Florida 2-15 Insurance License Exam 2024-2025: Practice Questions and Answers, Exams of Nursing

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FLORIDA 2-15 INSURANCE LICENSE EXAM 2024 - 2025

ACTUAL EXAM 600+ QUESTIONS AND CORRECT

ANSWERS WITH RATIONALES GRADED A+

Which of the following insurance concepts is founded on the ability to predict the approximate number of deaths or frequency of disabilities within a certain group during a specific time. A. Principle of large loss B. Quantum insurance principle C. Indemnity law D. Law of large numbers - CORRECT ANSWER>>Law of large numbers The owner of a camera store is worried that her new employees may help themselves to items from inventory without paying for them. What kind of hazard is described. A. Physical hazard B. Ethical hazard C. Morale hazard D. Moral hazard - CORRECT ANSWER>>Moral hazard All of the following actions are examples of risk avoidance EXCEPT A. Bill won't fly in an airplane B. Wendy keeps her money out of the stock market C. Pat pays his insurance premium D. John never drives a car - CORRECT ANSWER>>Pat pays his insurance premium Which of the following statements is CORRECT A. Only speculative risk is insurable B. Only pure risk is insurable C. Both pure risk and speculative risks are insurable D. Neither pure risks nor speculative risks are insurable - CORRECT ANSWER>>Only pure risk is insurable Which of the following statements does NOT describe an element of an insurable risk

A. The loss must not be due to chance B. The loss must be definite and measurable C. The loss cannot be catastrophic D. The loss exposure to be insured must be large - CORRECT ANSWER>>The loss must not be due to chance In the insurance business, risk can best be defined as A. sharing the possibility of a loss B. uncertainty regarding the future C. uncertainty regarding financial loss D. uncertainty regarding when death will occur - CORRECT ANSWER>>uncertainty regarding financial loss Buying insurance is one of the most effective ways of A. avoiding risk B. transferring risk C. reducing risk D. retaining risk - CORRECT ANSWER>>transferring risk Which of the following best describes the function of insurance A. It is a form of legalized gambling B. It spreads financial risk over a large group to minimize the loss to any one individual C. It protects against living too long D. It creates and protects risk - CORRECT ANSWER>>It spread the financial risk over a large group to minimize the loss to any one individual tornado is an example of A. a physical hazard B. a speculative risk C. a peril D. a moral hazard - CORRECT ANSWER>>a peril Tom buys his wife Mary a $50,000 diamond ring. When she is not wearing the ring, she keeps it in a safe deposit box at a local bank. This is an example of risk

A. avoidance B. reduction C. retention D. transference - CORRECT ANSWER>>reduction Producers are expected to adhere to all of the following standards to protect consumers and promote suitable sales EXCEPT A. selling to customers needs B. determining the suitability if recommended products C. assessing prospects' financial ability to pay commissions D. full and accurate disclosure - CORRECT ANSWER>>assessing prospects' financial ability to pay commissions An insurance company organized and based in Florida can be described as what type of company in Florida A. Alien B. Home-based C. Foreign D. Domestic - CORRECT ANSWER>>Domestic Which of the following statements regarding types of insurers is NOT correct A. Reinsurers usually deal with policy owners B. Mutual insurance companies are "owned" by their policy owners C. Stock insurance companies seek profit for their shareholders D. Fraternal benefit societies must be nonprofit organizations - CORRECT ANSWER>>Reinsurers usually deal with policy owners Regarding landmark cases and laws involving the regulation of insurance, which of the following statements is NOT correct A. Insurers are required to disclose when an applicants consumer/credit history is being investigated B. The NAIC has standing committees that work regularly to examine various aspects of the insurance industry

C. The Federal Trade Commission (FTC) directly supervises all insurance marketing activities. S. The McCarren-Ferguson Act (1945) led directly to our current understanding that the insurance industry is predominantly regulated by state governments - CORRECT ANSWER>>The FTC directly supervises all insurance marketing activities Which of the following statements regarding the National Association of Insurance Commissioners (NAIC) is NOT correct A. the NAIC is empowered to prosecute and punish criminal violators in the insurance industry B. the NAIC seems to preserve state rather than federal regulation of the insurance industry C. the NAIC promotes uniformity in state insurance laws and regulations D. the NAIC seems to promote efficient administration of insurance laws and regulations. - CORRECT ANSWER>>the NAIC is empowered to prosecute and punish criminal violators in the insurance industry In an insurance transaction, licensed agents legally represent which of the following? A. Insurer B. Applicant and insured C. State office of insurance regulation D. Themselves - CORRECT ANSWER>>Insurer In Florida, properly licensed and appointed agents may act as brokers in insurance transactions, in which case they may legally represent A. the insurer B. the applicant and insured C. the state office of insurance regulation D. themselves - CORRECT ANSWER>>the applicant and insured A life insurance company organized in Illinois, with its home office in Philadelphia, is licensed to conduct business in Florida. In Florida, this company is classified as A. a domestic company B. an alien company C. a foreign company D. a regional company - CORRECT ANSWER>>a foreign company

