Florida 240 License EXAM
Florida 240 License Exam Questions and
Answers 2025
The stated amount or percent of liquid assets that an insurer must have on hand that
will satisfy future obligations to its policyholders is called: -Correct Answer ✔Reserves
An insurance applicant MUST be informed of an investigation regarding his/her
reputation and character according to the: -Correct Answer ✔Fair Credit Reporting Act
A nonprofit incorporated society that does not have capital stock and operates for the
sole benefit of its members is known as: -Correct Answer ✔A fraternal benefit society
What I the name of the law that requires insurers to disclose information gathering
practices and where the information was obtained? -Correct Answer ✔Fair Credit
Reporting Act
Who elects the governing body of a mutual insurance company? -Correct Answer
✔Policyholders
A group-owned insurance company that is formed to assume and spread the liability
ricks of its members is known as a: -Correct Answer ✔Risk retention group
What type of reinsurance contract involves two companies automatically sharing their
risk exposure? -Correct Answer ✔treaty
What year was the McCarran-Ferguson Act enacted? -Correct Answer ✔1945
Which of these describe a participating life insurance policy? -Correct Answer ✔Policy
owners 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
Which of the following requires insurers to disclose when an applicant's consumer or
credit history is being investigated: -Correct Answer ✔1970 - Fair Credit Reporting Act
What type of reinsurance contract involves two companies automatically sharing their
risk exposure? -Correct Answer ✔Treaty
A group-owned insurance company that is formed to assume and spread the liability
risks of its members is known as a: -Correct Answer ✔risk retention group
Florida 240 License EXAM
,Florida 240 License EXAM
All of the following are considered to be typical characteristics describing the nature of
an insurance contract, EXCEPT: -Correct Answer ✔Bilateral
The part of a life insurance policy guaranteed to be true is called a(n) -Correct Answer
✔warranty
Statements made on an insurance application that are believed to be true to the best of
the applicant's knowledge are called -Correct Answer ✔representations
Q purchases a $500,000 life insurance policy and pays $900 in premiums over the first
six months. Q dies suddenly and the beneficiary is paid $500,000. This exchange of
unequal values reflects which of the following insurance contract features? -Correct
Answer ✔Aleatory
When must insurable interest be present in order for a life insurance policy to be valid? -
Correct Answer ✔When the application is made
A life insurance arrangement which circumvents insurable interest statutes is called: -
Correct Answer ✔Investor-Originated Life Insurance
Stranger Originated Life Insurance (STOLI) has been found to be in violation of which of
the following contractual elements? -Correct Answer ✔Legal Purpose (Insurable
Interest)
Who makes the legally enforceable promises in a unilateral contract? -Correct Answer
✔Insurance company
A policy of adhesion can only be modified by whom? -Correct Answer ✔insurance
company
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 these is considered a statement that is assured to be true in every aspect? -
Correct Answer ✔Warranty
Which of these require an offer, acceptance, and consideration? -Correct Answer
✔contract
If a contract of adhesion contains complicated language, to whom would the
interpretation be in favor of? -Correct Answer ✔insured
Florida 240 License EXAM
, Florida 240 License EXAM
Insurance contracts are known as _____ because certain future conditions or acts must
occur before any claims can be paid. -Correct Answer ✔conditional
Insurance policies are offered on a "take it or leave it" basis, which make them: -Correct
Answer ✔Contracts of Adhesion
In regards to representations or warranties, which of these statements is TRUE? -
Correct Answer ✔If material to the risk, false representations will void a policy
Which of these arrangements allows one to bypass insurable interest laws? -Correct
Answer ✔Investor-Originated Life Insurance
In an insurance contract, the insurer is the only party who makes a legally enforceable
promise. What kind of contract is this? -Correct Answer ✔unilateral
Which of these is NOT a type of agent authority? -Correct Answer ✔principal
E and F are business partners. Each takes out a $500,000 life insurance policy on the
other, naming himself as primary beneficiary. E and F eventually terminate their
business, and four months later E dies. Although E was married with three children at
the time of death, the primary beneficiary is still F. However, an insurable interest no
longer exists. Where will the proceeds from E's life insurance policy be directed to? -
Correct Answer ✔In this situation, the proceeds from E's life insurance policy will go to
F.
