beyond

The correct answer is "6 months". Under a Medicare Supplement policy, the waiting period for pre-existing conditions may not exceed 6 months.

According to Florida Law, in which of the following situations would a dependent handicapped child NOT be covered under a Family Health policy?

*The handicapped child has reached the limiting age
*The premiums for the handicapped child are not paid
*The handicapped child becomes a full-time student
*The family moves outside the provider network

The premiums for the handicapped child are not paid Under a Family Health policy issued in Florida, a handicapped child must continue to be covered in all of these situations EXCEPT when premium payments cease to be paid.

Association Plans that are designed to provide health benefits to their members are regulated by the state because

they are insured by an authorized insurer Association Plans must be fully insured by an authorized insurer. The insurer is subject to state regulation.

An example of sliding would be

charging for an additional product without the applicant’s consent Sliding involves selling additional coverage to an insurance applicant who doesn’t want or need it. An agent will often "slide" this additional coverage in without the customer’s knowledge or consent.

What is the main reason for regulating the insurance industry?

Maintain the solvency of insurance companies

S takes out a health insurance policy which contains a provision that states that the agent does not have the authority to change the policy or waive any of its provisions. Which health policy provision is this?

Entire Contract

The insurer must provide a prospective buyer with a(n)

Buyer’s Guide and Policy Summary

Nonprofit life insurance providers that are covered by a special section in the Florida insurance code are called

Fraternal life insurance organizations

An applicant who pays the initial premium at the time of application is typically given a(n)

conditional receipt A conditional receipt is normally given to an applicant who pays the initial premium at the time of application.

Which of the following unfair trade practices involves an agent who makes malicious statements about another person’s financial condition?


A stock insurance company

is owned exclusively by its shareholders

The Financial Services Commission may hold hearings

for any reason deemed necessary

According to Florida law, when must an agent deliver the Outline of Coverage to a Medicare Supplement applicant?

At the time of application

According to Florida law, group life insurance conversion privileges must NOT

The correct answer is "require evidence of insurability". Florida’s insurance law that governs group life insurance conversion privileges provides that the individual policies do not require evidence of insurability.

Upon reaching the limiting age, a handicapped child can extend their health insurance coverage as a dependent

only if the child is incapable of employment and chiefly dependent on the policyowner

How many hours of continuing education must a newly licensed agent complete every two years?


A foreign insurance company doing business in Florida

is a company that was formed under the laws of another state

Who owns a stock company?

Its stockholders

Who is a mutual insurance company owned by?

Its policyholders

What would be an accurate definition of "controlled business"?

Insurance business that is written on the agent’s own life, property, or interests

Defamation occurs when an agent makes a false statement intended to

malign another insurer Defamation is an unfair trade practice involving false, maliciously critical, or derogatory statements intended to injure a person or company engaged in the insurance business.

Which of the following activities will NOT result in the suspension of an agent’s license?

Working for a foreign insurer

Which action could result in a hearing being ordered by the Department of Financial Services?

Performing insurance transactions without a license

An agent who makes misleading statements that lead to the termination of an existing insurance policy so that a new policy with another insurer can be taken out has committed

twisting Twisting is knowingly making misleading statements that would cause an insured to lapse, assign, or terminate an insurance policy in order to switch companies.

Which of the following is a standard provision of the conversion privileges in a Group Life policy?

The correct answer is "Group Life coverage can be converted to an individual policy at regular rates on an attained-age basis". Conversion at regular rates on an attained-age basis without a medical exam is a standard provision for conversion privileges in Group Life policies.

All of the following are Nonforfeiture Options EXCEPT

Automatic Premium Loan Option

According to Florida law, which of the following information does NOT need to be obtained by an agent recommending an annuity purchase?

Marital status

J owns a business and has a Group Life policy covering her employees. J decides to cancel the policy by letting it lapse on the renewal date. What action must be taken?

All of the employees must be notified of the cancellation either by the insurance company or through J An insurer must notify each certificate holder (employee) when the master policy has expired or is being cancelled. The insurer may take such action through the policyholder (employer).

Which type of insurance company allows their policyowners to elect a governing body?


In Florida, an element of an insurance transaction would be

The correct answer is "issuing an insurance contract". The issuance of an insurance contract is considered to be an element of an insurance transaction.

Which of these is NOT a legal entity for selling life insurance in Florida?

Risk management advisers

All of these are a prerequisite for becoming a licensed agent EXCEPT

Graduate from high school

Under an Individual Disability policy in Florida, what is the minimum schedule of time in which claims must be made to an insured?

Monthly Claims on an individual disability policies must be paid out at monthly intervals, at minimum.

As a condition for a loan, a bank requires the borrower to purchase credit insurance from a specific company. What is the bank guilty of?


In Florida, most life insurance policies have a contestability period of

2 years

Which of the following can an agent provide to help a prospective client understand and purchase the most appropriate product?