Which of the following is NOT a service provider A. HMO B. Benefit plans offering medical services to subscribers C. Lloyd's of London D. PPO - CORRECT ANSWER>>Lloyd's of London A reinsurer is a company that A. accepts all the risk from another insurer B. assumes a portion of the risk from another insurer C. cedes the risk D. does not take any risk - CORRECT ANSWER>>assumes a portion of the the risk from another insurer The head of a state office of insurance regulation is generally responsible for all of the following EXCEPT A. licensing and supervising agents and brokers B. overseeing insurance companies' marketing practices C. issuing rules and regulations D. making insurance laws - CORRECT ANSWER>>making insurance laws In addition to the state, the organization that regulates variable life and variable annuities is the A. Federal Trade Commission (FTC) B. National Association of Insurance Commissioners (NAIC) C. Securities and Exchange Commission (SEC) D. Federal Communications Commission (FCC) - CORRECT ANSWER>>Securities and Exchange Commission (SEC) The Buyer's Guide is intended to accomplish all of the following EXCEPT A. help buyers choose the most suitable plan B. explain basic product features C. provide information about the recommended policy D. ensure that buyers obtain the lowest price for insurance - CORRECT ANSWER>>ensure that buyers obtain the lowest price for insurance

The State Guaranty Association guarantees A. that a policy will be issued B. that a claim will be paid if an insurer becomes insolvent C. that dividends will be paid D. the rate of return on a policy - CORRECT ANSWER>>that a claim will be paid if an insurer becomes insolvent All of the following methods support the sale of insurance through agents and brokers EXCEPT A. independent agency systems B. personal producing general agency system C. career agency system D. direct selling system - CORRECT ANSWER>>direct selling systems What two fundamentals are insurance based on? - CORRECT ANSWER>>- Risk Pooling (Loss Sharing)

• Law of Large Numbers What are the two classes or risk? - CORRECT ANSWER>>- Speculative (opportunity for loss or gain) No Insurers
• Pure (only possibility is loss) Yes Insurers The authority that an insurer gives to its agent by means of the agent's contract is known as A. implied authority B. express authority C. fiduciary responsibility D. general authority - CORRECT ANSWER>>express authority "An insurance contract is prepared by one party, the insurer, rather than by negotiations between the contacting parties." Which of the following statements explains this characteristic of insurance contracts. A. The insurance contract is an aleatory contract B. The insurance contract is a contract of acceptance C. The insurance contract is a contract of adhesion

D. The insurance contract names only the insurer as the competent party - CORRECT ANSWER>>the insurance contract is a contract of adhesion Which of the following statements regarding insurable interest is NOT correct A. Insurable interest exists when the applicant is the insured B. A policy obtained by a person without an insurable interest in the insured can be enforced C. The applicant must be subject to loss upon the death, illness, or disability of the insured D. Generally, the person to be insured must give consent before a policy is issued, even if the applicant has an insurable interest - CORRECT ANSWER>>A policy obtained by a person without an insurable interest in the insured can be enforced Which of the following statements about authority is NOT correct A. Express authority is granted by means of the agent's contract B. Express authority is determined by a principal's conduct C. Implied authority is not overtly extended in the agent's contract but does permit many of the agent's operations D. Apparent authority can be assumed from the actions of the principle - CORRECT ANSWER>>Express authority is determined by a principal's conduct Which of the following statements regarding utmost good faith in insurance contracts is CORRECT A. The concept of utmost good faith - that there is not attempt to conceal, disguise, or deceive - applies only to the insurer B. Although a warranty is a statement, it is not technically part of the contract C. A representation is a statement that the applicant guarantees to be true. D. Most state insurance laws consider statements made in an application for an insurance policy to be representations, not warranties - CORRECT ANSWER>>Most state insurance laws consider statements made in an application for an insurance policy to be representations, not warranties Which of the following statements describes an insurable interest A. The policyowner must expect to benefits from the insred's death B. The policyowner must expect to suffer a loss when the insured dies or becomes disabled C. The beneficiary, by definition, has an insurable interest in the insured

