FLA 214 INSURANCE LICENSE EXAM
401K Plan - Answers- A qualified retirement plan in which the employee can set aside a
portion of their income with pre-tax dollards
Absolute Assigment vs. Collateral Asssigment - Answers- Absolute: A permanent and
irrevocable transfer of rights and/or benefits by the policyowner.
Collateral: A temporary and/or revocable transfer of benefits by the policyowner.
Accelerated Death Benefit - Answers- Policy provision that allows full or partial payment
of the policy's death benefit before the insured's death if he/she is terminally ill.
Accidental Death Benefit - Answers- An extra cost rider that requires the insurance
company to pay an additional benefit in the event that the insured dies within 90 days of
an accident as a direct result of the accident.
Agent Authorities - Answers- Expressed: Power or authority specifically granted in writin
to an agent by the insurance company in their Agency Agreement.
Apparent: Power or authority that the public reasonably assumes an agent has based
upon his/her actions.
Implied: Power or authority that is not expressely granted by the company but that an
agent can assume or that are implied he/she has in order to transact insurance
business.
Agent/ Producer - Answers- Anyone who sell or aids in the selling of insurance. Legally
represents the company
Agent's Report - Answers- A written report from the agent submitted to the insurer along
with the application disclosing what the agent knows, observed, or learned about the
proposed insured's risks.
Aleatory - Answers- Unequal exchange of value. One party may obtain a far greater
value than the other under the contract.
Annual Renewable Term - Answers- A Term Life Insurance contract which gives the
policyower the option to revew the policy each year without showing proof of
insuranbility. Premiums increase at each renewal.
Annuitant - Answers- The person that buys an annuity; may or may not be an annuity's
policyowner.
Annuity - Answers- A contract/policy that guarantees to pay income for a specified
period of time or for the life of the annuitant. Designed to prevent people from the
outliving their savings.
,Appointment - Answers- Authorization of an agent/producer by an insurer to represent
the company
Blackout Period - Answers- The period of time between the youngest child turning 16
and the widow(er) reaching retirement age during which no Social Security Survivor
Benefits are paid to the surviving spouse.
Buy-Sell Agreement - Answers- Business use of Life Insurance where partners in a
business buy life insurance on each other. They agree that when one of them dies the
survivors have the right to purchase the deceased partner's share of the business. The
death benefit from the insurance is used to finance the purchase.
Cash Nonforfeiture Option - Answers- Policyowern receives a lump-sum payment of the
current cash value of the policy upon surrender of the policy. The policy cannot be
reinstated.
Cash Settlement Option - Answers- Upon maturity of an insurance policy the beneficary
receives a lump-sum payment of the entire policy proceeds due.
Cash Value - Answers- The part of an insurance policy that is the equity amount legally
available to the policyowner. The cash value accumulates throughout the duration of the
policy. Also known as living benefit or policy savings.
Commissioner - Answers- Public official in charge of the state's department of
insurance. Charged with regulating the insurance industry in his/her state by enforcing
the insurance laws.
Conditional - Answers- Certain conditions must be met in order for policy to pay-out
Condiitional Receipt - Answers- An interim insuring agreement under which the
insurance company agrees to start coverage on the later of either the date of application
or the date of the medical exam IF the proposed insured is found to be insurable on that
date.
Consideration - Answers- A necessary element of a contract; something of value
exchanged for the transfer of risk. Insured's consideration is payment of premiums and
truthful statements on the application. Insurer's consideration is promises contained in
the contract.
Contingent Beneficiary - Answers- An alternate benefiary designated to receive the
policy proceeds in the event that the primary beneficiary dies before the insured.
Contributory Plan vs. Noncontributory Plan - Answers- Contributory: Group insurance
plan under which the employees contribute to the payment of premiums.
Noncontributory: A group insurance plan in which the employer pays all the premiums
for the policy.
