214 License Exam Questions And Answers
Latest Update 2024 – 2025
Which of the following describes a participating insurance policy? –ANSWER:
Policyowners are entitled to receive dividends
At what point must a life insurance applicant be informed of their rights that fall unde
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
r the Fair Credit Reporting Act? - ANSWER: Upon completion of the application
1 1 1 1 1 1 1 1 1 1 1 1
Dividends payable to a policyowner are: - 1 1 1 1 1 1
ANSWER: Declared by the insurance company.
1 11 1 1 1 1
At what point does an informal agreement become a binding contract? -
1 1 1 1 1 1 1 1 1 1 1
ANSWER: When consideration is provided by one of the parties to the contract
1 1 1 1 1 1 1 1 1 1 1 1 1
When third- 1
party ownership is involved, applicants who also happen to be the stated primary ben
1 1 1 1 1 1 1 1 1 1 1 1 1
eficiary are required to have - ANSWER: Insurable interest in the proposed insured
1 1 1 1 1 1 11 1 1 1 1 1
Which of the following arrangements allows one to bypass insurable interest laws? -
1 1 1 1 1 1 1 1 1 1 1 1
ANSWER: (STOLI) or Investor Originated Life Insurance
1 1 1 1 1 1 1
Taking receipt of premiums and holding them for the insurance company is an examp
1 1 1 1 1 1 1 1 1 1 1 1 1
le of - ANSWER: Fiduciary Responsibility
1 1 1 1 1
A policy of adhesion can only be modified by whom? -
1 1 1 1 1 1 1 1 1 1
ANSWER: The Insurance Company
1 11 1 1
The exchange of unequal values reflects: - ANSWER: Aleatory
1 1 1 1 1 1 1 1
Life and health insurance policies are -
1 1 1 1 1 1
ANSWER: Unilateral Contracts (one makes promise, other can only accept by perform
1 1 1 1 1 1 1 1 1 1 1 1
ance
The consideration clause of insurance contract includes -
1 1 1 1 1 1 1
ANSWER: The schedule and amount of premium payments
1 1 1 1 1 1 1 1
A life insurance arrangement which circumvents insurable interest values is called -
1 1 1 1 1 1 1 1 1 1 1
ANSWER: Investor Originated Life Insurance (IOLI)
1 1 1 1 1 1
Who makes the legally enforceable promises in a unilateral contract? -
1 1 1 1 1 1 1 1 1 1
ANSWER: The Insurance Company
1 11 1 1
, A life insurance policy would be considered a wagering contract WITHOUT: -
1 1 1 1 1 1 1 1 1 1 1
ANSWER: Insurable Interest
1 1 1
A life insurance policy that provides a policyowner with cash value along with a level f
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
ace amount is called: - ANSWER: Whole Life Policy
1 1 1 1 1 1 1 1
Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies? -
1 1 1 1 1 1 1 1 1 1 1
ANSWER: the Policyowner(investor)
1 1 1
K purchased a Life insurance policy in 1986 which paid 10% interest in the early year
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
s of the policy. Twenty years after the purchase, she received a notice from the insure
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
r stating that the policy will soon terminate unless a much-
1 1 1 1 1 1 1 1 1 1
higher premium is paid because of falling interest rates. This type of policy is known
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
as: - ANSWER: Universal Life Policy
1 1 11 1 1
Which of these would be considered a Limited-Pay-Life policy? -
1 1 1 1 1 1 1 1 1
ANSWER: Life Paid Up at Age 70
1 1 1 1 1 1 1
K is looking to purchase Renewable Term insurance. Which of these types of Term ins
1 1 1 1 1 1 1 1 1 1 1 1 1 1
urance may be renewable? - 1 1 1 1
ANSWER: Level Term Policy (pays same death benefit if insured dies any time during
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
policy)
A universal life policy is sometimes referred to as an unbundled Life Policy because t
1 1 1 1 1 1 1 1 1 1 1 1 1 1
he owner can see the interest earned, cost of insurance, and -
1 1 1 1 1 1 1 1 1 1 1
ANSWER: Expense Charges
1 11 1
What type of insurance offers permanent life coverage with premiums that are payab
1 1 1 1 1 1 1 1 1 1 1 1
le for life? - ANSWER: Whole Life Policy
1 1 1 1 11 1 1
Which provision allows the policyowner to change a term life policy to a permanent o
1 1 1 1 1 1 1 1 1 1 1 1 1 1
ne without providing proof of good health? - ANSWER: Conversion
1 1 1 1 1 1 1 1 11
When is the face amount of a Whole Life policy paid? -
1 1 1 1 1 1 1 1 1 1 1
ANSWER: When the insured dies, or the policy's maturity, whichever comes first!
1 1 1 1 1 1 1 1 1 1 1 1
Additional coverage can be added to a Whole Life policy by adding a(n) -
1 1 1 1 1 1 1 1 1 1 1 1 1
ANSWER: Decreasing Term Rider
1 11 1 1
When a life policy exceeds certain IRS table values, the result would create which of t
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
he following? - ANSWER: Modified Endowment Contract (MEC)
1 1 1 1 1 1 1
K pays on a $20,000 20-
1 1 1 1 1
Year Endowment policy for 10 years and dies from an automobile accident. How muc
1 1 1 1 1 1 1 1 1 1 1 1 1
h will the insurance company pay the beneficiary? - ANSWER: $20,000 death benefit.