D. The insured must have a personal or business relationship with the beneficiary - CORRECT ANSWER>>The policyowner must expect to suffer a loss when the insured dies or become disabled Which of the following statements describes the parol evidence rule A. A written contract cannot be changed once it is signed B. An oral contract cannot be modified by written evidence C. A written contract cannot be changed by oral evidence D. A oral contract takes preference over any earlier written contracts - CORRECT ANSWER>>A written contract cannot be changed by oral evidence Which of the following is NOT a distinguishing characteristic of an insurance contract A. Offer and acceptance B. Conditional C. Consideration D. Competent parties - CORRECT ANSWER>>conditional An insurer is considered competent if it A. is registered with the NAIC B. is licensed or authorized by the state C. follows the Code of Ethics of the state Office of Insurance Regulation D. is registered with the Securities and Exchange Commission - CORRECT ANSWER>>is licensed of authorized by the state Competent parties who can enter into insurance contracts are A. applicants B. trusts and estates C. business entities D. all of the above - CORRECT ANSWER>>all of the above Which of the following is an example of legal considerations A. Politeness B. Initial premium

C. Legal purpose D. Offer and acceptance - CORRECT ANSWER>>initial premium With life and health contracts, when must an insurable interest exist? A. After the policy is issued B. Before the beneficiary is named C. While the policy is in force D. At the inception of the policy - CORRECT ANSWER>>At the inception of the policy An insurance company has how many years to challenge the validity of a life insurance contract A. One B. Two C. Three D. Four - CORRECT ANSWER>>two Which of the following terms is used for the voluntary relinquishment of a known right A. Estoppel B. Adhesion C. Waiver D. Unilateral - CORRECT ANSWER>>Waiver Bob and Tom enter into a contract in which Bob agrees to fraudulently induce sick people to sell their insurance contracts to Tom's company. Bob and Tom's contract can best be described as A. void B. competitive C. voidable D. conditional - CORRECT ANSWER>>void What is the difference between a peril and a hazard - CORRECT ANSWER>>- Peril - cause of loss. Life insurance peril is death. Health insurance peril is sickness

• Hazard - conditions that increase the likelihood of a loss

What are the three types of hazards - CORRECT ANSWER>>- Physical (wet floors/icy steps that increase the chance of loss)

• Moral - (smoking/stealing)
• Morale - (deciding against buckling seatbelt/driving above the speed limit) Name the four different options for treating risk - CORRECT ANSWER>>- Risk Avoidance
• Risk Reduction
• Risk Retention (Self-Insuring)
• Risk Transference Name the elements of insurable risk - CORRECT ANSWER>>- Chance
• Measurable
• Predicable
• Non-Catasrophic
• Large
• Random Explain the Human Life Value - CORRECT ANSWER>>puts a value on people's earning and how the loss of that salary, through death, disability, or retirement would affect their dependents What are the four elements needed so that a contract is legal and binding - CORRECT ANSWER>>- Offer and Acceptance
• Consideration
• Legal Purpose
• Competent Parites What is the difference between a stock insurer and a mutual insurer - CORRECT ANSWER>>- Stock Insurer - make profit for its stockholders (non-participating companies)
• Mutual Insurers - owned by the policyholders who are both customers and owners (participating companies) A large group of individuals sharing the possibility of a loss is a concepts known as: A. risk spreading B. Insurance risk C. law of large numbers D. risk pooling - CORRECT ANSWER>>risk pooling Ethics can help agents decide the right decision when situations seems

A. confusing B. ambiguous C. legal D. all of the above - CORRECT ANSWER>>all of the above One of the best ways to explain policies to the client more clearly is to use: A. policy illustrations B. marketing methods C. rebating D. coercion - CORRECT ANSWER>>policy illustrations Which law protects the rights of workers covered under an employer sponsored retirement plan? A. F.S. 626. B. ERISA C. OSHA D. 403(b) Plan - CORRECT ANSWER>>ERISA All of the following can lead to an agent's license being suspended EXCEPT A. making materially untrue statements B. stating a policy has benefits not stated in the insurance contract C. Using a policy illustration for a life policy D. Disparaging a competitive producer - CORRECT ANSWER>>using a policy illustration for a life policy An insurance salesperson who offers a $100 gourmet dinner in exchange for the purchase of a life insurance policy would be considered to have violated ethical sales practices by A. twisting B. replacement C. churning D. rebating - CORRECT ANSWER>>rebating In what phase of the selling process are serious problems of misrepresentation likely to occur?

