Florida Insurance License: Life, Health And Annuity Exam! Trivia Quiz
Below is a Florida Insurance License: Life, Health, and Annuity Exam! Insurance is the act of putting money in a company so as to protect you from the occurrence of a risk that may lead to loss or damage to the insured. How about you up this quiz and see if you know about the covers in Florida insurance in order to get your dream job.
Questions and Answers
- 1.
A moral hazard is a hazard arising from indifference to loss because of the existence of insurance.
- A.
T
- B.
F
Correct Answer
B. FExplanation
The given statement is false. A moral hazard refers to the increased risk-taking or reckless behavior that can occur when individuals or organizations are protected from the consequences of their actions by insurance or other forms of protection. It is not indifference to loss, but rather a willingness to take on more risk due to the belief that any negative consequences will be mitigated by insurance coverage.Rate this question:
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- 2.
Jimmy keeping his money out of the stock market is an example of risk avoidance.
- A.
T
- B.
F
Correct Answer
A. TExplanation
Jimmy keeping his money out of the stock market demonstrates risk avoidance because he is choosing not to invest in a potentially volatile and unpredictable market. By avoiding the stock market, Jimmy is minimizing the risk of losing his money due to market fluctuations or downturns. This decision indicates a preference for safer, more stable investment options or simply keeping his money in a secure place rather than taking on the potential risks associated with investing in stocks.Rate this question:
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- 3.
Only pure risks are insurable.
- A.
T
- B.
F
Correct Answer
A. TExplanation
Pure risks refer to risks that have only two possible outcomes - loss or no loss. These risks are insurable because they can be quantified and the probability of occurrence can be determined. Insurance companies are able to assess the risk and provide coverage based on the likelihood of a loss happening. On the other hand, speculative risks involve the possibility of gain or loss, and are not insurable as the potential for gain complicates the assessment of risk.Rate this question:
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- 4.
Risk in the insurance business is best described as uncertainty regarding financial loss.
- A.
T
- B.
F
Correct Answer
A. TExplanation
Risk in the insurance business refers to the uncertainty or possibility of experiencing a financial loss. Insurance companies exist to provide coverage and protection against potential financial losses that individuals or businesses may face. Therefore, it can be concluded that risk in the insurance business is best described as uncertainty regarding financial loss.Rate this question:
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- 5.
One of the most effective ways of reducing risk is by buying insurance.
- A.
T
- B.
F
Correct Answer
B. FExplanation
This statement is false because while buying insurance can help mitigate certain risks, it is not the only or most effective way of reducing risk. Other risk reduction strategies include diversifying investments, implementing safety protocols, conducting risk assessments, and implementing risk management plans. Insurance is just one tool in a comprehensive risk management approach.Rate this question:
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- 6.
A basic principle of insurance where a large number covers the losses of a few is called risk pooling.
- A.
T
- B.
F
Correct Answer
A. TExplanation
Risk pooling is a basic principle of insurance where a large number of individuals contribute to a pool of funds that can cover the losses of a few individuals who experience an insured event. This principle allows for the spreading of risk and ensures that the financial burden of losses is shared among a larger group, making insurance more affordable and accessible for everyone. Therefore, the statement is true.Rate this question:
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- 7.
A tornado is an example of a moral hazard.
- A.
T
- B.
F
Correct Answer
B. FExplanation
A tornado is not an example of a moral hazard. A moral hazard refers to a situation where individuals or entities take excessive risks because they know they will be protected from the consequences. However, a tornado is a natural disaster and not a result of human behavior or decision-making. Therefore, it does not fall under the category of moral hazard.Rate this question:
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- 8.
An HMO is considered a service provider.
- A.
T
- B.
F
Correct Answer
A. TExplanation
An HMO, which stands for Health Maintenance Organization, is indeed considered a service provider. HMOs are healthcare organizations that provide managed care services, such as medical treatment, preventive care, and health education, to their members. They typically have a network of healthcare providers, including doctors and hospitals, that members can choose from for their healthcare needs. Therefore, the statement that an HMO is considered a service provider is correct.Rate this question:
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- 9.
A PPO is considered a service provider.
- A.
T
- B.
F
Correct Answer
A. TExplanation
A PPO, or Preferred Provider Organization, is a type of healthcare plan that contracts with a network of healthcare providers to offer services to its members at discounted rates. As a service provider, a PPO negotiates contracts with healthcare providers to establish a network of preferred providers. Members of the PPO can choose to receive care from any provider within the network without needing a referral. Therefore, the statement that a PPO is considered a service provider is true.Rate this question:
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- 10.
Lloyd’s of London is considered a service provider.
