Florida 240 License Study Guide 100% Correct Answers Verified Latest 2024 Version
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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: - Reserves
An insurance applicant MUST be informed of an investigation regarding his/her reputation and character
according to the: - Fair Credit R...
Florida 240 License Study Guide | 100% Correct
Answers | Verified | Latest 2024 Version
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: - ✔✔Reserves
An insurance applicant MUST be informed of an investigation regarding his/her reputation and character
according to the: - ✔✔Fair Credit Reporting Act
A nonprofit incorporated society that does not have capital stock and operates for the sole benefit of its
members is known as: - ✔✔A fraternal benefit society
What I the name of the law that requires insurers to disclose information gathering practices and where
the information was obtained? - ✔✔Fair Credit Reporting Act
Who elects the governing body of a mutual insurance company? - ✔✔Policyholders
A group-owned insurance company that is formed to assume and spread the liability ricks of its
members is known as a: - ✔✔Risk retention group
What type of reinsurance contract involves two companies automatically sharing their risk exposure? -
✔✔treaty
What year was the McCarran-Ferguson Act enacted? - ✔✔1945
Which of these describe a participating life insurance policy? - ✔✔Policy owners 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? - ✔✔Upon completion of the application
,Which of the following requires insurers to disclose when an applicant's consumer or credit history is
being investigated: - ✔✔1970 - Fair Credit Reporting Act
What type of reinsurance contract involves two companies automatically sharing their risk exposure? -
✔✔Treaty
A group-owned insurance company that is formed to assume and spread the liability risks of its members
is known as a: - ✔✔risk retention group
All of the following are considered to be typical characteristics describing the nature of an insurance
contract, EXCEPT: - ✔✔Bilateral
The part of a life insurance policy guaranteed to be true is called a(n) - ✔✔warranty
Statements made on an insurance application that are believed to be true to the best of the applicant's
knowledge are called - ✔✔representations
Q purchases a $500,000 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 of the
following insurance contract features? - ✔✔Aleatory
When must insurable interest be present in order for a life insurance policy to be valid? - ✔✔When the
application is made
A life insurance arrangement which circumvents insurable interest statutes is called: - ✔✔Investor-
Originated Life Insurance
Stranger Originated Life Insurance (STOLI) has been found to be in violation of which of the following
contractual elements? - ✔✔Legal Purpose (Insurable Interest)
Who makes the legally enforceable promises in a unilateral contract? - ✔✔Insurance company
,A policy of adhesion can only be modified by whom? - ✔✔insurance company
When third-party ownership is involved, applicants who also happen to be the stated primary
beneficiary are required to have: - ✔✔insurable interest in the proposed insured
Which of these is considered a statement that is assured to be true in every aspect? - ✔✔Warranty
Which of these require an offer, acceptance, and consideration? - ✔✔contract
If a contract of adhesion contains complicated language, to whom would the interpretation be in favor
of? - ✔✔insured
Insurance contracts are known as _____ because certain future conditions or acts must occur before any
claims can be paid. - ✔✔conditional
Insurance policies are offered on a "take it or leave it" basis, which make them: - ✔✔Contracts of
Adhesion
In regards to representations or warranties, which of these statements is TRUE? - ✔✔If material to the
risk, false representations will void a policy
Which of these arrangements allows one to bypass insurable interest laws? - ✔✔Investor-Originated Life
Insurance
In an insurance contract, the insurer is the only party who makes a legally enforceable promise. What
kind of contract is this? - ✔✔unilateral
Which of these is NOT a type of agent authority? - ✔✔principal
E and F are business partners. Each takes out a $500,000 life insurance policy on the other, naming
himself as primary beneficiary. E and F eventually terminate their business, and four months later E dies.
, Although E was married with three children at the time of death, the primary beneficiary is still F.
However, an insurable interest no longer exists. Where will the proceeds from E's life insurance policy be
directed to? - ✔✔In this situation, the proceeds from E's life insurance policy will go to F.
When must insurable interest exist for a life insurance contract to be valid? - ✔✔Inception of the
contract
Life and health insurance policies are: - ✔✔unilateral contracts
A policy of adhesion can only be modified by whom? - ✔✔insurance company
At what point does an informal contract become binding? - ✔✔When one party makes an offer and the
other party accepts that offer
What is the consideration given by an insurer in the Consideration clause of a life policy? - ✔✔Promise to
pay a death benefit
What is the consideration given by an insurer in the Consideration clause of life policy? - ✔✔Promise to
pay a death benefit to a named beneficiary
Insurance policies are considered aleatory contracts because: - ✔✔performance is conditioned upon a
future occurrence
Taking receipt of premiums and holding them for the insurance company is an example of - ✔✔fiduciary
responsibility
The Consideration clause in a life insurance contract contains what pertinent information? - ✔✔The
schedule and amount of premium payments
Which of the following consists of an offer, acceptance, and consideration? - ✔✔Contract
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