A. Approach B. Presentation of recommendations C. Fact finding and needs analysis D. Policy delivery and ongoing service - CORRECT ANSWER>>presentation of recommendations Which of the following phrases cannot be used when explaining policies to prospective applicants or clients A. Cash value B. Vanishing premium C. Flexible premium D. Death benefit - CORRECT ANSWER>>Vanishing premium All of the following are involved in a product presentation EXCEPT A. pressure B. education C. discussion D. disclosure - CORRECT ANSWER>>pressure Which of the following is NOT part of the home office underwriting process? A. Credit report B. Medical Information Bureau report C. Applicant's analysis report D. Inspection report - CORRECT ANSWER>>Applicant's analysis report The basis for many state statutes regulating insurance advertising is the NAIC's A. McCarran-Ferguson Act B. Fair Credit Reporting Act C. Ethics in Advertising Act D. Unfair Trade Practices Act - CORRECT ANSWER>>Unfair Trade Practices Act Ethics is best described as A. laws and statues enacted by duly elected representatives B. religious rituals and ceremonies C. instructions on how to interact with fellow members of a group or community

D. a society's laws and regulations - CORRECT ANSWER>>instructions on how to interact with fellow members of a group or community Which of the following is the goal of a sales presentation A. To educated the client so the client can make her own decisions about what's right for her B. To sell the client as many products as possible C. To convince the client that the producer's recommendations are best D. To explain the rules and regulations governing particular insurance products - CORRECT ANSWER>>To educate the client so the client can make her own decisions about what's right for her Which of the following is NOT part of a sales presentation A. Review and re-establish the client-producer relationship B. Introduce the recommended policy C. Review the product application D. Review the client's needs and priorities - CORRECT ANSWER>>review the product application Which of the following should a producer NOT do during a presentation A. Explain and educate B. Sell a policy C. Motivate the client D. Openly discuss a policy's limitations - CORRECT ANSWER>>sell a policy All of the following are reasons why it is seldom in the best interest of a policyholder to replace a life insurance policy with a new on EXCEPT A. most of the first-year premium is swallowed up in commission B. the old policy, viewed objectively, no longer meets the stated needs and objective of the policyholder C. the premium is higher bet the insured is older D. waiting periods begin anew - CORRECT ANSWER>>the old policy, viewed objectively, no longer meets the stated needs and objectives of the policyholder Diverting insurance funds for personal use is an example of

A. replacement B. rebating C. misuse of premiums D. misrepresentation - CORRECT ANSWER>>misuse of premiums Selling variable universal life insurance policies as mutual funds is an example of a prohibited practice called: A. twisting B. misrepresentation C. replacement D. rebating - CORRECT ANSWER>>misrepresentation When an agent spreads a false story that damages a competing agent's reputation, the offense is called A. twisting B. defamation C. disclosure D. rebating - CORRECT ANSWER>>defamation When values of an insurance policy are used to purchase another policy with the same insurer for the sole purpose of earning additional premiums or commissions, this practice is called A. replacement B. misalliance C. rebating D. churning - CORRECT ANSWER>>churning Which of the following is an objective of the NAIC A. to promote federal legislation of the insurance industry B. to encourage uniformity in state insurance laws and regulations C. to develop continuing education courses for insurance producers D. to develop model insurance policies for adoption by insurers - CORRECT ANSWER>>to encourage uniformity in state insurance laws and regulations