- A.
T
- B.
F
Correct Answer
B. FExplanation
Lloyd's of London is not considered a service provider. It is actually an insurance marketplace where various insurance underwriters come together to provide coverage for a wide range of risks. They do not directly provide services to individuals or businesses, but rather facilitate the process of obtaining insurance coverage through their marketplace.Rate this question:
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- 11.
A reinsurer is a company that cedes the risk.
- A.
T
- B.
F
Correct Answer
B. FExplanation
A reinsurer is actually a company that assumes or takes on the risk from another insurance company. They provide financial protection to the primary insurer by taking on a portion of the risk associated with the policies they underwrite. This helps the primary insurer to manage their risk exposure and protect their financial stability. Therefore, the correct answer is False.Rate this question:
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- 12.
Licensed agents legally represent the insurer in an insurance transaction.
- A.
T
- B.
F
Correct Answer
A. TExplanation
Licensed agents are individuals who have obtained the necessary qualifications and certifications to legally represent the insurer in insurance transactions. They act as intermediaries between the insurer and the insured, providing information, advice, and assistance in purchasing insurance policies. Their role includes explaining policy terms, helping clients understand their coverage options, and assisting with claims processes. By being licensed, agents have the authority to bind the insurer to the terms of the insurance contract, making the statement true.Rate this question:
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- 13.
Fraternal Benefit companies must be non-profit organizations and can only offer benefits to members.
- A.
T
- B.
F
Correct Answer
A. TExplanation
Fraternal Benefit companies must be non-profit organizations and can only offer benefits to members. This means that these companies cannot operate for profit and their main purpose is to provide benefits to their members. They cannot offer benefits to non-members or the general public. This is in line with the nature of fraternal benefit organizations, which are typically formed by groups of individuals with a common interest or purpose, such as a professional association or a religious group, to provide mutual support and benefits to their members.Rate this question:
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- 14.
The head of state a state office of insurance regulation is in charge of making insurance laws
- A.
T
- B.
F
Correct Answer
B. FExplanation
The given answer is False. The head of state office of insurance regulation is responsible for overseeing and regulating insurance activities within the state, but they do not have the authority to make insurance laws. The power to create and pass insurance laws lies with the legislative branch of the government.Rate this question:
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- 15.
The state guarantee office guarantees that a policy will be issued.
- A.
T
- B.
F
Correct Answer
B. FExplanation
The statement is false because the state guarantee office does not guarantee that a policy will be issued. The role of the state guarantee office is to provide a safety net for policyholders in case an insurance company becomes insolvent and is unable to fulfill its obligations. The state guarantee office steps in to ensure that policyholders receive the benefits they are entitled to. However, the office does not guarantee the issuance of policies.Rate this question:
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- 16.
In addition to the state the SEC (Securities and Exchange Commission) regulates variable life and variable annuities.
- A.
T
- B.
F
Correct Answer
A. TExplanation
The statement is true. The SEC, which stands for Securities and Exchange Commission, does regulate variable life and variable annuities. These are types of insurance policies that allow the policyholder to invest in various investment options, such as stocks and bonds. The SEC regulates these products to ensure that they are being sold and marketed accurately and that investors are protected from fraud or misleading information.Rate this question:
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- 17.
Producers are expected to assess the prospects financial ability to pay commissions.
- A.
T
- B.
F
Correct Answer
B. FExplanation
Producers are not expected to assess the prospects' financial ability to pay commissions. It is the responsibility of the prospects to determine their own financial ability to pay commissions.Rate this question:
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- 18.
Reinsures usually deal with group policies.
- A.
T
- B.
F
Correct Answer
B. FExplanation
Reinsurers do not usually deal with group policies. Reinsurers are insurance companies that provide coverage to other insurance companies. They typically deal with individual policies, where they assume a portion of the risk from the primary insurer. Group policies, on the other hand, are typically offered by primary insurers directly to groups of individuals, such as employees of a company or members of an organization. Reinsurers may occasionally participate in group policies, but it is not their usual focus.Rate this question:
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- 19.
The buyers guide’s purpose is to ensure that the buyer obtains the lost price for insurance.
- A.
T
- B.
F
Correct Answer
B. FExplanation
The statement is false because the purpose of the buyer's guide is not to ensure that the buyer obtains the lowest price for insurance. The buyer's guide provides information and guidance to help buyers make informed decisions when purchasing insurance, but it does not guarantee the lowest price. The guide may include factors to consider when comparing prices, but its main purpose is to educate buyers about insurance policies and coverage options.Rate this question:
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- 20.
Stock companies may be converted into a mutual company through a process call mutualization.
- A.
