2026-2027 UPDATED FLORIDA 2-15
INSURANCE EXAM: IN-DEPTH QUESTION BANK
WITH OVER 370+ QUESTIONS WITH CORRECT
ANSWERS & RATIONALES
1. In the insurance business, risk can best be defined
as:
A. sharing the possibility of a loss
B. uncertainty regarding the future
C. uncertainty regarding financial loss
D. uncertainty regarding when death will occur
Correct Answer: C
Rationale: Insurance is specifically concerned with
uncertainty about financial loss.
2. Which of the following risks is insurable?
A. pure risks
B. gambling
C. speculative risks
D. investing
Correct Answer: A
,Rationale: Only pure risks involve only the chance of
loss and are insurable.
3. Buying insurance is one of the most effective ways
of:
A. avoiding risk
B. transferring risk
C. reducing risk
D. retaining risk
**Correct Answer:** B
**Rationale:** Insurance transfers the financial
burden of risk from the individual to the insurer.
4. Which of the following best describes the function
of insurance?
A. it is a form of legalized gambling.
B. it spreads financial risk over a large group to
minimize the loss to any one individual
C. it protects against living too long
D. it creates and protects risks
**Correct Answer:** B
**Rationale:** Insurance pools risk across many
people so losses of a few are paid by many.
,5. All of the following are elements of an insurable
risk EXCEPT:
A. the loss must be due to chance
B. the loss must be predictable
C. the loss must be catastrophic
D. the loss must have a determinable value
**Correct Answer:** C
**Rationale:** Insurable risks cannot be catastrophic
in nature.
6. The amount of money an insurer sets aside to pay
future claims is called:
A. a premium
B. a reserve
C. a dividend
D. an accumulated interest
**Correct Answer:** B
**Rationale:** Reserves are funds set aside to fulfill
future claim obligations.
, 7. Which of the following constitutes an insurable
interest?
A. the policyowner must expect to benefit from the
insured's death
B. the policyowner must expect to suffer a loss when
the insured dies or becomes disabled
C. the beneficiary, by definition, has an insurable
interest in the insured
D. the insured must have a personal or business
relationship with the beneficiary
**Correct Answer:** B
**Rationale:** Insurable interest means the
policyowner would suffer a loss upon death or
disability.
8. Which of the following statements describes the
parol evidence rule?
A. a written contract cannot be changed once it is
signed
B. an oral contract cannot be modified by written
evidence
C. a written contract cannot be changed by oral
evidence
INSURANCE EXAM: IN-DEPTH QUESTION BANK
WITH OVER 370+ QUESTIONS WITH CORRECT
ANSWERS & RATIONALES
1. In the insurance business, risk can best be defined
as:
A. sharing the possibility of a loss
B. uncertainty regarding the future
C. uncertainty regarding financial loss
D. uncertainty regarding when death will occur
Correct Answer: C
Rationale: Insurance is specifically concerned with
uncertainty about financial loss.
2. Which of the following risks is insurable?
A. pure risks
B. gambling
C. speculative risks
D. investing
Correct Answer: A
,Rationale: Only pure risks involve only the chance of
loss and are insurable.
3. Buying insurance is one of the most effective ways
of:
A. avoiding risk
B. transferring risk
C. reducing risk
D. retaining risk
**Correct Answer:** B
**Rationale:** Insurance transfers the financial
burden of risk from the individual to the insurer.
4. Which of the following best describes the function
of insurance?
A. it is a form of legalized gambling.
B. it spreads financial risk over a large group to
minimize the loss to any one individual
C. it protects against living too long
D. it creates and protects risks
**Correct Answer:** B
**Rationale:** Insurance pools risk across many
people so losses of a few are paid by many.
,5. All of the following are elements of an insurable
risk EXCEPT:
A. the loss must be due to chance
B. the loss must be predictable
C. the loss must be catastrophic
D. the loss must have a determinable value
**Correct Answer:** C
**Rationale:** Insurable risks cannot be catastrophic
in nature.
6. The amount of money an insurer sets aside to pay
future claims is called:
A. a premium
B. a reserve
C. a dividend
D. an accumulated interest
**Correct Answer:** B
**Rationale:** Reserves are funds set aside to fulfill
future claim obligations.
, 7. Which of the following constitutes an insurable
interest?
A. the policyowner must expect to benefit from the
insured's death
B. the policyowner must expect to suffer a loss when
the insured dies or becomes disabled
C. the beneficiary, by definition, has an insurable
interest in the insured
D. the insured must have a personal or business
relationship with the beneficiary
**Correct Answer:** B
**Rationale:** Insurable interest means the
policyowner would suffer a loss upon death or
disability.
8. Which of the following statements describes the
parol evidence rule?
A. a written contract cannot be changed once it is
signed
B. an oral contract cannot be modified by written
evidence
C. a written contract cannot be changed by oral
evidence
