Test Questions

Question 1

Which of the following consists of an offer, acceptance, and consideration?
A. • Contract
B. • Warranty
C. O Estoppel
D. • Representation

Answer 1

A. Contract

Question 2

The part of a life insurance policy guaranteed to be true is called a(n):
A. O warranty
B. O waiver
C. • representation
D. O exclusion

Answer 2

Waranties are statements that are considered literally true. A warranty that is not literally true in every detail, even if made im ficient to render a policy void.

Question 3

A life insurance arrangement which circumvents insurable interest statutes is called:
A. O key person insurance
B. O Investor-Originated Life Insurance
C. • an indemnity contract
D. • a contract of adhesion

Answer 3

B. O Investor-Originated Life Insurance

Question 4

An insurance contract is considered a policy of adhesion. This means that the contract can only be modified by
A. O the insured
B. • the insurer
C. O the applicant
D. O the agent

Answer 4

B. • the insurer

Question 5

Insurance contracts are known as________ _because certain future conditions or acts must occur before any claims can be paid
A. O unilateral
B. O aleatory
C. • consideration
D. • conditional

Answer 5

D. • conditional

Question 6

Taking receipt of premiums and holding them for the insurance company is an example of:
A. O Theft
B. • Misappropriation
C.O Commingling
D. • Fiduciary responsibility

Answer 6

D. • Fiduciary responsibility

Question 7

Which of these arrangements allows one to bypass insurable interest laws?
A. O Investor-Originated Life Insurance
B. • Contract of adhesion
C. • Indemnity contract
D. • Concealment

Answer 7

A. O Investor-Originated Life Insurance

Question 8

All of the following are considered to be typical characteristics describing the nature of an insurance contract, EXCEPT:
A. O Bilateral
B. • Adhesion
C. • Aleatory
D. • Unilateral

Answer 8

A. O Bilateral

The correct answer is “Bilateral”, Unilateral, aleatory, and adhesion are all special features of insurance contracts. Bilateral is not.

Question 9

E and F are business partners. Each takes out a $500,000 life insurance policy on the other, naming himself as primary beneficiary. E and F eventually terminate their business, and four months later E dies. Although E was married with three children at the time of death, the primary beneficiary is still F. However, an insurable interest no longer exists. Where will the proceeds from E’s life insurance policy be directed to?
A. O E’s estate
B. • The dissolved partnership
C.O F
D. O E’s family

Answer 9

C. F

Question 10

When third-party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have:
A. • all those involved be family-related
B. • all statements be warranties
C. • insurable interest in the proposed insured
D. • the agent complete a third-party application

Answer 10

C. • insurable interest in the proposed insured