Page 1 of 24
LIFE & HEALTH INSURANCE EXAM PRACTICE QUESTIONS
AND ANSWERS FOR EXAM PREPARATION
>> consideration
- correct answer- The payment of the first premium, the promise to pay a covered loss, and the
agreement to abide by policy conditions are all examples of...
>> conditional contract
- correct answer- The insurer's obligation to pay a claim depends on whether the insured or
beneficiary has complied with all policy conditions. This makes the policy a(n)
>> Implied Authority
- correct answer- XYZ Insurance Company gives direct authority to its producers to sell insurance
through an agency contract, but nothing is stated regarding the collection of premiums. Which
authority grants the producer the right to collect premiums?
>> A policy is purchased by a parent for a minor child.
- correct answer- Which situation would not require the insured's consent when a life insurance
policy is issued?
>> Waiver
- correct answer- A insurance company's failure to enforce a contract's provision is called a(n)
>> Inception of the contract
- correct answer- When must insurable interest exist for a life insurance contract to be valid?
, Page 2 of 24
>> Contract of Adhesion
- correct answer- The courts will normally interpret a policy in favor of the insured when the
meaning of the policy is not clear. This is because an insurance policy is a(n)
>> Apparent Authority
- correct answer- Use of XYZ Insurance Company brochures, business cards, and rating guides is an
example of
>> Initial offer is void
- correct answer- What happens when an initial offers is answered with a counteroffer?
>> warranty
- correct answer- During the application process, a statement made by an applicant that becomes
part of the contract is considered to be a(n)
>> An issued policy
- correct answer- What qualifies as acceptance of an insurance contract offer?
>> material
- correct answer- An insurance contract may be voided if a misrepresentation found on the
application is determined to be
>> endorsement
- correct answer- Christopher is issued an insurance policy that contains an attached agreement
which alters the terms of the policy. This attached agreement is called a(n)
>> Consideration
Offer and Acceptance
, Page 3 of 24
Competent parties
- correct answer- The following are all elements of a valid contract
>> Reasonable expectations
- correct answer- Ambiguities in insurance contracts are typically interpreted in favor of the
insured. This rule is referred to as
>> Marriage partners
- correct answer- Which of the following relationships demonstrates insurable interest in the
absence of economic interest?
>> Making a recommendation to a potential insured to replace existing coverage
- correct answer- Which of the following situations would an insurance agent need to guard
against liability for professional errors and omissions?
>> Marriage
Blood-related
Co-owning a business
- correct answer- What indicates the presence of insurable interest in a life insurance contract?
>> implied authority
- correct answer- The unwritten authority given to a producer to carry out necessary incidental
acts of the agency agreement is called
>> material
- correct answer- An insurance contract may be voided if a misrepresentation found on the
application is determined to be
LIFE & HEALTH INSURANCE EXAM PRACTICE QUESTIONS
AND ANSWERS FOR EXAM PREPARATION
>> consideration
- correct answer- The payment of the first premium, the promise to pay a covered loss, and the
agreement to abide by policy conditions are all examples of...
>> conditional contract
- correct answer- The insurer's obligation to pay a claim depends on whether the insured or
beneficiary has complied with all policy conditions. This makes the policy a(n)
>> Implied Authority
- correct answer- XYZ Insurance Company gives direct authority to its producers to sell insurance
through an agency contract, but nothing is stated regarding the collection of premiums. Which
authority grants the producer the right to collect premiums?
>> A policy is purchased by a parent for a minor child.
- correct answer- Which situation would not require the insured's consent when a life insurance
policy is issued?
>> Waiver
- correct answer- A insurance company's failure to enforce a contract's provision is called a(n)
>> Inception of the contract
- correct answer- When must insurable interest exist for a life insurance contract to be valid?
, Page 2 of 24
>> Contract of Adhesion
- correct answer- The courts will normally interpret a policy in favor of the insured when the
meaning of the policy is not clear. This is because an insurance policy is a(n)
>> Apparent Authority
- correct answer- Use of XYZ Insurance Company brochures, business cards, and rating guides is an
example of
>> Initial offer is void
- correct answer- What happens when an initial offers is answered with a counteroffer?
>> warranty
- correct answer- During the application process, a statement made by an applicant that becomes
part of the contract is considered to be a(n)
>> An issued policy
- correct answer- What qualifies as acceptance of an insurance contract offer?
>> material
- correct answer- An insurance contract may be voided if a misrepresentation found on the
application is determined to be
>> endorsement
- correct answer- Christopher is issued an insurance policy that contains an attached agreement
which alters the terms of the policy. This attached agreement is called a(n)
>> Consideration
Offer and Acceptance
, Page 3 of 24
Competent parties
- correct answer- The following are all elements of a valid contract
>> Reasonable expectations
- correct answer- Ambiguities in insurance contracts are typically interpreted in favor of the
insured. This rule is referred to as
>> Marriage partners
- correct answer- Which of the following relationships demonstrates insurable interest in the
absence of economic interest?
>> Making a recommendation to a potential insured to replace existing coverage
- correct answer- Which of the following situations would an insurance agent need to guard
against liability for professional errors and omissions?
>> Marriage
Blood-related
Co-owning a business
- correct answer- What indicates the presence of insurable interest in a life insurance contract?
>> implied authority
- correct answer- The unwritten authority given to a producer to carry out necessary incidental
acts of the agency agreement is called
>> material
- correct answer- An insurance contract may be voided if a misrepresentation found on the
application is determined to be
