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Life, Health & Variable Annuity (2-15
Exam) Questions with Detailed Verified
Answers (100% Correct Answers) /Already
Graded A+
Law of Averages
Ans: Insurance concept founded on the ability to predict the approximate number of deaths
or frequency of disabilities within a certain group during a specific time.
Moral Hazard
Ans: An owner is worried that employees will help themselves to products on the shelf without
paying for them. This is an example of what type of hazard?
Risk Avoidance
Ans: Won't fly an airplane, never drives a car and keeps money out of the stock market is
known as what type of risk ?
Risk
Ans: Uncertainty regarding financial loss best describes this term?
Transferring Risk
Ans: Buying insurance is one of the most effective ways of...
The function of Insurance
Ans: Spreads financial risk over a large group to minimize the loss to any one individual.
Peril
Ans: A Tornado is an example of a what type of hazard?
Risk Reduction
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Ans: Tom buys his wife a $50,000 diamond ring. When she is not wearing it he locks it up in
his safe. This is an example of what type of risk?
Domestic
Ans: An insurance company organized and headquartered in Florida is what type of
company?
Insurer
Ans: In an insurance transaction, licensed agents legally represent who?
-Applicant
-Themselves
-Insurer
Applicant & Insured
Ans: In Florida, properly licensed and appointed agents may act as brokers in insurance
transactions , in which case they may legally represent who?
-Themselves
-Applicant & Insured
-State office of Insurance Regulation
Foreign
Ans: A Life Insurance company organized in IL, with it's home office in Philadelphia, is
licensed to conduct business in Florida. In Florida, this company is classified as?
Assumes a portion of the risk from another insurer
Ans: A reinsurer is a company that...
SEC (Securities & Exchange Commission)
Ans: In addition to the state, the organization that regulates variable life and variable
annuities is the..
-FTC
-NAIC
-SEC
A claim will be paid if the insurer becomes insolvent
Ans: The State Guaranty Association guarantees that..
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Direct Selling Systems
Ans: All of the following methods support the sale of insurance through agents and brokers
EXCEPT
-Independant agency systems
-Career agency systems
-Direct selling systems
Express Authority
Ans: The authority that an insurer gives to its agents by means of the agent's contract is
known as
-Implied Authority
-General Authority
-Express Authority
The contract is of Adhesion
Ans: An insurance contract is prepared by one party, the insurer, rather than by negotiation
between the contracting parties. Which of the following statements explains the characterisitcs
of insurance contracts?
-The contract is Aleatory
-The contract is of Adhesion
-The contract is of Acceptance
The policy owner must expect to suffer a loss when the insured dies or becomes
disabled
Ans: Which of the following statements describes an insurable interest?
-The beneficiary, by definition, has an insurable interest in the insured
-The insured must have a personal or business relationship with the beneficiary
-The policy owner must expect to suffer a loss when the insured dies or becomes disabled
TRUE
Ans: A written contract cannot be changed by oral evidence.
TRUE or FALSE?
Conditional
Ans: Which of the following is a distinguishing characteristic of an insurance contract?
-Consideration
-Conditional
-Offer & Acceptance
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TRUE
Ans: An insurer is considered competent if it is licensed or authorized by the state.
TRUE or FALSE?
All of the above
Ans: Competent parties who can enter into contracts are...
-Applicants
-Trusts & Estates
-Business Entities
-All of the above
Initial Premium
Ans: Which of the following is an example of legal consideration?
-Politeness
-Legal Purpose
-Initial Premium
At the inception of the policy
Ans: With life and health contracts, when must an insurable interest exist?
Two years
Ans: An insurance company has how many years to challenge the validity of a life insurance
contract?
Waiver
Ans: Which of the following terms is used for the voluntary relinquishment of a known right?
-Adhesion
-Estoppel
-Waiver
VOID
Ans: Bob and Tom enter into a contract in which Bob agrees to fraudulently induce sick
people to sell their insurance contracts to Tom's company can best be described as?
