Florida 240 License [ACTUAL EXAM] LATEST VERSION [QUESTIONS
AND ANSWERS] WITH STUDY GUIDE DETAILED AND VERIFIED FOR
GUARANTEED PASS- LATEST UPDATE 2025 GRADED A
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
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
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
Taking receipt of premiums and holding them for the insurance company is an
example of - CORRECT ANSWER fiduciary responsibility
The Consideration clause in a life insurance contract contains what pertinent
information? - CORRECT ANSWER The schedule and amount of premium
payments
Which of the following consists of an offer, acceptance, and consideration? -
CORRECT ANSWER Contract
Which of the following consists of an offer, acceptance, and consideration? -
CORRECT ANSWER contract
Which of these is NOT considered to be an element of an insurance company? -
CORRECT ANSWER Negotiating
What is a warranty? - CORRECT ANSWER is a statement guaranteed to be
true
A life insurance policy would be considered a wagering contract WITHOUT: -
CORRECT ANSWER insurable interest
G is an accountant who has ten employees and is concerned about how the
business would survive financially if G became disabled. The type of policy which
BEST addresses this concern is - CORRECT ANSWER Business Overhead
Expense
AND ANSWERS] WITH STUDY GUIDE DETAILED AND VERIFIED FOR
GUARANTEED PASS- LATEST UPDATE 2025 GRADED A
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
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
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
Taking receipt of premiums and holding them for the insurance company is an
example of - CORRECT ANSWER fiduciary responsibility
The Consideration clause in a life insurance contract contains what pertinent
information? - CORRECT ANSWER The schedule and amount of premium
payments
Which of the following consists of an offer, acceptance, and consideration? -
CORRECT ANSWER Contract
Which of the following consists of an offer, acceptance, and consideration? -
CORRECT ANSWER contract
Which of these is NOT considered to be an element of an insurance company? -
CORRECT ANSWER Negotiating
What is a warranty? - CORRECT ANSWER is a statement guaranteed to be
true
A life insurance policy would be considered a wagering contract WITHOUT: -
CORRECT ANSWER insurable interest
G is an accountant who has ten employees and is concerned about how the
business would survive financially if G became disabled. The type of policy which
BEST addresses this concern is - CORRECT ANSWER Business Overhead
Expense
