FSE 214: Licensing Exam Preparation Guide
Which of the following describes a participating insurance policy? - correct answer ✔✔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? - correct answer ✔✔Upon completion of the application
Dividends payable to a policyowner are: - correct answer ✔✔Declared by the insurance company.
At what point does an informal agreement become a binding contract? - correct answer ✔✔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 - correct answer ✔✔Insurable interest in the proposed insured
Which of the following arrangements allows one to bypass insurable interest laws? - correct answer
✔✔(STOLI) or Investor Originated Life Insurance
Taking receipt of premiums and holding them for the insurance company is an example of - correct
answer ✔✔Fiduciary Responsibility
A policy of adhesion can only be modified by whom? - correct answer ✔✔The Insurance Company
The exchange of unequal values reflects: - correct answer ✔✔Aleatory
Life and health insurance policies are - correct answer ✔✔Unilateral Contracts (one makes promise,
other can only accept by performance
The consideration clause of insurance contract includes - correct answer ✔✔The schedule and amount
of premium payments
, A life insurance arrangement which circumvents insurable interest values is called - correct answer
✔✔Investor Originated Life Insurance (IOLI)
Who makes the legally enforceable promises in a unilateral contract? - correct answer ✔✔The Insurance
Company
A life insurance policy would be considered a wagering contract WITHOUT: - correct answer
✔✔Insurable Interest
A life insurance policy that provides a policyowner with cash value along with a level face amount is
called: - correct answer ✔✔Whole Life Policy
Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies? - correct answer ✔✔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: - correct answer ✔✔Universal Life Policy
Which of these would be considered a Limited-Pay-Life policy? - correct answer ✔✔Life Paid Up at Age
70
K is looking to purchase Renewable Term insurance. Which of these types of Term insurance may be
renewable? - correct answer ✔✔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 - correct answer ✔✔Expense Charges
What type of insurance offers permanent life coverage with premiums that are payable for life? - correct
answer ✔✔Whole Life Policy
Which of the following describes a participating insurance policy? - correct answer ✔✔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? - correct answer ✔✔Upon completion of the application
Dividends payable to a policyowner are: - correct answer ✔✔Declared by the insurance company.
At what point does an informal agreement become a binding contract? - correct answer ✔✔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 - correct answer ✔✔Insurable interest in the proposed insured
Which of the following arrangements allows one to bypass insurable interest laws? - correct answer
✔✔(STOLI) or Investor Originated Life Insurance
Taking receipt of premiums and holding them for the insurance company is an example of - correct
answer ✔✔Fiduciary Responsibility
A policy of adhesion can only be modified by whom? - correct answer ✔✔The Insurance Company
The exchange of unequal values reflects: - correct answer ✔✔Aleatory
Life and health insurance policies are - correct answer ✔✔Unilateral Contracts (one makes promise,
other can only accept by performance
The consideration clause of insurance contract includes - correct answer ✔✔The schedule and amount
of premium payments
, A life insurance arrangement which circumvents insurable interest values is called - correct answer
✔✔Investor Originated Life Insurance (IOLI)
Who makes the legally enforceable promises in a unilateral contract? - correct answer ✔✔The Insurance
Company
A life insurance policy would be considered a wagering contract WITHOUT: - correct answer
✔✔Insurable Interest
A life insurance policy that provides a policyowner with cash value along with a level face amount is
called: - correct answer ✔✔Whole Life Policy
Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies? - correct answer ✔✔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: - correct answer ✔✔Universal Life Policy
Which of these would be considered a Limited-Pay-Life policy? - correct answer ✔✔Life Paid Up at Age
70
K is looking to purchase Renewable Term insurance. Which of these types of Term insurance may be
renewable? - correct answer ✔✔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 - correct answer ✔✔Expense Charges
What type of insurance offers permanent life coverage with premiums that are payable for life? - correct
answer ✔✔Whole Life Policy