T
- B.
F
Correct Answer
A. TExplanation
This statement is true. Stock companies can indeed be converted into a mutual company through a process called mutualization. Mutualization refers to the transformation of a stock company, which is owned by shareholders, into a mutual company, which is owned by its policyholders or members. This conversion typically involves the transfer of ownership from the shareholders to the policyholders, resulting in a change in the company's structure and governance.Rate this question:
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- 21.
In Florida the law specifies that no life or health insurance policy may be issued for delivery unless the application is taken by and the policy is delivered through a licensed agent who will receive commissions.
- A.
T
- B.
F
Correct Answer
A. TExplanation
The statement is true. According to the law in Florida, no life or health insurance policy can be issued unless it is taken by a licensed agent who will receive commissions. This means that insurance policies cannot be obtained or delivered without involving a licensed agent who will earn commissions from the sale.Rate this question:
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- 22.
A contract is an agreement that is enforceable by law.
- A.
T
- B.
F
Correct Answer
A. TExplanation
A contract is a legally binding agreement between two or more parties. It means that if any party fails to fulfill their obligations as stated in the contract, the other party can take legal action to enforce the terms of the agreement. Therefore, a contract is indeed enforceable by law.Rate this question:
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- 23.
For a contract to be legally valid it is not necessary to contain an offer and acceptance nor does it need to contain consideration or legal purpose.
- A.
T
- B.
F
Correct Answer
B. FExplanation
This statement is incorrect. In order for a contract to be legally valid, it must contain an offer and acceptance, consideration, and a legal purpose. These elements are essential to create a binding agreement between parties. Without these elements, the contract may be deemed unenforceable or void. Therefore, the correct answer is False.Rate this question:
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- 24.
Insurance contracts are aleatory in that there is an element of chance for both parties involved and the dollar values to be exchanged may not be equal.
- A.
T
- B.
F
Correct Answer
A. TExplanation
Insurance contracts are considered aleatory because they involve an element of chance for both parties involved. This means that the outcome of the contract is uncertain and depends on future events. Additionally, the dollar values to be exchanged in an insurance contract may not be equal, as the insured pays premiums to the insurer in exchange for the potential benefits or coverage provided by the policy.Rate this question:
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- 25.
Insurance contracts are contracts of adhesion.
- A.
T
- B.
F
Correct Answer
A. TExplanation
Insurance contracts are considered contracts of adhesion because they are typically offered on a take-it-or-leave-it basis, with the terms and conditions set by the insurer. The insured party usually has little to no ability to negotiate or modify the terms of the contract. This is because insurance contracts are standardized and designed to protect the insurer's interests. The insured party must either accept the contract as is or seek coverage elsewhere. This makes insurance contracts unequal in terms of bargaining power, hence making them contracts of adhesion.Rate this question:
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- 26.
A warranty in an insurance contract is a statement that is made by the applicant is guaranteed to be true.
- A.
T
- B.
F
Correct Answer
A. TExplanation
A warranty in an insurance contract is a statement that is made by the applicant and is guaranteed to be true. This means that when the applicant provides information or makes a statement in the insurance contract, they are legally bound to ensure that it is accurate and true. If the statement is found to be false or inaccurate, it can lead to the denial of coverage or the cancellation of the insurance policy. Therefore, it is important for applicants to provide truthful and accurate information when filling out insurance contracts.Rate this question:
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- 27.
A representation made by an applicant is a statement that the applicant guarantees to be true.
- A.
T
- B.
F
Correct Answer
B. FExplanation
The statement in the question is false. A representation made by an applicant is not a statement that the applicant guarantees to be true. A representation is simply a statement or assertion made by the applicant, which may or may not be true. It is not a guarantee of truthfulness.Rate this question:
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- 28.
Concealment means that the applicant has been totally upfront and honest on their application.
- A.
T
- B.
F
Correct Answer
B. FExplanation
Concealment means that the applicant has not been upfront and honest on their application.Rate this question:
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- 29.
You do not to have an insurable interest on a policy holder to be named beneficiary.
- A.
T
- B.
F
Correct Answer
B. FExplanation
To be named as a beneficiary on a policy, it is necessary to have an insurable interest in the policyholder. Insurable interest refers to a financial or emotional stake in the life or well-being of the insured individual. Without an insurable interest, it would be inappropriate for someone to benefit from the policy. Therefore, the statement is false.Rate this question:
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- 30.
Express authority is the authority a principal gives to its agent.
- A.
T
- B.