,Convertible Term - Answers- Term insurance that specifically permits "conversion" of
the policy into permanent protection without proof of insurability
Accumulate at Interest - Answers- The Dividend Option where the policyowner leaves
the dividens with the insurer to invest and earn interest
Adhesion - Answers- Since the insurer created all the documents of the contract, any
ambiguities in the contract will be settled in favor of the insured. Since the insurer wrote
the contract they are stuck with it.
Adverse Selection - Answers- The tendency for less favorable risks to seek or continue
insurance to a greater extent than more favorable risks
Agency Agreement or Agency Contract - Answers- A legal document containing the
terms of the agreement between the agent and the insurance company. It clearly
defines what an agent can and cannot do, and how he/she will be compensated.
Decreasing Term - Answers- Term life insurance in which the face amount of the policy
decreases over time in scheduled steps. Most often used to cover a debt obligation
(mortgage)
Dividends - Answers- Distribution paid out by insurance companies. Stock insurers pay
dividends (portion of profit) to stockholders and they are taxable. Mutual insurers pay
dividens (return of undeeded premiums) to policyowens an they are not taxable.
Dividends are never guaranteed.
Equity Indexed Annuity - Answers- The annuity that has a guaranteed minimum interest
rate and allows the annuitant to invest money in a index (i.e.: S&P 500). The
investments grow as the index grows.
Estoppel - Answers- Legally preventing someone from asserting or reasserting a known
right that they have previously waived.
Extended Term Insurance - Answers- Nonforfeiture option where cash value is used to
make a single premium payment on a Term Insurance Policy of the same face amount
as the original policy. Original policy can be reinstated. Not available on rated policies.
Face Amount - Answers- Amount payable in the event of death of the insured. Also
called faced value, death benefit, policy proceeds, coverage, stated amount, indemnity
amount or proceeds to the beneficiary.
Facultative Reinsurance vs. Treaty Reinsurance - Answers- Facultative: Transferring
risk from one insurance company to another on a policy-by-policy basis.
Treaty: Transferring risk from one insurance company to another under a blanket
agreement
, Fair Credit Reporting Act - Answers- A federal law that protects consumers in regard to
their credit history. Establishes guidelines for how companies can access consumer's
credit reports and what types of disclosures and notifications are required.
Financial Needs Approach - Answers- In determining how much life insurance is
needed the needs of the surviving family are the focus. Using needs analysis
worksheets, an amount is determined to meet the needs of the surviving family
regarless of the earnings of the insured.
Fixed Amount Annuity - Answers- A Life Annuity that guarantees a fixed dollar payment
at regular intervals during the lifetime of the annuitant
Fixed Amount Settlement Option - Answers- Upon maturity of an insurance policy the
beneficiary receives periodic payments of a set dollar amount from the policy proceeds.
Fixed Period Settlement Option - Answers- Upon maturity of an insurance policy, the
beneficiary receives income from the policy proceees for a stated period of time.
Free Look Provision - Answers- A policy provision required by state law that establishes
a set number of days (usually 10) for the policyowner to review a newly issued policy.
The policyowner may return the policy to the insurer during this time for any reason and
receive a 100% refund. Also known as refund provision, unconditional refund provision,
return provision. exchange provision, or right to examine.
General Account vs. Separate Account - Answers- General Account: Contains the
regulated, or guaranteed, funds of an insurance company.
Separate Account: Contains the investments of an insurance company. These
investments have no guaranteed rate of return and are regulated by the SEC and
NASD.
Grace Period - Answers- A prescribed period of time during which the policy stays in
force without the payment of premiums. Mandated by state law and is usually 30 to 31
days.
Graded Premium Policy - Answers- Premiums for the policy increase regularly for 5 to
20 years and then level off. Death benefit remain level.
Group Insurance - Answers- An Insurance policy that covers multiple people (who have
a common interest). A Master Policy is issued to the policyowner and individual insureds
receive Certificates of Insurance.
Guaranteed Insurability Rider - Answers- Optional rider that enables the policyowner to
purchase additional amounts of coverage at predetermined times without proof of
insurability.
