FLORIDA INSURANCE 2-14 EXAMINATION 2025
QUESTIONS WITH ANSWERS GUARANTEE A+
✔✔Which of the following types of agent authority is specifically set forth in writing in the
agent's contract?
A. express
B. implied
C. apparent
D. personal - ✔✔A. Express authority is the authority a principal gives to its agent.
Express authority is granted by means of the agent's contract, which is the principal's
appointment of the agent to act on its behalf.
✔✔Assume a home catches fire after it is struck by lightning and the fire destroys its
structure and contents. By insurance definition, the fire is
A. the risk
B. the hazard
C. the peril
D. the proximate cause - ✔✔C. A peril is the immediate specific event causing loss and
giving rise to risk. When a building burns, fire is the peril.
✔✔What constitutes "consideration" for a life insurance policy?
A. application and initial premium
B. agent's commission
C. adhesion feature of the contract
D. policy's benefits - ✔✔A. Consideration is the value given in exchange for the
promises sought. In an insurance contract, consideration is given by the applicant in
exchange for the insurer's promise to pay benefits, and it consists of the application and
the initial premium.
✔✔Statements made by an applicant for life insurance that are guaranteed to be true
are
A. warranties
B. material statements
C. representations
D. declarations - ✔✔A. A warranty in insurance is a statement made by the applicant
that is guaranteed to be true. It becomes part of the contract and, if found to be untrue,
can be grounds for revoking the contract. Warranties are presumed to be material
because they affect the insurer's decision to accept or reject an applicant.
✔✔Which of the following insurance companies is owned by its policyholders?
,A. service insurer
B. stock insurer
C. reinsurer
D. mutual insurer - ✔✔D. Mutual insurers are owned by the policyholders. Anyone
purchasing insurance from a mutual insurer is both a customer and an owner.
✔✔With regard to life insurance, all of the following statements are correct EXCEPT
A. all individuals are considered to have insurable interests in themselves
B. spouses are automatically considered to have insurable interests in each other
C. a creditor has an insurable interest in a debtor
D. insurable interest must be maintained throughout the life of the contract - ✔✔D.
Insurable interest is required only when a contract is issued; it does not have to be
maintained throughout the life of the contract nor is it necessary at the time of claim.
✔✔A life insurance company is organized in Orlando where it maintains its home office.
In Florida, the company is classified as
A. a domestic company
B. a local company
C. a foreign company
D. a preferred company - ✔✔A. An insurer is termed "domestic" in a state when it is
incorporated in that state.
✔✔A life insurance company organized in Illinois, with its home office in Philadelphia, is
licensed to conduct business in Wisconsin. In Wisconsin, this company is classified as
A. a domestic company
B. an alien company
C. a foreign company
D. a regional company - ✔✔C. A foreign company operates within a state in which it is
not chartered and in which the home office is not located.
✔✔To whom does the cash value of a life insurance policy belong?
A. policyowner
B. insured
C. insurer
D. beneficiary - ✔✔A. The accumulation that builds over the life of a policy is called the
"cash value," and it belongs to the policyowner, who may or may not be the insured.
✔✔Frank is the insured in a $40,000, 5-year level term policy issued in 2003. He died in
2009. His beneficiary received
A. nothing
, B. $20,000
C. $40,000
D. the cash value of the policy - ✔✔A. In this case, the insured died after his term policy
had expired. As a result, his beneficiary received nothing.
✔✔All of the following statements regarding assignment of a life insurance policy are
correct EXCEPT
A. to secure a loan, the policy can be transferred temporarily to the lender as security
for the loan
B. the policyowner must obtain approval from the insurance company before a policy
can be assigned
C. the life insurance company assume no responsibility for the validity of an assignment
D. the life insurance company must be notified in writing by the policyowner of any new
assignment - ✔✔B. Policyowners actually own their policies and may do with them as
they please. They can even give them away, just as they can give away any other kind
of property they own. Nevertheless, they must notify the insurance company in writing of
any transfers of ownership (assignments). The company must then accept the validity of
the assignments without question.
✔✔After a family's breadwinner dies, the "blackout period" generally can be defined as
the period
A. during which children are living at home
B. that begins when the youngest child turns 16 and ends when the surviving parent
retires
C. during which children are in school
D. from the surviving parent's retirement to death - ✔✔B. The "blackout period" is the
time during which no Social Security benefits are payable to a surviving spouse. This
period begins when the youngest child reaches age 16 and continues until the spouse
retires.
✔✔A company with 3 partners is considering a buy-sell plan. All of the following
statements pertaining to buy-sell plans and this partnership are correct EXCEPT
A. an insured entity buy-sell agreement designates the partnership as the beneficiary
B. if they choose a cross-purchase plan, each partner would have to purchase 2 policies
for a total of 6 plans
C. no benefits will accrue to the partnership from the buy-sell agreement until one of the
partners dies
D. if they choose an entity buy-sell agreement, the business would be party to the
agreement - ✔✔C. A buy-sell plan offers several advantages to the partners while they
are all living. The partners know they will have a legal right to buy a deceased partner's
share of the business, and the family and heirs of the partners know that the partnership
interest will be disposed of at a fair price. Further, the money needed to purchase the
QUESTIONS WITH ANSWERS GUARANTEE A+
✔✔Which of the following types of agent authority is specifically set forth in writing in the
agent's contract?