When must insurable interest exist for a life insurance contract to be valid? -Correct
Answer ✔Inception of the contract
Life and health insurance policies are: -Correct Answer ✔unilateral contracts
A policy of adhesion can only be modified by whom? -Correct Answer ✔insurance
company
At what point does an informal contract become binding? -Correct Answer ✔When one
party makes an offer and the other party accepts that offer
What is the consideration given by an insurer in the Consideration clause of a life
policy? -Correct Answer ✔Promise to pay a death benefit
What is the consideration given by an insurer in the Consideration clause of life policy? -
Correct Answer ✔Promise to pay a death benefit to a named beneficiary
Insurance policies are considered aleatory contracts because: -Correct Answer
✔performance is conditioned upon a future occurrence
Florida 240 License EXAM
Florida 240 License Exam Questions and
Answers 2025
The stated amount or percent of liquid assets that an insurer must have on hand that
will satisfy future obligations to its policyholders is called: -Correct Answer ✔Reserves
An insurance applicant MUST be informed of an investigation regarding his/her
reputation and character according to the: -Correct Answer ✔Fair Credit Reporting Act
A nonprofit incorporated society that does not have capital stock and operates for the
sole benefit of its members is known as: -Correct Answer ✔A fraternal benefit society
What I the name of the law that requires insurers to disclose information gathering
practices and where the information was obtained? -Correct Answer ✔Fair Credit
Reporting Act
Who elects the governing body of a mutual insurance company? -Correct Answer
✔Policyholders
A group-owned insurance company that is formed to assume and spread the liability
ricks of its members is known as a: -Correct Answer ✔Risk retention group
What type of reinsurance contract involves two companies automatically sharing their
risk exposure? -Correct Answer ✔treaty
What year was the McCarran-Ferguson Act enacted? -Correct Answer ✔1945
Which of these describe a participating life insurance policy? -Correct Answer ✔Policy
owners 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
Which of the following requires insurers to disclose when an applicant's consumer or
credit history is being investigated: -Correct Answer ✔1970 - Fair Credit Reporting Act
What type of reinsurance contract involves two companies automatically sharing their
risk exposure? -Correct Answer ✔Treaty
A group-owned insurance company that is formed to assume and spread the liability
risks of its members is known as a: -Correct Answer ✔risk retention group
Florida 240 License EXAM
,Florida 240 License EXAM
All of the following are considered to be typical characteristics describing the nature of
an insurance contract, EXCEPT: -Correct Answer ✔Bilateral
The part of a life insurance policy guaranteed to be true is called a(n) -Correct Answer
✔warranty
Statements made on an insurance application that are believed to be true to the best of
the applicant's knowledge are called -Correct Answer ✔representations
Q purchases a $500,000 life insurance policy and pays $900 in premiums over the first
six months. Q dies suddenly and the beneficiary is paid $500,000. This exchange of
unequal values reflects which of the following insurance contract features? -Correct
Answer ✔Aleatory
When must insurable interest be present in order for a life insurance policy to be valid? -
Correct Answer ✔When the application is made
A life insurance arrangement which circumvents insurable interest statutes is called: -
Correct Answer ✔Investor-Originated Life Insurance
Stranger Originated Life Insurance (STOLI) has been found to be in violation of which of
the following contractual elements? -Correct Answer ✔Legal Purpose (Insurable
Interest)
Who makes the legally enforceable promises in a unilateral contract? -Correct Answer
✔Insurance company
A policy of adhesion can only be modified by whom? -Correct Answer ✔insurance
company
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 these is considered a statement that is assured to be true in every aspect? -
Correct Answer ✔Warranty
Which of these require an offer, acceptance, and consideration? -Correct Answer
✔contract
If a contract of adhesion contains complicated language, to whom would the
interpretation be in favor of? -Correct Answer ✔insured
Florida 240 License EXAM
, Florida 240 License EXAM
Insurance contracts are known as _____ because certain future conditions or acts must
occur before any claims can be paid. -Correct Answer ✔conditional
Insurance policies are offered on a "take it or leave it" basis, which make them: -Correct
Answer ✔Contracts of Adhesion
In regards to representations or warranties, which of these statements is TRUE? -
Correct Answer ✔If material to the risk, false representations will void a policy
Which of these arrangements allows one to bypass insurable interest laws? -Correct
Answer ✔Investor-Originated Life Insurance
In an insurance contract, the insurer is the only party who makes a legally enforceable
promise. What kind of contract is this? -Correct Answer ✔unilateral
Which of these is NOT a type of agent authority? -Correct Answer ✔principal
E and F are business partners. Each takes out a $500,000 life insurance policy on the
other, naming himself as primary beneficiary. E and F eventually terminate their
business, and four months later E dies. Although E was married with three children at
the time of death, the primary beneficiary is still F. However, an insurable interest no
longer exists. Where will the proceeds from E's life insurance policy be directed to? -
Correct Answer ✔In this situation, the proceeds from E's life insurance policy will go to
F.
When must insurable interest exist for a life insurance contract to be valid? -Correct
Answer ✔Inception of the contract
Life and health insurance policies are: -Correct Answer ✔unilateral contracts
A policy of adhesion can only be modified by whom? -Correct Answer ✔insurance
company
At what point does an informal contract become binding? -Correct Answer ✔When one
party makes an offer and the other party accepts that offer
What is the consideration given by an insurer in the Consideration clause of a life
policy? -Correct Answer ✔Promise to pay a death benefit
What is the consideration given by an insurer in the Consideration clause of life policy? -
Correct Answer ✔Promise to pay a death benefit to a named beneficiary
Insurance policies are considered aleatory contracts because: -Correct Answer
✔performance is conditioned upon a future occurrence
Florida 240 License EXAM
