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.

Which statement is true regarding third-party ownership of a life insurance policy?

It is illegal in most states
It is only beneficial for the insured
It is widely used in business and estate-planning
It is recommended for short-term coverage only

The correct answer is: It is widely used in business and estate-planning

A third-party ownership of a life insurance policy refers to a situation where a person other than the insured or the beneficiary owns the policy. Option A, stating that it is illegal in most states, is incorrect as third-party ownership is legal and widely used in many states. Option B, stating that it is only beneficial for the insured, is incorrect as third-party ownership can also benefit the owner by providing a guaranteed source of income. Option D, stating that it is recommended for short-term coverage only, is also incorrect as third-party ownership can be beneficial for long-term planning and can provide financial security for the beneficiary. Therefore, option C is the correct answer as it accurately reflects the widespread use of third-party ownership in business and estate-planning.