214 License Exam Questions And Answers
Latest Update 2024 – 2025
Which of the following describes a participating insurance policy? –ANSWER:
Policyowners 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? - ANSWER: Upon completion of the application
Dividends payable to a policyowner are: - ANSWER: Declared by the insurance
company.
At what point does an informal agreement become a binding contract? - ANSWER:
When consideration is provided by one of the parties to the contract
When third-party ownership is involved, applicants who also happen to be the stated
primary beneficiary are required to have - ANSWER: Insurable interest in the
proposed insured
Which of the following arrangements allows one to bypass insurable interest laws? -
ANSWER: (STOLI) or Investor Originated Life Insurance
Taking receipt of premiums and holding them for the insurance company is an
example of - ANSWER: Fiduciary Responsibility
A policy of adhesion can only be modified by whom? - ANSWER: The Insurance
Company
The exchange of unequal values reflects: - ANSWER: Aleatory
Life and health insurance policies are - ANSWER: Unilateral Contracts (one makes
promise, other can only accept by performance
The consideration clause of insurance contract includes - ANSWER: The schedule and
amount of premium payments
A life insurance arrangement which circumvents insurable interest values is called -
ANSWER: Investor Originated Life Insurance (IOLI)
Who makes the legally enforceable promises in a unilateral contract? - ANSWER: The
Insurance Company
, A life insurance policy would be considered a wagering contract WITHOUT: -
ANSWER: Insurable Interest
A life insurance policy that provides a policyowner with cash value along with a level
face amount is called: - ANSWER: Whole Life Policy
Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies? -
ANSWER: the Policyowner(investor)
K purchased a Life insurance policy in 1986 which paid 10% interest in the early
years of the policy. Twenty years after the purchase, she received a notice from the
insurer stating that the policy will soon terminate unless a much-higher premium is
paid because of falling interest rates. This type of policy is known as: - ANSWER:
Universal Life Policy
Which of these would be considered a Limited-Pay-Life policy? - ANSWER: Life Paid
Up at Age 70
K is looking to purchase Renewable Term insurance. Which of these types of Term
insurance may be renewable? - ANSWER: Level Term Policy (pays same death benefit
if insured dies any time during policy)
A universal life policy is sometimes referred to as an unbundled Life Policy because
the owner can see the interest earned, cost of insurance, and - ANSWER: Expense
Charges
What type of insurance offers permanent life coverage with premiums that are
payable for life? - ANSWER: Whole Life Policy
Which provision allows the policyowner to change a term life policy to a permanent
one without providing proof of good health? - ANSWER: Conversion
When is the face amount of a Whole Life policy paid? - ANSWER: When the insured
dies, or the policy's maturity, whichever comes first!
Additional coverage can be added to a Whole Life policy by adding a(n) - ANSWER:
Decreasing Term Rider
When a life policy exceeds certain IRS table values, the result would create which of
the following? - ANSWER: Modified Endowment Contract (MEC)
K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an
automobile accident. How much will the insurance company pay the beneficiary? -
ANSWER: $20,000 death benefit.
Latest Update 2024 – 2025
Which of the following describes a participating insurance policy? –ANSWER:
Policyowners 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? - ANSWER: Upon completion of the application
Dividends payable to a policyowner are: - ANSWER: Declared by the insurance
company.
At what point does an informal agreement become a binding contract? - ANSWER:
When consideration is provided by one of the parties to the contract
When third-party ownership is involved, applicants who also happen to be the stated
primary beneficiary are required to have - ANSWER: Insurable interest in the
proposed insured
Which of the following arrangements allows one to bypass insurable interest laws? -
ANSWER: (STOLI) or Investor Originated Life Insurance
Taking receipt of premiums and holding them for the insurance company is an
example of - ANSWER: Fiduciary Responsibility
A policy of adhesion can only be modified by whom? - ANSWER: The Insurance
Company
The exchange of unequal values reflects: - ANSWER: Aleatory
Life and health insurance policies are - ANSWER: Unilateral Contracts (one makes
promise, other can only accept by performance
The consideration clause of insurance contract includes - ANSWER: The schedule and
amount of premium payments
A life insurance arrangement which circumvents insurable interest values is called -
ANSWER: Investor Originated Life Insurance (IOLI)
Who makes the legally enforceable promises in a unilateral contract? - ANSWER: The
Insurance Company
, A life insurance policy would be considered a wagering contract WITHOUT: -
ANSWER: Insurable Interest
A life insurance policy that provides a policyowner with cash value along with a level
face amount is called: - ANSWER: Whole Life Policy
Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies? -
ANSWER: the Policyowner(investor)
K purchased a Life insurance policy in 1986 which paid 10% interest in the early
years of the policy. Twenty years after the purchase, she received a notice from the
insurer stating that the policy will soon terminate unless a much-higher premium is
paid because of falling interest rates. This type of policy is known as: - ANSWER:
Universal Life Policy
Which of these would be considered a Limited-Pay-Life policy? - ANSWER: Life Paid
Up at Age 70
K is looking to purchase Renewable Term insurance. Which of these types of Term
insurance may be renewable? - ANSWER: Level Term Policy (pays same death benefit
if insured dies any time during policy)
A universal life policy is sometimes referred to as an unbundled Life Policy because
the owner can see the interest earned, cost of insurance, and - ANSWER: Expense
Charges
What type of insurance offers permanent life coverage with premiums that are
payable for life? - ANSWER: Whole Life Policy
Which provision allows the policyowner to change a term life policy to a permanent
one without providing proof of good health? - ANSWER: Conversion
When is the face amount of a Whole Life policy paid? - ANSWER: When the insured
dies, or the policy's maturity, whichever comes first!
Additional coverage can be added to a Whole Life policy by adding a(n) - ANSWER:
Decreasing Term Rider
When a life policy exceeds certain IRS table values, the result would create which of
the following? - ANSWER: Modified Endowment Contract (MEC)
K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an
automobile accident. How much will the insurance company pay the beneficiary? -
ANSWER: $20,000 death benefit.
