Florida 240 License Exam Complete Questions and Guide
Answers, 100% Verified Graded A+
1. 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
Answer: Reserves
2. An insurance applicant MUST be informed of an investigation regarding
his/her reputation and character according to the
Answer: Fair Credit Reporting Act
3. A nonprofit incorporated society that does not have capital stock and oper-
ates for the sole benefit of its members is known as
Answer: A fraternal benefit society
4. What I the name of the law that requires insurers to disclose information
gathering practices and where the information was obtained?
Answer: Fair Credit Reporting Act
5. Who elects the governing body of a mutual insurance company?
Answer: Policyholders
,6. A group-owned insurance company that is formed to assume and spread the
liability ricks of its members is known as a
Answer: Risk retention group
7. What type of reinsurance contract involves two companies automatically
sharing their risk exposure?
Answer: treaty
8. What year was the McCarran-Ferguson Act enacted?
Answer: 1945
9. Which of these describe a participating life insurance policy?
Answer: Policy owners are entitled to receive dividends
10. At what point must a life insurance applicant be informed of their rights that
fall under the Fair Credit Reporting Act?
Answer: Upon completion of the application
11. Which of the following requires insurers to disclose when an applicant's
consumer or credit history is being investigated
Answer: 1970 - Fair Credit Reporting Act
12. What type of reinsurance contract involves two companies automatically
sharing their risk exposure?
,Answer: Treaty
13. A group-owned insurance company that is formed to assume and spread the
liability risks of its members is known as a
Answer: risk retention group
14. All of the following are considered to be typical characteristics describing the
nature of an insurance contract, EXCEPT
Answer: Bilateral
15. The part of a life insurance policy guaranteed to be true is called a(n)
Answer: warranty
16. Statements made on an insurance application that are believed to be true to
the best of the applicant's knowledge are called
Answer: representations
17. 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?
Answer: Aleatory
18. When must insurable interest be present in order for a life insurance policy to
be valid?
Answer: When the application is made
19. A life insurance arrangement which circumvents insurable interest statutes is
called
Answer: Investor-Originated Life Insurance
20. Stranger Originated Life Insurance (STOLI) has been found to be in violation
of which of the following contractual elements?
Answer: Legal Purpose (Insurable Interest)
21. Who makes the legally enforceable promises in a unilateral contract?
Answer: Insurance company
22. A policy of adhesion can only be modified by whom?
Answer: insurance company
23. When third-party ownership is involved, applicants who also happen to be
the stated primary beneficiary are required to have
Answers, 100% Verified Graded A+
1. 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
Answer: Reserves
2. An insurance applicant MUST be informed of an investigation regarding
his/her reputation and character according to the
Answer: Fair Credit Reporting Act
3. A nonprofit incorporated society that does not have capital stock and oper-
ates for the sole benefit of its members is known as
Answer: A fraternal benefit society
4. What I the name of the law that requires insurers to disclose information
gathering practices and where the information was obtained?
Answer: Fair Credit Reporting Act
5. Who elects the governing body of a mutual insurance company?
Answer: Policyholders
,6. A group-owned insurance company that is formed to assume and spread the
liability ricks of its members is known as a
Answer: Risk retention group
7. What type of reinsurance contract involves two companies automatically
sharing their risk exposure?
Answer: treaty
8. What year was the McCarran-Ferguson Act enacted?
Answer: 1945
9. Which of these describe a participating life insurance policy?
Answer: Policy owners are entitled to receive dividends
10. At what point must a life insurance applicant be informed of their rights that
fall under the Fair Credit Reporting Act?
Answer: Upon completion of the application
11. Which of the following requires insurers to disclose when an applicant's
consumer or credit history is being investigated
Answer: 1970 - Fair Credit Reporting Act
12. What type of reinsurance contract involves two companies automatically
sharing their risk exposure?
,Answer: Treaty
13. A group-owned insurance company that is formed to assume and spread the
liability risks of its members is known as a
Answer: risk retention group
14. All of the following are considered to be typical characteristics describing the
nature of an insurance contract, EXCEPT
Answer: Bilateral
15. The part of a life insurance policy guaranteed to be true is called a(n)
Answer: warranty
16. Statements made on an insurance application that are believed to be true to
the best of the applicant's knowledge are called
Answer: representations
17. 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?
Answer: Aleatory
18. When must insurable interest be present in order for a life insurance policy to
be valid?
Answer: When the application is made
19. A life insurance arrangement which circumvents insurable interest statutes is
called
Answer: Investor-Originated Life Insurance
20. Stranger Originated Life Insurance (STOLI) has been found to be in violation
of which of the following contractual elements?
Answer: Legal Purpose (Insurable Interest)
21. Who makes the legally enforceable promises in a unilateral contract?
Answer: Insurance company
22. A policy of adhesion can only be modified by whom?
Answer: insurance company
23. When third-party ownership is involved, applicants who also happen to be
the stated primary beneficiary are required to have
