FLA 214 LICENSE QUESTIONS AND ANSWERS
Which of the following describes a participating insurance policy? - Answers-
Policyowners are entitled to receive dividends
At what point must a life insurance applicant be informed of their rights that fall under
the Fair Credit Reporting Act? - Answers- Upon completion of the application
Dividends payable to a policyowner are: - Answers- Declared by the insurance
company.
At what point does an informal agreement become a binding contract? - Answers-
When consideration is provided by one of the parties to the contract
When third-party ownership is involved, applicants who also happen to be the stated
primary beneficiary are required to have - Answers- Insurable interest in the proposed
insured
The consideration clause of insurance contract includes - Answers- The schedule and
amount of premium payments
A life insurance arrangement which circumvents insurable interest values is called -
Answers- Investor Originated Life Insurance (IOLI)
Who makes the legally enforceable promises in a unilateral contract? - Answers- The
Insurance Company
A life insurance policy would be considered a wagering contract WITHOUT: - Answers-
Insurable Interest
A life insurance policy that provides a policyowner with cash value along with a level
face amount is called: - Answers- Whole Life Policy
Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies? -
Answers- the Policyowner(investor)
K purchased a Life insurance policy in 1986 which paid 10% interest in the early years
of the policy. Twenty years after the purchase, she received a notice from the insurer
stating that the policy will soon terminate unless a much-higher premium is paid
because of falling interest rates. This type of policy is known as: - Answers- Universal
Life Policy
Which of these would be considered a Limited-Pay-Life policy? - Answers- Life Paid Up
at Age 70
, K is looking to purchase Renewable Term insurance. Which of these types of Term
insurance may be renewable? - Answers- Level Term Policy (pays same death benefit
if insured dies any time during policy)
A universal life policy is sometimes referred to as an unbundled Life Policy because the
owner can see the interest earned, cost of insurance, and - Answers- Expense Charges
What type of insurance offers permanent life coverage with premiums that are payable
for life? - Answers- Whole Life Policy
Which provision allows the policyowner to change a term life policy to a permanent one
without providing proof of good health? - Answers- Conversion
When is the face amount of a Whole Life policy paid? - Answers- When the insured
dies, or the policy's maturity, whichever comes first!
Which of the following arrangements allows one to bypass insurable interest laws? -
Answers- (STOLI) or Investor Originated Life Insurance
Taking receipt of premiums and holding them for the insurance company is an example
of - Answers- Fiduciary Responsibility
A policy of adhesion can only be modified by whom? - Answers- The Insurance
Company
The exchange of unequal values reflects: - Answers- Aleatory
Life and health insurance policies are - Answers- Unilateral Contracts (one makes
promise, other can only accept by performance
Additional coverage can be added to a Whole Life policy by adding a(n) - Answers-
Decreasing Term Rider
When a life policy exceeds certain IRS table values, the result would create which of the
following? - Answers- Modified Endowment Contract (MEC)
K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an
automobile accident. How much will the insurance company pay the beneficiary? -
Answers- $20,000 death benefit.
Which of the following combination of plans is designed to protect an insured from an
unpaid mortgage balance upon premature death? - Answers- Joint Life Policy
Which policy requires an agent to register with the National Association of Securities
Dealers (NASD) before selling? - Answers- Variable Life
Which of the following describes a participating insurance policy? - Answers-
Policyowners are entitled to receive dividends
At what point must a life insurance applicant be informed of their rights that fall under
the Fair Credit Reporting Act? - Answers- Upon completion of the application
Dividends payable to a policyowner are: - Answers- Declared by the insurance
company.
At what point does an informal agreement become a binding contract? - Answers-
When consideration is provided by one of the parties to the contract
When third-party ownership is involved, applicants who also happen to be the stated
primary beneficiary are required to have - Answers- Insurable interest in the proposed
insured
The consideration clause of insurance contract includes - Answers- The schedule and
amount of premium payments
A life insurance arrangement which circumvents insurable interest values is called -
Answers- Investor Originated Life Insurance (IOLI)
Who makes the legally enforceable promises in a unilateral contract? - Answers- The
Insurance Company
A life insurance policy would be considered a wagering contract WITHOUT: - Answers-
Insurable Interest
A life insurance policy that provides a policyowner with cash value along with a level
face amount is called: - Answers- Whole Life Policy
Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies? -
Answers- the Policyowner(investor)
K purchased a Life insurance policy in 1986 which paid 10% interest in the early years
of the policy. Twenty years after the purchase, she received a notice from the insurer
stating that the policy will soon terminate unless a much-higher premium is paid
because of falling interest rates. This type of policy is known as: - Answers- Universal
Life Policy
Which of these would be considered a Limited-Pay-Life policy? - Answers- Life Paid Up
at Age 70
, K is looking to purchase Renewable Term insurance. Which of these types of Term
insurance may be renewable? - Answers- Level Term Policy (pays same death benefit
if insured dies any time during policy)
A universal life policy is sometimes referred to as an unbundled Life Policy because the
owner can see the interest earned, cost of insurance, and - Answers- Expense Charges
What type of insurance offers permanent life coverage with premiums that are payable
for life? - Answers- Whole Life Policy
Which provision allows the policyowner to change a term life policy to a permanent one
without providing proof of good health? - Answers- Conversion
When is the face amount of a Whole Life policy paid? - Answers- When the insured
dies, or the policy's maturity, whichever comes first!
Which of the following arrangements allows one to bypass insurable interest laws? -
Answers- (STOLI) or Investor Originated Life Insurance
Taking receipt of premiums and holding them for the insurance company is an example
of - Answers- Fiduciary Responsibility
A policy of adhesion can only be modified by whom? - Answers- The Insurance
Company
The exchange of unequal values reflects: - Answers- Aleatory
Life and health insurance policies are - Answers- Unilateral Contracts (one makes
promise, other can only accept by performance
Additional coverage can be added to a Whole Life policy by adding a(n) - Answers-
Decreasing Term Rider
When a life policy exceeds certain IRS table values, the result would create which of the
following? - Answers- Modified Endowment Contract (MEC)
K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an
automobile accident. How much will the insurance company pay the beneficiary? -
Answers- $20,000 death benefit.
Which of the following combination of plans is designed to protect an insured from an
unpaid mortgage balance upon premature death? - Answers- Joint Life Policy
Which policy requires an agent to register with the National Association of Securities
Dealers (NASD) before selling? - Answers- Variable Life
