Florida 2 - 14 Life, Variables and
Annuities Exam Questions and
Answers
Risk Avoidance - correct Answer-avoiding a risk altogether, which is not easy to do in
every situation. (i.e. By never scuba diving, you avoid the risk of dying while scuba
diving.)
Risk Reduction - correct Answer-reducing the risk (i.e. The Jones bought a new alarm
system for their house to reduce the chances of being robbed.)
Risk Retention (or Self-Assuring) - correct Answer-not purchasing insurance and
assuming all the financial risks.
Risk Transference - correct Answer-moving the risk to somewhere else. (i.e. Tom
purchases health insurance to transfer some of the financial risk to the insurance
company.)
Insurable Risk includes... - correct Answer-• Chance • Measurable • Predictable • Non-
Catastrophic • Large • Random
Fraternal Benefit Societies - correct Answer-• Must be NONPROFIT, noted for
charitable work, and have a lodge system that includes ritualistic work that maintains a
representative form of government.
Reciprocal Insurers - correct Answer-• Organized on the basis of POLICYHOLDERS
and are managed by an ATTORNEY-IN-FACT.
1945 McCarran Ferguson Act - correct Answer-Made it clear that STATES are to
regulate insurance and made possible the application of FEDERAL ANTITRUST LAWS
1970 Fair Credit Reporting Act - correct Answer-Requires fair and accurate reporting of
information about consumers. If consumer is denied coverage or charged higher rate
because of a report, the insurer must inform the consumer the name of the agency
conducting the investigation.
DOMESTIC INSURER - correct Answer-Headquartered in Florida
FOREIGN - correct Answer-Any other state but Florida
ALIEN - correct Answer-Country other than United States.
, Unfair Trade Practice - correct Answer-Gives CFO power to investigate insurers and
producers and to penalize
State Guaranty Association - correct Answer-supports insurance companies and
consumers if an insurance company becomes insolvent by covering claims
Consideration - correct Answer-Once accepted, something of value (money) is given for
the promise sought.
Aleatory - correct Answer-UNEQUAL in that one party may pay less than the other.
Also, there is an element of chance for both parties.
Adhesion - correct Answer-Contract is prepared by ONE party. There are NO
NEGOTIATIONS.
Unilateral - correct Answer-Only ONE party, the INSURER, makes an ENFORCEABLE
promise.
Warranty - correct Answer--Applicant's statement is GUARANTEED to be true. If the
statement turns out to be false, this could be grounds for the contract to be revoked.
Representation - correct Answer-Applicant's statement that they BELIEVE to be true
Concealment - correct Answer-Failure of applicant to disclose KNOWN fact
Express - correct Answer-Granted by contract between agent and company in writing
Implied - correct Answer-Not spelled out but implied
Apparent - correct Answer-Authority based on actions, words, or deeds of the company
ESTOPPEL - correct Answer-The company is FORBIDDEN by legal action from
exercising a right. EXAMPLE: If the company decided to deny benefits because of the
different way the insured was paying premiums, the company would be estopped from
denying the already approved change in premium payment.
PAROL EVIDENCE RULE - correct Answer-Oral or verbal statements to put in writing
contract cannot be changed.
VOIDABLE CONTRACT - correct Answer-A voidable contract can be set aside. If
satisfactory to the court, by one party to the contract, insurance is a voidable contract.
EXAMPLE: The insurance company voided Matt's life insurance policy because he did
not pay the premium.
VOID CONTRACT - correct Answer-A void contract has no legal effect. Lacks one or
more of the elements required for a contract. It was never really a contract.
Annuities Exam Questions and
Answers
Risk Avoidance - correct Answer-avoiding a risk altogether, which is not easy to do in
every situation. (i.e. By never scuba diving, you avoid the risk of dying while scuba
diving.)
Risk Reduction - correct Answer-reducing the risk (i.e. The Jones bought a new alarm
system for their house to reduce the chances of being robbed.)
Risk Retention (or Self-Assuring) - correct Answer-not purchasing insurance and
assuming all the financial risks.
Risk Transference - correct Answer-moving the risk to somewhere else. (i.e. Tom
purchases health insurance to transfer some of the financial risk to the insurance
company.)
Insurable Risk includes... - correct Answer-• Chance • Measurable • Predictable • Non-
Catastrophic • Large • Random
Fraternal Benefit Societies - correct Answer-• Must be NONPROFIT, noted for
charitable work, and have a lodge system that includes ritualistic work that maintains a
representative form of government.
Reciprocal Insurers - correct Answer-• Organized on the basis of POLICYHOLDERS
and are managed by an ATTORNEY-IN-FACT.
1945 McCarran Ferguson Act - correct Answer-Made it clear that STATES are to
regulate insurance and made possible the application of FEDERAL ANTITRUST LAWS
1970 Fair Credit Reporting Act - correct Answer-Requires fair and accurate reporting of
information about consumers. If consumer is denied coverage or charged higher rate
because of a report, the insurer must inform the consumer the name of the agency
conducting the investigation.
DOMESTIC INSURER - correct Answer-Headquartered in Florida
FOREIGN - correct Answer-Any other state but Florida
ALIEN - correct Answer-Country other than United States.
, Unfair Trade Practice - correct Answer-Gives CFO power to investigate insurers and
producers and to penalize
State Guaranty Association - correct Answer-supports insurance companies and
consumers if an insurance company becomes insolvent by covering claims
Consideration - correct Answer-Once accepted, something of value (money) is given for
the promise sought.
Aleatory - correct Answer-UNEQUAL in that one party may pay less than the other.
Also, there is an element of chance for both parties.
Adhesion - correct Answer-Contract is prepared by ONE party. There are NO
NEGOTIATIONS.
Unilateral - correct Answer-Only ONE party, the INSURER, makes an ENFORCEABLE
promise.
Warranty - correct Answer--Applicant's statement is GUARANTEED to be true. If the
statement turns out to be false, this could be grounds for the contract to be revoked.
Representation - correct Answer-Applicant's statement that they BELIEVE to be true
Concealment - correct Answer-Failure of applicant to disclose KNOWN fact
Express - correct Answer-Granted by contract between agent and company in writing
Implied - correct Answer-Not spelled out but implied
Apparent - correct Answer-Authority based on actions, words, or deeds of the company
ESTOPPEL - correct Answer-The company is FORBIDDEN by legal action from
exercising a right. EXAMPLE: If the company decided to deny benefits because of the
different way the insured was paying premiums, the company would be estopped from
denying the already approved change in premium payment.
PAROL EVIDENCE RULE - correct Answer-Oral or verbal statements to put in writing
contract cannot be changed.
VOIDABLE CONTRACT - correct Answer-A voidable contract can be set aside. If
satisfactory to the court, by one party to the contract, insurance is a voidable contract.
EXAMPLE: The insurance company voided Matt's life insurance policy because he did
not pay the premium.
VOID CONTRACT - correct Answer-A void contract has no legal effect. Lacks one or
more of the elements required for a contract. It was never really a contract.