Level Term
Click here for more: Preppass - Stuvia
Life, Health & Variable Annuity (2-15
Exam) Questions with Detailed Verified
Answers (100% Correct Answers) /Already
Graded A+
Law of Averages
Ans: Insurance concept founded on the ability to predict the approximate number of deaths
or frequency of disabilities within a certain group during a specific time.
Moral Hazard
Ans: An owner is worried that employees will help themselves to products on the shelf without
paying for them. This is an example of what type of hazard?
Risk Avoidance
Ans: Won't fly an airplane, never drives a car and keeps money out of the stock market is
known as what type of risk ?
Risk
Ans: Uncertainty regarding financial loss best describes this term?
Transferring Risk
Ans: Buying insurance is one of the most effective ways of...
The function of Insurance
Ans: Spreads financial risk over a large group to minimize the loss to any one individual.
Peril
Ans: A Tornado is an example of a what type of hazard?
Risk Reduction
,Page | 2
Click here for more: Preppass - Stuvia
Ans: Tom buys his wife a $50,000 diamond ring. When she is not wearing it he locks it up in
his safe. This is an example of what type of risk?
Domestic
Ans: An insurance company organized and headquartered in Florida is what type of
company?
Insurer
Ans: In an insurance transaction, licensed agents legally represent who?
-Applicant
-Themselves
-Insurer
Applicant & Insured
Ans: In Florida, properly licensed and appointed agents may act as brokers in insurance
transactions , in which case they may legally represent who?
-Themselves
-Applicant & Insured
-State office of Insurance Regulation
Foreign
Ans: A Life Insurance company organized in IL, with it's home office in Philadelphia, is
licensed to conduct business in Florida. In Florida, this company is classified as?
Assumes a portion of the risk from another insurer
Ans: A reinsurer is a company that...
SEC (Securities & Exchange Commission)
Ans: In addition to the state, the organization that regulates variable life and variable
annuities is the..
-FTC
-NAIC
-SEC
A claim will be paid if the insurer becomes insolvent
Ans: The State Guaranty Association guarantees that..
,Page | 3
Click here for more: Preppass - Stuvia
Direct Selling Systems
Ans: All of the following methods support the sale of insurance through agents and brokers
EXCEPT
-Independant agency systems
-Career agency systems
-Direct selling systems
Express Authority
Ans: The authority that an insurer gives to its agents by means of the agent's contract is
known as
-Implied Authority
-General Authority
-Express Authority
The contract is of Adhesion
Ans: An insurance contract is prepared by one party, the insurer, rather than by negotiation
between the contracting parties. Which of the following statements explains the characterisitcs
of insurance contracts?
-The contract is Aleatory
-The contract is of Adhesion
-The contract is of Acceptance
The policy owner must expect to suffer a loss when the insured dies or becomes
disabled
Ans: Which of the following statements describes an insurable interest?
-The beneficiary, by definition, has an insurable interest in the insured
-The insured must have a personal or business relationship with the beneficiary
-The policy owner must expect to suffer a loss when the insured dies or becomes disabled
TRUE
Ans: A written contract cannot be changed by oral evidence.
TRUE or FALSE?
Conditional
Ans: Which of the following is a distinguishing characteristic of an insurance contract?
-Consideration
-Conditional
-Offer & Acceptance
, Page | 4
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TRUE
Ans: An insurer is considered competent if it is licensed or authorized by the state.
TRUE or FALSE?
All of the above
Ans: Competent parties who can enter into contracts are...
-Applicants
-Trusts & Estates
-Business Entities
-All of the above
Initial Premium
Ans: Which of the following is an example of legal consideration?
-Politeness
-Legal Purpose
-Initial Premium
At the inception of the policy
Ans: With life and health contracts, when must an insurable interest exist?
Two years
Ans: An insurance company has how many years to challenge the validity of a life insurance
contract?
Waiver
Ans: Which of the following terms is used for the voluntary relinquishment of a known right?
-Adhesion
-Estoppel
-Waiver
VOID
Ans: Bob and Tom enter into a contract in which Bob agrees to fraudulently induce sick
people to sell their insurance contracts to Tom's company can best be described as?
Level Term
