State RegulationsFL specificDifficulty 1/5
Which of the following is an insurance contract under Florida law?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under the Florida Insurance Code, contracts that promise payment of a benefit upon a contingent event, such as the insured's death, in exchange for premium are insurance contracts. A whole life policy fits exactly: the insurer undertakes to pay a death benefit upon a life contingency, transferring the risk of financial loss for consideration.
Why the other options are wrong
- A) A certificate of deposit is a banking product returning principal plus interest, with no contingent risk transfer.
- C) An appliance warranty is a service contract from a retailer, not an insurer's promise tied to a life or health contingency.
- D) A mutual fund prospectus is an offering document for securities, regulated by the Office of Financial Regulation, not an insurance contract.
Memory hook
Life policy on a life contingency = the classic insurance contract.