1 1 1 1 1 1 1 1 1 1 1 1
Latest Update 2024 – 2025
Which of the following describes a participating insurance policy? –ANSWER:
Policyowners are entitled to receive dividends
At what point must a life insurance applicant be informed of their rights that fall unde
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
r the Fair Credit Reporting Act? - ANSWER: Upon completion of the application
1 1 1 1 1 1 1 1 1 1 1 1
Dividends payable to a policyowner are: - 1 1 1 1 1 1
ANSWER: Declared by the insurance company.
1 11 1 1 1 1
At what point does an informal agreement become a binding contract? -
1 1 1 1 1 1 1 1 1 1 1
ANSWER: When consideration is provided by one of the parties to the contract
1 1 1 1 1 1 1 1 1 1 1 1 1
When third- 1
party ownership is involved, applicants who also happen to be the stated primary ben
1 1 1 1 1 1 1 1 1 1 1 1 1
eficiary are required to have - ANSWER: Insurable interest in the proposed insured
1 1 1 1 1 1 11 1 1 1 1 1
Which of the following arrangements allows one to bypass insurable interest laws? -
1 1 1 1 1 1 1 1 1 1 1 1
ANSWER: (STOLI) or Investor Originated Life Insurance
1 1 1 1 1 1 1
Taking receipt of premiums and holding them for the insurance company is an examp
1 1 1 1 1 1 1 1 1 1 1 1 1
le of - ANSWER: Fiduciary Responsibility
1 1 1 1 1
A policy of adhesion can only be modified by whom? -
1 1 1 1 1 1 1 1 1 1
ANSWER: The Insurance Company
1 11 1 1
The exchange of unequal values reflects: - ANSWER: Aleatory
1 1 1 1 1 1 1 1
Life and health insurance policies are -
1 1 1 1 1 1
ANSWER: Unilateral Contracts (one makes promise, other can only accept by perform
1 1 1 1 1 1 1 1 1 1 1 1
ance
The consideration clause of insurance contract includes -
1 1 1 1 1 1 1
ANSWER: The schedule and amount of premium payments
1 1 1 1 1 1 1 1
A life insurance arrangement which circumvents insurable interest values is called -
1 1 1 1 1 1 1 1 1 1 1
ANSWER: Investor Originated Life Insurance (IOLI)
1 1 1 1 1 1
Who makes the legally enforceable promises in a unilateral contract? -
1 1 1 1 1 1 1 1 1 1
ANSWER: The Insurance Company
1 11 1 1
, A life insurance policy would be considered a wagering contract WITHOUT: -
1 1 1 1 1 1 1 1 1 1 1
ANSWER: Insurable Interest
1 1 1
A life insurance policy that provides a policyowner with cash value along with a level f
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
ace amount is called: - ANSWER: Whole Life Policy
1 1 1 1 1 1 1 1
Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies? -
1 1 1 1 1 1 1 1 1 1 1
ANSWER: the Policyowner(investor)
1 1 1
K purchased a Life insurance policy in 1986 which paid 10% interest in the early year
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
s of the policy. Twenty years after the purchase, she received a notice from the insure
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
r stating that the policy will soon terminate unless a much-
1 1 1 1 1 1 1 1 1 1
higher premium is paid because of falling interest rates. This type of policy is known
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
as: - ANSWER: Universal Life Policy
1 1 11 1 1
Which of these would be considered a Limited-Pay-Life policy? -
1 1 1 1 1 1 1 1 1
ANSWER: Life Paid Up at Age 70
1 1 1 1 1 1 1
K is looking to purchase Renewable Term insurance. Which of these types of Term ins
1 1 1 1 1 1 1 1 1 1 1 1 1 1
urance may be renewable? - 1 1 1 1
ANSWER: Level Term Policy (pays same death benefit if insured dies any time during
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
policy)
A universal life policy is sometimes referred to as an unbundled Life Policy because t
1 1 1 1 1 1 1 1 1 1 1 1 1 1
he owner can see the interest earned, cost of insurance, and -
1 1 1 1 1 1 1 1 1 1 1
ANSWER: Expense Charges
1 11 1
What type of insurance offers permanent life coverage with premiums that are payab
1 1 1 1 1 1 1 1 1 1 1 1
le for life? - ANSWER: Whole Life Policy
1 1 1 1 11 1 1
Which provision allows the policyowner to change a term life policy to a permanent o
1 1 1 1 1 1 1 1 1 1 1 1 1 1
ne without providing proof of good health? - ANSWER: Conversion
1 1 1 1 1 1 1 1 11
When is the face amount of a Whole Life policy paid? -
1 1 1 1 1 1 1 1 1 1 1
ANSWER: When the insured dies, or the policy's maturity, whichever comes first!
1 1 1 1 1 1 1 1 1 1 1 1
Additional coverage can be added to a Whole Life policy by adding a(n) -
1 1 1 1 1 1 1 1 1 1 1 1 1
ANSWER: Decreasing Term Rider
1 11 1 1
When a life policy exceeds certain IRS table values, the result would create which of t
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1
he following? - ANSWER: Modified Endowment Contract (MEC)
1 1 1 1 1 1 1
K pays on a $20,000 20-
1 1 1 1 1
Year Endowment policy for 10 years and dies from an automobile accident. How muc
1 1 1 1 1 1 1 1 1 1 1 1 1
h will the insurance company pay the beneficiary? - ANSWER: $20,000 death benefit.
1 1 1 1 1 1 1 1 1 1 1 1