F
Correct Answer
A. TExplanation
The statement is true because express authority refers to the authority that a principal explicitly grants to its agent. This can be done through written or verbal communication, where the principal clearly outlines the agent's powers and responsibilities. Express authority is essential in establishing a clear understanding between the principal and agent, ensuring that the agent acts within the scope of their granted authority.Rate this question:
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- 31.
Apparent authority is authority that a is not expressly granted, but which the agent is assumed to have in order to Transact business of the principal.
- A.
T
- B.
F
Correct Answer
B. FExplanation
The statement is false. Apparent authority is authority that is not expressly granted, but which the agent is assumed to have based on the actions or representations of the principal. It is the authority that a reasonable third party would assume the agent has, even if it is not explicitly given.Rate this question:
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- 32.
Implied authority is the appearance of, or the assumption of, authority based on the actions, words, or deeds of the principal
- A.
T
- B.
F
Correct Answer
B. FExplanation
Implied authority is not based on the actions, words, or deeds of the principal. It is actually based on the actions, words, or deeds of the agent. Implied authority refers to the authority that an agent reasonably assumes to have in order to carry out the tasks assigned by the principal. Therefore, the correct answer is False.Rate this question:
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- 33.
A fiduciary is a person who holds a position of special trust or confidence.
- A.
T
- B.
F
Correct Answer
A. TExplanation
A fiduciary is indeed a person who holds a position of special trust or confidence. This means that they are entrusted with managing and protecting the interests of another person or entity. As a fiduciary, they are legally obligated to act in the best interests of the person or entity they are representing, and they must avoid any conflicts of interest. This role often applies to professionals such as lawyers, financial advisors, and trustees, who are expected to prioritize the needs and well-being of their clients or beneficiaries.Rate this question:
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- 34.
A waiver is the voluntary relinquishment of a known right.
- A.
T
- B.
F
Correct Answer
A. TExplanation
A waiver refers to the act of giving up or surrendering a known right willingly. This means that an individual or party is consciously choosing to renounce a particular right that they are aware of. This can be done in various contexts, such as legal agreements, contracts, or even personal situations. The correct answer, "T", indicates that the statement is true, as it accurately defines a waiver as the voluntary relinquishment of a known right.Rate this question:
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- 35.
An example of a legal consideration is the paying of an initial premium.
- A.
T
- B.
F
Correct Answer
A. TExplanation
The statement is true because the payment of an initial premium is a legal consideration. In insurance contracts, the premium is the amount of money paid by the insured to the insurer in exchange for the coverage provided. It is a legal requirement for the insured to pay the premium in order to enter into a valid insurance contract. Therefore, the paying of an initial premium is indeed a legal consideration.Rate this question:
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- 36.
An insurance company has four years to challenge the validity of a life insurance contract.
- A.
T
- B.
F
Correct Answer
B. FExplanation
The statement is false. An insurance company typically has a specific time frame, known as the contestability period, within which they can challenge the validity of a life insurance contract. This period is usually two years from the date the policy was issued. After this period, the contract is considered valid and the insurance company cannot challenge it based on the insured's misrepresentation or non-disclosure. Therefore, the insurance company does not have four years to challenge the validity of a life insurance contract.Rate this question:
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- 37.
An insurable interest must be present after a life or health insurance policy is issued.
- A.
T
- B.
F
Correct Answer
B. FExplanation
The statement is false. An insurable interest must be present at the time the life or health insurance policy is initiated, not after it is issued. Insurable interest refers to the financial or emotional interest an individual has in the life or health of another person. It ensures that the policyholder has a legitimate reason to protect the insured person's life or health.Rate this question:
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- 38.
There are three basic kinds of coverage, and they are ordinary insurance, industrial insurance and group insurance.
- A.
T
- B.
F
Correct Answer
A. TExplanation
The statement is true. The three basic kinds of coverage mentioned - ordinary insurance, industrial insurance, and group insurance - are indeed types of insurance coverage.Rate this question:
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- 39.
Term Life Insurance is sometimes called “temporary insurance”.
- A.
T
- B.
F
Correct Answer
A. TExplanation
Term Life Insurance is sometimes called "temporary insurance" because it provides coverage for a specific period of time, typically 10, 20, or 30 years. Unlike permanent life insurance, which provides coverage for the insured's entire lifetime, term life insurance is designed to provide temporary protection. It is often chosen by individuals who want coverage during a specific period when they have financial obligations or dependents to protect, such as when they have young children or a mortgage. Once the term expires, the coverage ends unless it is renewed or converted into a permanent policy.Rate this question:
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- 40.
The cash values that accrue in a insurance policy belongs to the Insurer and not the Policy Owner.
- A.
T
- B.