401K Plan - Answers- A qualified retirement plan in which the employee can set aside a
portion of their income with pre-tax dollards
Absolute Assigment vs. Collateral Asssigment - Answers- Absolute: A permanent and
irrevocable transfer of rights and/or benefits by the policyowner.
Collateral: A temporary and/or revocable transfer of benefits by the policyowner.
Accelerated Death Benefit - Answers- Policy provision that allows full or partial payment
of the policy's death benefit before the insured's death if he/she is terminally ill.
Accidental Death Benefit - Answers- An extra cost rider that requires the insurance
company to pay an additional benefit in the event that the insured dies within 90 days of
an accident as a direct result of the accident.
Agent Authorities - Answers- Expressed: Power or authority specifically granted in writin
to an agent by the insurance company in their Agency Agreement.
Apparent: Power or authority that the public reasonably assumes an agent has based
upon his/her actions.
Implied: Power or authority that is not expressely granted by the company but that an
agent can assume or that are implied he/she has in order to transact insurance
business.
Agent/ Producer - Answers- Anyone who sell or aids in the selling of insurance. Legally
represents the company
Agent's Report - Answers- A written report from the agent submitted to the insurer along
with the application disclosing what the agent knows, observed, or learned about the
proposed insured's risks.
Aleatory - Answers- Unequal exchange of value. One party may obtain a far greater
value than the other under the contract.
Annual Renewable Term - Answers- A Term Life Insurance contract which gives the
policyower the option to revew the policy each year without showing proof of
insuranbility. Premiums increase at each renewal.
Annuitant - Answers- The person that buys an annuity; may or may not be an annuity's
policyowner.
Annuity - Answers- A contract/policy that guarantees to pay income for a specified
period of time or for the life of the annuitant. Designed to prevent people from the
outliving their savings.
,Appointment - Answers- Authorization of an agent/producer by an insurer to represent
the company
Blackout Period - Answers- The period of time between the youngest child turning 16
and the widow(er) reaching retirement age during which no Social Security Survivor
Benefits are paid to the surviving spouse.
Buy-Sell Agreement - Answers- Business use of Life Insurance where partners in a
business buy life insurance on each other. They agree that when one of them dies the
survivors have the right to purchase the deceased partner's share of the business. The
death benefit from the insurance is used to finance the purchase.
Cash Nonforfeiture Option - Answers- Policyowern receives a lump-sum payment of the
current cash value of the policy upon surrender of the policy. The policy cannot be
reinstated.
Cash Settlement Option - Answers- Upon maturity of an insurance policy the beneficary
receives a lump-sum payment of the entire policy proceeds due.
Cash Value - Answers- The part of an insurance policy that is the equity amount legally
available to the policyowner. The cash value accumulates throughout the duration of the
policy. Also known as living benefit or policy savings.
Commissioner - Answers- Public official in charge of the state's department of
insurance. Charged with regulating the insurance industry in his/her state by enforcing
the insurance laws.
Conditional - Answers- Certain conditions must be met in order for policy to pay-out
Condiitional Receipt - Answers- An interim insuring agreement under which the
insurance company agrees to start coverage on the later of either the date of application
or the date of the medical exam IF the proposed insured is found to be insurable on that
date.
Consideration - Answers- A necessary element of a contract; something of value
exchanged for the transfer of risk. Insured's consideration is payment of premiums and
truthful statements on the application. Insurer's consideration is promises contained in
the contract.
Contingent Beneficiary - Answers- An alternate benefiary designated to receive the
policy proceeds in the event that the primary beneficiary dies before the insured.
Contributory Plan vs. Noncontributory Plan - Answers- Contributory: Group insurance
plan under which the employees contribute to the payment of premiums.
Noncontributory: A group insurance plan in which the employer pays all the premiums
for the policy.