A. express
B. implied
C. apparent
D. personal - ✔✔A. Express authority is the authority a principal gives to its agent.
Express authority is granted by means of the agent's contract, which is the principal's
appointment of the agent to act on its behalf.
✔✔Assume a home catches fire after it is struck by lightning and the fire destroys its
structure and contents. By insurance definition, the fire is
A. the risk
B. the hazard
C. the peril
D. the proximate cause - ✔✔C. A peril is the immediate specific event causing loss and
giving rise to risk. When a building burns, fire is the peril.
✔✔What constitutes "consideration" for a life insurance policy?
A. application and initial premium
B. agent's commission
C. adhesion feature of the contract
D. policy's benefits - ✔✔A. Consideration is the value given in exchange for the
promises sought. In an insurance contract, consideration is given by the applicant in
exchange for the insurer's promise to pay benefits, and it consists of the application and
the initial premium.
✔✔Statements made by an applicant for life insurance that are guaranteed to be true
are
A. warranties
B. material statements
C. representations
D. declarations - ✔✔A. A warranty in insurance is a statement made by the applicant
that is guaranteed to be true. It becomes part of the contract and, if found to be untrue,
can be grounds for revoking the contract. Warranties are presumed to be material
because they affect the insurer's decision to accept or reject an applicant.
✔✔Which of the following insurance companies is owned by its policyholders?
,A. service insurer
B. stock insurer
C. reinsurer
D. mutual insurer - ✔✔D. Mutual insurers are owned by the policyholders. Anyone
purchasing insurance from a mutual insurer is both a customer and an owner.
✔✔With regard to life insurance, all of the following statements are correct EXCEPT
A. all individuals are considered to have insurable interests in themselves
B. spouses are automatically considered to have insurable interests in each other
C. a creditor has an insurable interest in a debtor
D. insurable interest must be maintained throughout the life of the contract - ✔✔D.
Insurable interest is required only when a contract is issued; it does not have to be
maintained throughout the life of the contract nor is it necessary at the time of claim.
✔✔A life insurance company is organized in Orlando where it maintains its home office.
In Florida, the company is classified as
A. a domestic company
B. a local company
C. a foreign company
D. a preferred company - ✔✔A. An insurer is termed "domestic" in a state when it is
incorporated in that state.
✔✔A life insurance company organized in Illinois, with its home office in Philadelphia, is
licensed to conduct business in Wisconsin. In Wisconsin, this company is classified as
A. a domestic company
B. an alien company
C. a foreign company
D. a regional company - ✔✔C. A foreign company operates within a state in which it is
not chartered and in which the home office is not located.
✔✔To whom does the cash value of a life insurance policy belong?
A. policyowner
B. insured
C. insurer
D. beneficiary - ✔✔A. The accumulation that builds over the life of a policy is called the
"cash value," and it belongs to the policyowner, who may or may not be the insured.
✔✔Frank is the insured in a $40,000, 5-year level term policy issued in 2003. He died in
2009. His beneficiary received
A. nothing
, B. $20,000
C. $40,000
D. the cash value of the policy - ✔✔A. In this case, the insured died after his term policy
had expired. As a result, his beneficiary received nothing.
✔✔All of the following statements regarding assignment of a life insurance policy are
correct EXCEPT
A. to secure a loan, the policy can be transferred temporarily to the lender as security
for the loan
B. the policyowner must obtain approval from the insurance company before a policy
can be assigned
C. the life insurance company assume no responsibility for the validity of an assignment
D. the life insurance company must be notified in writing by the policyowner of any new
assignment - ✔✔B. Policyowners actually own their policies and may do with them as
they please. They can even give them away, just as they can give away any other kind
of property they own. Nevertheless, they must notify the insurance company in writing of
any transfers of ownership (assignments). The company must then accept the validity of
the assignments without question.
✔✔After a family's breadwinner dies, the "blackout period" generally can be defined as
the period
A. during which children are living at home
B. that begins when the youngest child turns 16 and ends when the surviving parent
retires
C. during which children are in school
D. from the surviving parent's retirement to death - ✔✔B. The "blackout period" is the
time during which no Social Security benefits are payable to a surviving spouse. This
period begins when the youngest child reaches age 16 and continues until the spouse
retires.
✔✔A company with 3 partners is considering a buy-sell plan. All of the following
statements pertaining to buy-sell plans and this partnership are correct EXCEPT
A. an insured entity buy-sell agreement designates the partnership as the beneficiary
B. if they choose a cross-purchase plan, each partner would have to purchase 2 policies
for a total of 6 plans
C. no benefits will accrue to the partnership from the buy-sell agreement until one of the
partners dies
D. if they choose an entity buy-sell agreement, the business would be party to the
agreement - ✔✔C. A buy-sell plan offers several advantages to the partners while they
are all living. The partners know they will have a legal right to buy a deceased partner's
share of the business, and the family and heirs of the partners know that the partnership
interest will be disposed of at a fair price. Further, the money needed to purchase the