F
Correct Answer
B. FExplanation
The cash values that accrue in an insurance policy actually belong to the policy owner and not the insurer. These cash values are typically accumulated over time and can be accessed by the policy owner through withdrawals or loans. Therefore, the correct answer is false.Rate this question:
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- 41.
With whole life insurance the policy’s cash value decreases each year the policy is in force.
- A.
T
- B.
F
Correct Answer
B. FExplanation
This statement is false. With whole life insurance, the policy's cash value actually increases over time. The cash value is a component of the policy that grows over time as premiums are paid and earns interest. It can be accessed by the policyholder through loans or withdrawals. Therefore, the correct answer is false.Rate this question:
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- 42.
It would be better to use decreasing term insurance if the need for protection declines from year to year.
- A.
T
- B.
F
Correct Answer
A. TExplanation
If the need for protection declines from year to year, it would be more suitable to use decreasing term insurance. This type of insurance provides coverage that decreases over time, aligning with the decreasing need for protection. By opting for decreasing term insurance, individuals can ensure that they are not paying for unnecessary coverage as their protection needs decrease.Rate this question:
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- 43.
A policy covering two lives that only pays a death benefit when the second insured person dies is know as a joint and last survivor policy.
- A.
T
- B.
F
Correct Answer
A. TExplanation
A joint and last survivor policy is a type of insurance policy that covers two lives and pays out a death benefit only when the second insured person dies. This means that the policy remains in effect even after the first insured person passes away, and the death benefit is paid out upon the death of the second insured person.Rate this question:
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- 44.
A multiple protection policy is one that pays double or triple the face amount if death occurs during a specific period of time.
- A.
T
- B.
F
Correct Answer
A. TExplanation
A multiple protection policy is a type of life insurance policy that offers an increased payout if the insured person dies within a specific period of time. This means that if the policyholder passes away during this time frame, the beneficiary will receive a payout that is double or triple the original face amount of the policy. This additional payout provides extra financial protection to the policyholder's loved ones in the event of their untimely death.Rate this question:
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- 45.
Variable contracts are not considered to be securities products.
- A.
T
- B.
F
Correct Answer
B. FExplanation
Variable contracts are actually considered to be securities products. Variable contracts are a type of insurance contract that allows the policyholder to invest their premiums in a variety of investment options, such as mutual funds. These contracts are regulated by the Securities and Exchange Commission (SEC) and are subject to the same rules and regulations as other securities products. Therefore, the statement that variable contracts are not considered to be securities products is incorrect.Rate this question:
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- 46.
The entire contract provision is found at the beginning of the policy and specifically states that the policy document, application included in the policy as well as any attached rider constitutes the entire contract.
- A.
T
- B.
F
Correct Answer
A. TExplanation
The statement is true because it states that the entire contract provision can be found at the beginning of the policy. It also specifies that the policy document, application included in the policy, and any attached rider are all part of the entire contract. This means that all these documents together form the complete agreement between the parties involved.Rate this question:
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- 47.
The insuring clause or provision sets for the company’s basic promise to pay benefits upon the insured’s death.
- A.
T
- B.
F
Correct Answer
A. TExplanation
The insuring clause or provision is a fundamental part of an insurance policy that outlines the company's commitment to providing benefits in the event of the insured person's death. It serves as a contractual agreement between the insurance company and the policyholder, stating that the company will fulfill its obligation to pay out the agreed-upon benefits upon the insured's death.Rate this question:
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- 48.
In Florida, the free-look period for insurance contracts and annuities is 20 days from policy delivery.
- A.
T
- B.
F
Correct Answer
B. FExplanation
The given statement is false. In Florida, the free-look period for insurance contracts and annuities is 14 days from policy delivery, not 20 days. During this period, the policyholder has the right to review the policy and cancel it if they are not satisfied, without any penalties or charges.Rate this question:
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- 49.
State insurance laws do not require a cash value policy to include a policy loan provision.
- A.
T
- B.
F
Correct Answer
B. FExplanation
State insurance laws do require a cash value policy to include a policy loan provision.Rate this question:
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- 50.
The suicide provision, found in most policies, usually states that a death benefit will not be paid in cases of suicide between one or two years of purchasing the policy.
- A.
T
- B.
F
Correct Answer
A. TExplanation
The statement is true. The suicide provision is a common clause in insurance policies that states that if the policyholder dies by suicide within the first one or two years of purchasing the policy, the death benefit will not be paid. This provision is in place to prevent individuals from purchasing a policy with the intention of committing suicide shortly after to provide financial support for their beneficiaries.Rate this question:
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Mar 22, 2023Quiz Edited by
ProProfs Editorial Team -
Sep 19, 2009Quiz Created by
Nedramball
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