,Convertible Term - Answers- Term insurance that specifically permits "conversion" of
the policy into permanent protection without proof of insurability
Accumulate at Interest - Answers- The Dividend Option where the policyowner leaves
the dividens with the insurer to invest and earn interest
Adhesion - Answers- Since the insurer created all the documents of the contract, any
ambiguities in the contract will be settled in favor of the insured. Since the insurer wrote
the contract they are stuck with it.
Adverse Selection - Answers- The tendency for less favorable risks to seek or continue
insurance to a greater extent than more favorable risks
Agency Agreement or Agency Contract - Answers- A legal document containing the
terms of the agreement between the agent and the insurance company. It clearly
defines what an agent can and cannot do, and how he/she will be compensated.
Decreasing Term - Answers- Term life insurance in which the face amount of the policy
decreases over time in scheduled steps. Most often used to cover a debt obligation
(mortgage)
Dividends - Answers- Distribution paid out by insurance companies. Stock insurers pay
dividends (portion of profit) to stockholders and they are taxable. Mutual insurers pay
dividens (return of undeeded premiums) to policyowens an they are not taxable.
Dividends are never guaranteed.
Equity Indexed Annuity - Answers- The annuity that has a guaranteed minimum interest
rate and allows the annuitant to invest money in a index (i.e.: S&P 500). The
investments grow as the index grows.
Estoppel - Answers- Legally preventing someone from asserting or reasserting a known
right that they have previously waived.
Extended Term Insurance - Answers- Nonforfeiture option where cash value is used to
make a single premium payment on a Term Insurance Policy of the same face amount
as the original policy. Original policy can be reinstated. Not available on rated policies.
Face Amount - Answers- Amount payable in the event of death of the insured. Also
called faced value, death benefit, policy proceeds, coverage, stated amount, indemnity
amount or proceeds to the beneficiary.
Facultative Reinsurance vs. Treaty Reinsurance - Answers- Facultative: Transferring
risk from one insurance company to another on a policy-by-policy basis.
Treaty: Transferring risk from one insurance company to another under a blanket
agreement
, Fair Credit Reporting Act - Answers- A federal law that protects consumers in regard to
their credit history. Establishes guidelines for how companies can access consumer's
credit reports and what types of disclosures and notifications are required.
Financial Needs Approach - Answers- In determining how much life insurance is
needed the needs of the surviving family are the focus. Using needs analysis
worksheets, an amount is determined to meet the needs of the surviving family
regarless of the earnings of the insured.
Fixed Amount Annuity - Answers- A Life Annuity that guarantees a fixed dollar payment
at regular intervals during the lifetime of the annuitant
Fixed Amount Settlement Option - Answers- Upon maturity of an insurance policy the
beneficiary receives periodic payments of a set dollar amount from the policy proceeds.
Fixed Period Settlement Option - Answers- Upon maturity of an insurance policy, the
beneficiary receives income from the policy proceees for a stated period of time.
Free Look Provision - Answers- A policy provision required by state law that establishes
a set number of days (usually 10) for the policyowner to review a newly issued policy.
The policyowner may return the policy to the insurer during this time for any reason and
receive a 100% refund. Also known as refund provision, unconditional refund provision,
return provision. exchange provision, or right to examine.
General Account vs. Separate Account - Answers- General Account: Contains the
regulated, or guaranteed, funds of an insurance company.
Separate Account: Contains the investments of an insurance company. These
investments have no guaranteed rate of return and are regulated by the SEC and
NASD.
Grace Period - Answers- A prescribed period of time during which the policy stays in
force without the payment of premiums. Mandated by state law and is usually 30 to 31
days.
Graded Premium Policy - Answers- Premiums for the policy increase regularly for 5 to
20 years and then level off. Death benefit remain level.
Group Insurance - Answers- An Insurance policy that covers multiple people (who have
a common interest). A Master Policy is issued to the policyowner and individual insureds
receive Certificates of Insurance.
Guaranteed Insurability Rider - Answers- Optional rider that enables the policyowner to
purchase additional amounts of coverage at predetermined times without proof of
insurability.