Buyer’s guide

A life insurance policyowner may sell their policy to a(n) _____ in order to receive a percentage of the policy’s face value.

viatical settlement provider

A stock life insurance company that issues both participating and nonparticipating policies is doing business on

The correct answer is "a mixed plan". When a stock life insurance company issues both participating and nonparticipating policies, the company is doing business on a mixed plan.

In order for a domestic, foreign, or alien insurance company to conduct business, it must be authorized by whom?

The correct answer is "The state where they are conducting business". Domestic, foreign, or alien companies must be authorized by each state where they conduct business.

Advertising gifts not to exceed ___ are allowed to be given by an agent to a prospective client.


A licensed agent must be appointed by an insurance company to solicit insurance in Florida. The agent’s license will terminate if a certain period of time elapses without being appointed. How long is this period of time?

48 months

A long-term care lapse notice must be delivered to both the applicant and

secondary addressee

Under Florida law, which of the following provisions is NOT required in a Medicare Supplement policy?

Limitation on pre-existing conditions for up to 12 months There is only a 6-month limitation on pre-existing conditions for Medicare Supplements.

According to Florida law, a Group Life insurance policy requires a minimum of how many insureds?

No minimum

Which of the following situations are NOT subject to Florida life insurance laws?

Insurance companies’ day-to-day operations
Insurance companies’ life policy replacement requirements
Insurance companies’ setting of life insurance policy rates
Insurance companies’ guidelines for paying a life insurance claim

Insurance companies’ day-to-day operations Florida life insurance laws apply to all of these situations EXCEPT "Insurance companies’ day-to-day operations".

An individual covered under a Group Life insurance policy is considered to be a(n)

certificate holder

The act of an insurance company publishing misleading information about its policy’s provisions is called

false advertising

Which of the following employer tasks does a Professional Employer Organization normally handle?

A Professional Employer Organization typically handles administration functions.

According to Florida’s rules on disclosure, a life insurance applicant is expected to be provided with

a Buyer’s Guide and Policy Summary

An example of an unfair claims settlement practice is

turning down a claim without providing the basis of denial

Under Florida law, a variable annuity policyowner must be notified of the accumulated value of the contract

once each year A variable annuity policyholder must be informed at least once each year of the accumulated value of the contract during the premium payment period.

J is an agent who recently told a claimant that his rights might be impaired if he does not complete a release form within a specified time. What could this agent be found guilty of?


According to Florida’s life insurance replacement laws, a policyowner must be provided with a written Comparison and Summary Statement when it’s requested by

the policyowner

The Life and Health Insurance Guaranty Association is

The correct answer is "funded by admitted insurance companies through assessments". The Life and Health Insurance Guaranty Association is funded by insurance companies through assessments and will pay claims if an insurance company becomes insolvent.

The Bureau of Unclaimed Property is overseen by the

Chief Financial Officer

J is an agent who has induced an insured through misrepresentation to surrender an existing insurance policy. What is J guilty of?


Which of the following documents must an agent submit to the replacing insurance company during the replacement of an existing life insurance policy?

Notice to existing and replacing insurers of intention to replace

K is an agent who made an improper sale of an annuity to a client. Which of the following corrective actions would the Department of Financial Services likely order K to take?

Pay monetary restitution to the client The Department of Financial Services may order the agent to pay monetary restitution to the client.

An insurance company can contest a life insurance contract due to application fraud within

2 years There is a 2 year time limit for an insurer to contest a life insurance contract due to application fraud.

In Florida, what is the maximum percentage of controlled business an agent may produce?


Within how many days must a licensee notify the Department of Financial Services of a change in address?


Which of the following professional organizations has its code of ethics incorporated into Florida law?

National Association of Insurance and Financial Advisors (NAIFA) The professional organization whose code of ethics is incorporated into Florida law, and whose responsibility is to establish the activities of agents is the National Association of Insurance and Financial Advisors.

How can an agent-in-charge have more than one location?

Only if the agent-in-charge is present when insurance activity occurs Multiple locations are allowed as long as the agent-in-charge is present when insurance activity occurs.

An insurance company incorporated under the laws of the state in which its home office is located is called a(n) ____ company.


Which Unfair Trade Practice involves an agent telling a prospective client that a policy’s dividends are guaranteed?

The correct answer is "Misrepresentation". An agent who tells a client that dividends are guaranteed may be guilty of misrepresentation.

In Florida, agents are allowed to engage in rebating if

offered to all insureds in the same actuarial class

Agents that have been licensed for less than six years must complete __ hours of continuing education every two years.


Which entity approves the insurance policy forms used in Florida?

Office of Insurance Regulation (OIR)

Which of the following is NOT required in the Outline of Coverage for a health insurance policy?

Projection of the policy’s future costs

Florida requires that an insurance agent must complete __ hours of continuing education on the subject of law and ethics every two years.


Which of the following types of insureds are life insurance companies allowed to make policy rate discriminations against?

People that smoke

Which of the following is an example of an Unfair Trade Practice?