Which of the following is NOT a provision of NAIC's Life Insurance Illustrations Model Regulations? A. each policy illustration must be accompanied by a written explanation or policy summary B. each policy illustration should use the words vanish and vanishing premium sparingly C. each policy illustration must show that cash values and coverage vary depending on changes in an insurer's costs and dividends D. each policy illustration must be complete - CORRECT ANSWER>>each policy illustration should use the words vanish and vanishing premium sparingly Which of the following is NOT part of a product presentation A. explaining policies B. asking for referrals C. motivating the client D. discussing a policy's limitations - CORRECT ANSWER>>asking for referrals The use of preprinted material in a sales presentation is recommended for which of the following reasons A. the agent doesn't have to know exactly how a product works B. it saves a lot of time and explanations C. such material generally has been reviewed for compliance D. the agent can give it to the client instead of answering the client's questions - CORRECT ANSWER>>such material generally has been reviewed for compliance The purpose behind full disclosure requirements is to A. make sure a client is told everything there is to know about a product B. help a client make an informed decision C. make sure agents comply with the letter of the law D. help a client distinguish one insurer's product from a similar offering from another insurer - CORRECT ANSWER>>help a client make an informed decision Jim gives Bill a couple of tickets to a baseball game to thank him for purchasing a policy. This is an A. rebating

B. twisting C. replacement D. churning - CORRECT ANSWER>>rebating Which of the following is an example of churning A. illegally inducing a person to drop existing insurance to purchase a similar coverage with another agent or company B. rephrasing a policy provision in such a way that it says just the opposite of the original C. replacing a policy for another with the same insurer with the intent of earning additional premiums or commissions D. representing an insurance policy as a retirement plan - CORRECT ANSWER>>replacing a policy for another with the same insurer with the intent of earning additional premiums or commissions Melanie is a newly licensed producer. A customer calls and asks for some product recommendations, but Melanie thinks that she is not yet qualified to help the customer. Therefore, Melanie has an ethical responsibility to A. answer the customer's questions on the basis of her current knowledge and then send a letter confirming their conversation B. assure the customer that because she is licensed, there is a presumption that the advise Melanie gives is reliable C. refuse to speak to the customer D. seek help from a more experienced colleague or other professional before responding to the customer's questions - CORRECT ANSWER>>seek help from a more experienced colleague or other professional before responding to the customer's questions Solicitation of insurance includes A. inviting prospective purchasers to enter a contract for an insurance product B. making general or specific recommendations concerning insurance products C. comparing insurance products, advising on insurance matters, or interpreting policies or coverages D. All of the above - CORRECT ANSWER>>all of the above How is constructive delivery accomplished

A. the policy is mailed to the agent B. the insurer does not relinquish control of the policy C. the company delivers the policy to the underwriter D. the policy is scanned and reviewed on the company's website - CORRECT ANSWER>>the policy is mailed to the agent Each application requires the following signatures A. insured B. agent C. policyowner D. all of the above - CORRECT ANSWER>>all of the above which entity has the primary responsibility for organizing and licensing insurance companies A. Financial Service Commission B. Office of Insurance Regulation C. Department of Financial Services D. The Legislature - CORRECT ANSWER>>Office of Insurance Regulation Underwriters take into consideration all of the following EXCEPT A. health B. age C. education D. occupation - CORRECT ANSWER>>education Premiums will rise at what portion of the life of a whole policy A. when insured reached 65 B. when the insured renews the policy contract C. premiums will remain level for the policy's life D. when the policy term ends - CORRECT ANSWER>>premiums will remain level for the policy's life The amount of a whole life policy's cash value depends on all of the following EXCEPT A. face amount of the policy

B. interest rates C. how long the policy has been in force D. duration and amount of premium payment - CORRECT ANSWER>>interest rates Limited pay whole life policies extend until age. A. 100 B. 65 C. 80 D. 72 - CORRECT ANSWER>> Any false or derogatory comment that is written or oral that injures another person's reputation is A. coercion B. defamation C. misrepresentation D. churning - CORRECT ANSWER>>defamation Giving the impression that the policy dividends or cash value projections are guaranteed is called A. defamation B. churning C. misrepresentation D. policy illustrations - CORRECT ANSWER>>misrepresentation A warranty is a statement made by the applicant that is A. researched by the agent B. signed off by the underwriter C. backed up by the agent D. guaranteed to be true - CORRECT ANSWER>>guaranteed to be true Insurance contracts are contracts of adhesion because A. they are drawn up by one party B. it is the result of negotiations

C. the insurer "adheres" to the terms of the contract D. ambiguity favors the insurer - CORRECT ANSWER>>they are drawn up by one party All of the following are elements of a legal and binding contract EXCEPT A. Offer and Acceptance B. Competent Parties C. Review D. Consideration - CORRECT ANSWER>>review Which of the following are main principles of agency law A. knowledge of the insurer regarding business B. a contract completed by an agent on behalf of the principal C. payments made to an attorney on behalf of the principal D. the act of the insurer are the acts of the principal - CORRECT ANSWER>>a contract completed by an agent on behalf of the principal What is the difference between compliance, ethics and market conduct - CORRECT ANSWER>>- Compliance - conducting business within current rules and laws set by the government (Minimum Standards)

