Insurance Basics Quiz

Conditional Receipt

• A conditional receipt provides coverage if the applicant meets all underwriting requirements at the time of application.

Policy Riders

• A Waiver of Premium Rider ensures the policyholder does not need to pay premiums if they become disabled.

Florida Guaranty Fund

• The Florida guaranty fund protects policyholders against loss of coverage if the insurer becomes insolvent.

Misrepresentation

• Exaggerating policy benefits to a prospective client is considered misrepresentation.

Aleatory Contract

• An insurance policy is considered aleatory because one party (the insured) may receive significantly more value than the other (the insurer) depending on the occurrence of a covered event.

Replacement Policies

• When replacing an existing policy, the agent must submit a copy of the replacement notice to the existing insurer and cancel the old policy before issuing the new one.

HIPAA Regulations

• HIPAA ensures insurers maintain the privacy of applicants' medical information.

Twisting vs. Churning

• Twisting persuades policyholders to change insurers, while churning involves internal policy replacements within the same company (not changing insurers).

Underwriting

• Underwriting determines an applicant's eligibility and risk.

Insurable Interest

• Insurable interest must exist throughout the entire policy duration.

Sliding

• Sliding is charging a client for additional coverage without their consent, or reducing coverage without notifying the insured.

Controlled Business

• Controlled business involves selling policies through unauthorized insurers or conducting replacement transactions without proper documentation.

Social Insurance

• Workers' Compensation Insurance is an example of social insurance.

Florida Licensing Requirements

• Maintaining a Florida insurance license requires completing continuing education hours.

Fair Credit Reporting Act (FCRA)

• The FCRA regulates the use of consumer credit reports during underwriting.

Medical Information Bureau (MIB)

• The MIB provides insurers with applicants' past insurance claims and medical history.

Policy Delivery

• During policy delivery, the agent must explain policy terms, conditions, and exclusions.

Adhesion Contracts

• An insurance contract is an adhesion contract because the insurer writes the terms, and the insured must accept them as is.

Fraud Prevention

• The Department of Financial Services investigates insurance fraud in Florida.

Unilateral Contracts

• An insurance contract is unilateral because the insurer promises to pay benefits if a covered loss occurs, but the insured does not have to make a payment.