Insurance Basics Quiz

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Questions and Answers

Under what condition does a conditional receipt provide coverage?

Immediately upon receipt of the first premium.

If the applicant meets all underwriting requirements at the time of application. (correct)

When the medical exam is waived by the insurer.

Only after the insurer formally issues the policy.

Which policy rider ensures the policyholder does not need to pay premiums if they become disabled?

Accidental Death Rider

Guaranteed Insurability Rider

Disability Income Rider

Waiver of Premium Rider (correct)

What does the Florida guaranty fund protect policyholders against?

Loss of coverage if the insurer becomes insolvent. (correct)

Incorrect claims denials by insurers.

Penalties for late premium payments.

Premium increases due to market conditions.

Which marketing practice is considered misrepresentation?

Exaggerating policy benefits to a prospective client. Signup and view all the answers

Why is an insurance policy considered an aleatory contract?

One party may receive significantly more value than the other. Signup and view all the answers

What must an agent do when replacing an existing policy?

Submit a copy of the replacement notice to the applicant’s existing insurer. Signup and view all the answers

HIPAA ensures:

Insurers maintain privacy of applicants’ medical information. Signup and view all the answers

What is the key difference between twisting and churning?

Twisting persuades policyholders to change insurers, while churning involves internal replacements. Signup and view all the answers

What is the primary purpose of underwriting in insurance?

To determine the eligibility and risk of the applicant. Signup and view all the answers

Insurable interest must exist:

At the time of application and policy issuance. Signup and view all the answers

Which is an example of sliding?

Charging a client for additional coverage without their consent. Signup and view all the answers

What is considered controlled business?

Selling policies only to immediate family members and close associates. Signup and view all the answers

Which of the following is an example of social insurance?

Workers' Compensation Insurance Signup and view all the answers

Which of the following is required to maintain a Florida insurance license?

Completing the required number of continuing education hours. Signup and view all the answers

What is the main purpose of the Fair Credit Reporting Act (FCRA) in insurance?

To regulate the use of consumer credit reports during underwriting. Signup and view all the answers

How does the Medical Information Bureau (MIB) help insurers during underwriting?

It provides applicants' past insurance claims and medical history. Signup and view all the answers

What is a defining feature of an insurance contract as a contract of adhesion?

The insurer writes the terms, and the insured must accept as is. Signup and view all the answers

An insurance contract is unilateral because:

The insurer promises to pay benefits if a covered loss occurs. Signup and view all the answers

Study Notes

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.

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.

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Description

Test your knowledge on fundamental insurance concepts including conditional receipts, policy riders, and HIPAA regulations. This quiz covers important elements like misrepresentation and aleatory contracts, ensuring you understand key aspects of insurance policies. Perfect for aspiring insurance professionals!