• Ethics - standards of conduct and moral judgment.
• Market Conduct - combination of both Ethics and Compliance What is the difference between twisting, churning, and coercion - CORRECT ANSWER>>- Twisting - (External replacement) illegally inducing a person to drop existing insurance coverage to buy similar coverage with another company
• Churning (Internal replacement) Illegally replacing a policy within the same company, often by the same producer who sold the original policy
• Coercion - applying physical or mental force or threat of force to persuade another to transact insurance What is an instrument that reflects a debtor relationship A. Stocks B. Annuities C. Life Insurance D. Bonds - CORRECT ANSWER>>Bonds

All of the following constitutes misrepresentation EXCEPT A. Overstating promises B. Giving impression that cash value is guaranteed C. Referring to a policy as insurance D. Using numbers that misleads the client - CORRECT ANSWER>>referring to a policy as insurance All of the following are principles of agency law EXCEPT A. a contract completed by the agent on behalf of the principle B. knowledge of the principle regarding business of the agent is presumed to be knowledge of the insurer C. payments made to an agent on behalf of the principle are payments to the principle D. the acts of the agent are acts of the principle - CORRECT ANSWER>>knowledge of the principle regarding business of the agent is presumed to be knowledge of the insurer Which of the following elements has to be present for a contract to be legal and binding A. minors B. consideration C. negotiated D. reviewed by more than 3 lawyers - CORRECT ANSWER>>consideration All of the following are objectives of the NAIC EXCEPT A. to encourage each state to pass licensing laws that benefits their own state B. to preserve state regulation of the insurance business C. to protect the interest of the policyholders D. to assist in the administration of insurance laws by promoting efficiency - CORRECT ANSWER>>to encourage each state to pass licensing laws that benefits their own state Which law made it clear that continued regulation of insurance by the states was in the public's best interest A. Financial Service Modernization Act B. USA Patriot Act

C. McCarran-Ferguson Act D. Insurance Regulation ACt - CORRECT ANSWER>>McCarran-Ferguson Act Which of the following is considered a Moral Hazard A. Alcohol addiction B. slippery steps C. reckless driving D. blindness - CORRECT ANSWER>>Alcohol addiction All of the following are elements of insurable risks EXCEPT A. loss must be predictable B. loss is catastrophic C. Loss must be due to chance D. loss much be definite - CORRECT ANSWER>>loss is catastrophic All are included under Unfair Methods of Competition EXCEPT A. sliding B. misrepresentation C. defamation D. misappropriation of funds - CORRECT ANSWER>>misappropriation of funds When an agent compares one policy to another using fraudulent and misleading information this is known as A. churning B. rebating C. twisting D. coercion - CORRECT ANSWER>>twisting Which of the following terms best describes a life insurance policy that provides a straight $100,000 of coverage for a period of five years A. Permanent Life B. Whole term C. Level term

D. Variable term - CORRECT ANSWER>>level term All of the following statements regarding term life insurance are correct EXCEPT A. a 3-year renewable policy allows a term policyowner to renew the same coverage for another 3 years B. a 3-year renewable policy allows a term policyowner to increase coverage for the next 3 years C. an option to convert provides that a term life insurance policy can be exchanged for a permanent one D. both the option to renew and the option to convert relieve the insured from furnishing evidence of insurability - CORRECT ANSWER>>a 3-year renewable policy allows a term policyowner to increase coverage for the next 3 years "When level premium insurance is renewed, the premium amount rises to reflect the increased mortality risk of the insured's older age." What phrase best describes this approach to increasing premiums A. Variable rate B. Targeted rate C. Step rate D. seniority rate - CORRECT ANSWER>>step rate Which of the following statements describing whole life insurance is CORRECT A. the face amount of the policy gradually increases the longer the policy remains in force B. the shorter the premium period, the slower the cash value will grow C. Whole life insurance is designed to mature at age 100 D. The policy's cash value decreases each year the policy is in force - CORRECT ANSWER>>whole life insurance is designed to mature at age 100 The cash values of life insurance policies belong to which of the following A. policyowner B. insured C. insurer D. beneficiary - CORRECT ANSWER>>policyowner All of the following statements regarding basic forms of whole life insurance are correct EXCEPT

