Florida Life and Health Insurance License Practice Test

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Prepare for the Florida Life and Health Insurance License Test. Study with flashcards and multiple choice questions, each with hints and explanations. Get ready for your certification exam with ease!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

What is considered a valid reason for small businesses to insure the lives of its major shareholders?

To cover operational costs
To fund a buy-sell agreement
To pay off business debts
To invest in stock markets

The correct answer is: To fund a buy-sell agreement

Small businesses may insure the lives of its major shareholders in order to fund a buy-sell agreement. This agreement provides for the transfer of the shares of a deceased shareholder to the surviving shareholders. This can ensure the continuity of the business and provide financial stability during a time of transition. Options A, C, and D do not directly relate to insuring the lives of major shareholders and therefore are not considered valid reasons in this context. Insuring for operational costs, paying off business debts, and investing in stock markets are all important considerations for a small business, but they are not a direct reason for insuring the lives of major shareholders.