FLORIDA 2 15 INSURANCE LICENSE EXAM
CLOSING SCRIPT UPDATED QUESTIONS
AND ANSWERS VIEW AHEAD PREP
MATERIAL SOLVED
⩥ Which of the following risks is insurable?
A. pure risks
B. gambling
C. speculative risks
D. investing.
Answer: A. Only pure risks are insurable because they involve only the
chance of loss. They are pure in the sense that they do not mix both
profits and losses. Insurance is concerned with the economic problems
created by pure risks.
⩥ Buying insurance is one of the most effective ways of
A. avoiding risk
B. transferring risk
C. reducing risk
D. retaining risk.
,Answer: B. Buying insurance is one of the most effective ways of
transferring risk. Through the insurance contract, the burden of carrying
the risk and indemnifying the financial loss is transferred from the
individual to the insurance company.
⩥ 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.
Answer: B. The function of insurance is to safeguard against financial
loss by having the losses of few paid by the contributions of many who
are exposed to the same risk.
⩥ 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.
Answer: C. One of the criteria for an insurable risk is that it NOT be
catastrophic. A principle of insurance holds that only a small portion of a
,given group will experience loss at any one time. Risks that would
adversely affect large numbers of people or large amounts of property -
wars or floods, for example - are typically not insurable.
⩥ 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.
Answer: B. Reserves can be defined as the amounts that are set aside to
fulfill the insurance company's obligation to pay future claims. The
reserve is compiled from past premium payments and interest.
⩥ 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.
, Answer: B. Insurable interest requires the policyowner to benefit from
the insured's continuing to live or enjoy good health or to suffer a loss
when the insured dies or is disabled.
⩥ 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
D. an oral contract takes precedence over any earlier written contract.
Answer: C. The parol evidence rule states that when parties put their
agreement in writing, all previous verbal statements come together in
that writing, and a written contract cannot be changed or modified by
parol (oral) evidence.
⩥ Which of the following factors determines whether policy dividends
will be paid on a participating policy?
A. reserves and experience
B. expenses and claims costs
C. interest and benefits
D. premiums and renewability.
Answer: B. If expenses and claims costs are less than expected,
dividends are likely to be paid.
CLOSING SCRIPT UPDATED QUESTIONS
AND ANSWERS VIEW AHEAD PREP
MATERIAL SOLVED
⩥ Which of the following risks is insurable?
A. pure risks
B. gambling
C. speculative risks
D. investing.
Answer: A. Only pure risks are insurable because they involve only the
chance of loss. They are pure in the sense that they do not mix both
profits and losses. Insurance is concerned with the economic problems
created by pure risks.
⩥ Buying insurance is one of the most effective ways of
A. avoiding risk
B. transferring risk
C. reducing risk
D. retaining risk.
,Answer: B. Buying insurance is one of the most effective ways of
transferring risk. Through the insurance contract, the burden of carrying
the risk and indemnifying the financial loss is transferred from the
individual to the insurance company.
⩥ 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.
Answer: B. The function of insurance is to safeguard against financial
loss by having the losses of few paid by the contributions of many who
are exposed to the same risk.
⩥ 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.
Answer: C. One of the criteria for an insurable risk is that it NOT be
catastrophic. A principle of insurance holds that only a small portion of a
,given group will experience loss at any one time. Risks that would
adversely affect large numbers of people or large amounts of property -
wars or floods, for example - are typically not insurable.
⩥ 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.
Answer: B. Reserves can be defined as the amounts that are set aside to
fulfill the insurance company's obligation to pay future claims. The
reserve is compiled from past premium payments and interest.
⩥ 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.
, Answer: B. Insurable interest requires the policyowner to benefit from
the insured's continuing to live or enjoy good health or to suffer a loss
when the insured dies or is disabled.
⩥ 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
D. an oral contract takes precedence over any earlier written contract.
Answer: C. The parol evidence rule states that when parties put their
agreement in writing, all previous verbal statements come together in
that writing, and a written contract cannot be changed or modified by
parol (oral) evidence.
⩥ Which of the following factors determines whether policy dividends
will be paid on a participating policy?
A. reserves and experience
B. expenses and claims costs
C. interest and benefits
D. premiums and renewability.
Answer: B. If expenses and claims costs are less than expected,
dividends are likely to be paid.