A. generally, straight life premiums are payable, at least annually, for the duration of the insured's life B. the owner of a 30-pay life policy will owe no more premiums after the 30th year the policy is in force C. limited payment life provides protection only for the years during which premiums are paid D. a single-premium life policy is purchases with a lager one-time only premium - CORRECT ANSWER>>limited payment life provides protection only for the years during which premiums are paid Which of the following statements regarding modified endowment contracts (MEC's) is CORRECT A. a 1988 revenue act, commonly known as TAMRA, greatly increased the popularity of MEC's B. Congress has granted MEC the most favorable tax status among all the life insurance policies C. To avoid being classified as an MEC, a life insurance policy must satisfy the "7-pay test." D. According to the "7-pay test", if the total amount a policyowner pays into a life contract during its first 7 years is less than the sum of the net level premiums that would have been payable to provide paid-up future benefits in 7 years, the policy is an MEC. - CORRECT ANSWER>>to avoid being classified as an MEC, a life insurance policy must satisfy the "7-pay test." Which of the following whole life insurance policies attempts to make insurance premiums more manageable by offering lower premiums during the first few years following issue A. minimum deposit whole life B. Indexed whole life C. Modified whole life D. Indeterminate premium whole life - CORRECT ANSWER>>modified whole life What type of policy would be best used when the need for protection declines from year to year A. Level Term B. Decreasing Term C. Whole Life D. Universal Life - CORRECT ANSWER>>Decreasing Term

All of the following statements about term insurance are correct EXCEPT A. it pays a benefit only if the insured dies during a specified period B. level, decreasing, and increasing are basic forms of term insurance C. cash values build during the specified period D. it provides protection for a temporary period of time - CORRECT ANSWER>>cash values build during the specified period Bob purchases a $50,000 5-year level term policy. All of the following statements about Bob's coverage are correct EXCEPT A. the policy provides a straight, level $50,000 of coverage for 5 years B. if the insured dies at any time during the 5 years, his beneficiary will receives the policy face value C. if the insured dies beyond the specified 5 years, only the policy's cash value will be paid D. if the insured lives beyond the 5 years, the policy expires and no benefits are payable - CORRECT ANSWER>>if the insured dies beyond the specified 5 years, only the policy's cash value will be paid. Mrs. Williamson purchases a 5-year $50,000 level term policy with an option to renew. At the end of the 5-year term, she renews the policy. Which of the following statements is CORRECT A. the premium for the renewal period will be the same as the initial period B. the premium for the renewal period will be higher than the initial period C. the premium for the renewal period will be the same as the initial period, but a one-time service charge will be assessed upon renewal. D. the premium for the renewal period will be lower than the initial period - CORRECT ANSWER>>the premium for the renewal period will be higher than the initial period All of the following statements about variable insurance policies are correct EXCEPT A. sales presentations must be preceded or accompanied by a prospectus B. state law protects consumers and promote meaningful communication C. materials used in selling variable policies must be approved only by the state Office of Insurance Regulation D. full and fair disclosure must be provided to prospective policyowners - CORRECT ANSWER>>materials used in selling variable policies must be approved only by the Office of Insurance Regulation

In contrast to traditional whole life insurance policies, with variable life insurance products A. premiums are invested in an insurer's general account B. investments match the insurer's contractual guarantees and liabilities C. contract cash value are not guaranteed D. the insurer assumes the investment risk - CORRECT ANSWER>>contract cash values are not guaranteed All of the following statements about variable insurance are correct EXCEPT A. they are not considered insurance contracts B. sellers must hold a state insurance license C. they are not considered securities contracts D. seller must hold a registered representative license from FINRA - CORRECT ANSWER>>they are not considered securities contracts A policy covering 2 lives that only pays a death benefit when the second insured person dies is A. a joint life policy B. a family policy C. a double indemnity policy D. a joint and last survivor policy - CORRECT ANSWER>>a joint and last survivor policy A policy that pays double or triple the face amount if death occurs during a specified period is A. a multiple protection policy B. a credit life policy C. a family policy D. a joint policy - CORRECT ANSWER>>a multiple protection policy In which of the following situations does the incontestable clause apply? A. Impersonation of the applicant by another B. No insurable interest C. Intent to murder D. Concealment of smoking - CORRECT ANSWER>>concealment of smoking