Florida’s 14-day free-look period for life insurance policies begins at the

date of delivery

In Florida, the underwriting and issuance of a master group health policy requires that all employees

are eligible to participate, regardless of their individual health history

T is an agent and when hired, is reminded that he has a responsibility to handle clients’ funds in an honest and ethical manner. This responsibility is referred to as

The correct answer is "fiduciary responsibility". Fiduciary responsibility involves an agent handling funds of a client or insurance company honestly and fairly, and not using them for the agent’s own purposes.

Insurance companies that are organized in countries outside the United States are referred to as


How many days does an insurance company have to reject a reinstatement application before it is automatically reinstated?


A group plan was recently terminated. In Florida, how many days are covered individuals guaranteed coverage after a group plan’s termination?

31 days

All of the following are eligibility requirements for an association group EXCEPT

Contributory plans require a minimum of 25 participants . A minimum of 100 participants is required for a contributory plan.

During the application process, the agent’s primary responsibility is to

The correct answer is "the insurance company". The agent’s primary responsibility in the application process is to the insurer.

W gave W’s age as 50 when W purchased a Life policy. At the time of W’s death seven years later, the company discovered W’s true age at issue had been 59. What would the normal procedure be under the misstatement of age provision in regard to the payment of the death claim?

The proceeds would be reduced based on whatever the premium would have been if purchased at age 59

Within how many days after policy delivery can a Medicare Supplement policy be returned for a 100% premium refund?


According to Florida law, which of the following statements accurately describes an admitted mail order insurance company?

It may solicit insurance business by mail without the assistance of a licensed agent

Which Unfair Trade Practice involves making a false statement on an insurance application in order to receive money from an insurer?


Convincing a prospective insured to buy an insurance policy based on exaggerations is called


In Florida, deceptive advertising is considered to be

a form of misrepresentation

What percentage of eligible persons must a policy cover in a noncontributory group?

In a noncontributory group, the policy must cover 100% of eligible persons.

Which of the following areas of state regulation is NOT protected by the savings clause in ERISA?


Commerce All of these areas of state regulation are protected by the savings clause in ERISA EXCEPT for commerce.

Which of the following provisions is NOT required in HMO contracts/certificates?

Seven-day grace period Correct. A grace period of no less than 10 days must be expressly included in an HMO contract.

In Florida, monthly-premium health insurance policies must provide a grace period of at least

10 days

In Florida, which of the following practitioners normally do NOT receive payment from health insurance policies?


Health insurance policies in Florida must cover payment to all of these practitioners EXCEPT naturopaths.

If a policyowner does not pay the premium by the due date, the

policyowner can make the premium payment during the grace period

An example of rebating would be

offering a client something of value not stated in the contract in exchange for their business Rebating can be defined as offering a prospect something of value that is not specified in a contract in order to induce the purchase of that contract.

Which of the following is considered to be misrepresentation?

An agent guaranteeing a policy’s dividends

Which of the following is considered an accurate statement of an unfair trade practice?

Twisting involves an agent using misrepresentation to convince a policyowner to cancel their current policy so that they can purchase a new life insurance policy with another company

Which of the following employees may NOT be excluded from a group life plan?

Full-time employees after the probationary period

In Florida, which of the following is considered an Unfair Trade Practice?


Who does an agent represent during the solicitation of insurance?

The insurance company

An example of false advertising would be

An insurer exaggerating its dividends in a magazine advertisement

A Multiple Employer Welfare Arrangement (MEWA) provides what type of benefits?


An agent selling Medicare Supplement policies must provide every applicant with a(n)

Suitability form

T is an employee covered under a Group Life policy. If T’s employment is terminated, the conversion privilege gives T the right to convert

to an individual policy upon employment termination

According to Florida law, an additional lapse notice must be issued after the standard grace period has expired for policyowners age

64 years or older

What do Dread Disease policies cover?

A specific disease or illness

The Florida Employee Health Care Access Act was established to make

group health insurance available to employers with up to 50 employees

Which organization was established to provide funds to protect an insured in the event of an insurer’s insolvency?

Florida Life and Health Insurance Guaranty Association

A variable life insurance agent must be licensed and appointed as a life and variable contract agent, as well as a(n)

broker dealer An agent marketing variable life insurance must be licensed and appointed as a life and variable contract agent and a broker dealer.

Which of the following acts is an agent NOT authorized to do on behalf of an insurer?

The correct answer is "Authorize claim payments". Agents do not authorize payment of claims.

All of the following entries are classified under the four principal areas of Florida insurance law EXCEPT

An agent’s commission

In Florida, an insurer licensed to conduct business in Florida, but domiciled in New Jersey, is called a(n)

foreign company

Which Unfair Trade Practice involves an agent suggesting that an insurance policy is like a share of stock?


If an agent would like to sell Variable annuities, which state examination must the agent pass?

Life and Variable contracts

Which of the following is NOT an unfair claim settlement practice?

Needing written documentation of claim details

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