Florida 2-15 Life, Health, Insurance Law
Practice Exam
Who elects the governing body of a metal Insurance company? ANS: The Policyholders
When a policy pays dividends to its policy holders is said to be? ANS: Participating
Which of these describe a participating insurance policy? ANS: Policy owners are entitled to receive
dividends
An insurance applicant MUST be informed of an investigation regarding his/her reputation and character
according to the? ANS: 1970 Fair credit reporting act
The Stated amount or percent of liquid assets that an insurer must have on hand that will satisfy future
obligations to its policyholders is called? ANS: Reserves
The Part of a life insurance policy GUARANTEED to be true is called? ANS: Warranty
At what point does an informal agreement become a binding contract? ANS: When consideration is
provided by one of the parties to the contract
Who makes the legally enforceable promise in a unilateral insurance policy? ANS: The Insurance
Company
When a third-party ownership is involved, applicants who also happen to be the stated the primary
beneficiary are required to have? ANS: Insurable interest in the proposed insured
A policy of adhesion can only be modified by whom? ANS: The insurance company
,Insurance policies are considered aleatory contracts because? ANS: Performance is conditioned upon a
future occurrence
Q purchase $500k life insurance policy and pays $900 in premiums over the first six months. Q dies
suddenly and the beneficiary is paid $500,000. This exchange of unequal values reflects which insurance
contract features? ANS: Aleatory
What consists of an offer, acceptance, and consideration? ANS: The Contract
A Principal is NOT a type agent authority? ANS: True
Taking a receipt of premiums and holding them for the insurance company is an example of? ANS:
Fiduciary responsibility
A Bilateral typically has characteristics describing the nature of an insurance contract. ANS: False
In regards to representation or warranties? ANS: If material to the RISK, false representations will void a
policy
Statements made on an insurance application that are BELIEVED to be true to the best of the applicants
knowledge are called? ANS: Representations
A variable insurance policy? ANS: Does NOT guarantee a return on investment accounts
Whole life insurance is sometimes referred to as "Straight Life". What does the word "Straight" indicate
when using this phrase? ANS: The duration of premium payments
What type of policy would offer a 40- year old the quickest accumulation of cash value? ANS: A 20-pay
life
, Modified Whole Life ANS: This life product is NOT considered interest sensitive?
Y Purchased $100,000 worth of permanent protection on himself and $50,000 worth of 10-year Term
coverage for his wife on the same policy. What did Y Purchase? ANS: Whole life policy with an Other
Insured Rider
Which of the following types of Term Life policies most likely contains a Renewability feature? ANS: A 10
year convertibility Term
Modified Endowment Contract ANS: This type of policy is considered to be overfunded, as stated by IRS
guidelines?
A company that owns a life insurance policy on one of its key employees can't? ANS: Change the policy's
interest rate
Under a Graded Premium policy, The premiums? ANS: Are lower during the policy's early years
When a policy owner exchanges a term policy for a whole life policy without providing proof of good
health this is applied? ANS: Conversion Provision
This features of a group Term Life policy enables an individual to leave the group and continue his or her
insurance without providing evidence of insurability? ANS: Conversion Privilege
What type of policy covers two people and pays upon the death of the last insured? ANS: Survivorship
Term insurance has what characteristic? ANS: Expires at the end of the policy period
Practice Exam
Who elects the governing body of a metal Insurance company? ANS: The Policyholders
When a policy pays dividends to its policy holders is said to be? ANS: Participating
Which of these describe a participating insurance policy? ANS: Policy owners are entitled to receive
dividends
An insurance applicant MUST be informed of an investigation regarding his/her reputation and character
according to the? ANS: 1970 Fair credit reporting act
The Stated amount or percent of liquid assets that an insurer must have on hand that will satisfy future
obligations to its policyholders is called? ANS: Reserves
The Part of a life insurance policy GUARANTEED to be true is called? ANS: Warranty
At what point does an informal agreement become a binding contract? ANS: When consideration is
provided by one of the parties to the contract
Who makes the legally enforceable promise in a unilateral insurance policy? ANS: The Insurance
Company
When a third-party ownership is involved, applicants who also happen to be the stated the primary
beneficiary are required to have? ANS: Insurable interest in the proposed insured
A policy of adhesion can only be modified by whom? ANS: The insurance company
,Insurance policies are considered aleatory contracts because? ANS: Performance is conditioned upon a
future occurrence
Q purchase $500k life insurance policy and pays $900 in premiums over the first six months. Q dies
suddenly and the beneficiary is paid $500,000. This exchange of unequal values reflects which insurance
contract features? ANS: Aleatory
What consists of an offer, acceptance, and consideration? ANS: The Contract
A Principal is NOT a type agent authority? ANS: True
Taking a receipt of premiums and holding them for the insurance company is an example of? ANS:
Fiduciary responsibility
A Bilateral typically has characteristics describing the nature of an insurance contract. ANS: False
In regards to representation or warranties? ANS: If material to the RISK, false representations will void a
policy
Statements made on an insurance application that are BELIEVED to be true to the best of the applicants
knowledge are called? ANS: Representations
A variable insurance policy? ANS: Does NOT guarantee a return on investment accounts
Whole life insurance is sometimes referred to as "Straight Life". What does the word "Straight" indicate
when using this phrase? ANS: The duration of premium payments
What type of policy would offer a 40- year old the quickest accumulation of cash value? ANS: A 20-pay
life
, Modified Whole Life ANS: This life product is NOT considered interest sensitive?
Y Purchased $100,000 worth of permanent protection on himself and $50,000 worth of 10-year Term
coverage for his wife on the same policy. What did Y Purchase? ANS: Whole life policy with an Other
Insured Rider
Which of the following types of Term Life policies most likely contains a Renewability feature? ANS: A 10
year convertibility Term
Modified Endowment Contract ANS: This type of policy is considered to be overfunded, as stated by IRS
guidelines?
A company that owns a life insurance policy on one of its key employees can't? ANS: Change the policy's
interest rate
Under a Graded Premium policy, The premiums? ANS: Are lower during the policy's early years
When a policy owner exchanges a term policy for a whole life policy without providing proof of good
health this is applied? ANS: Conversion Provision
This features of a group Term Life policy enables an individual to leave the group and continue his or her
insurance without providing evidence of insurability? ANS: Conversion Privilege
What type of policy covers two people and pays upon the death of the last insured? ANS: Survivorship
Term insurance has what characteristic? ANS: Expires at the end of the policy period
