Knowledge Exam Flashcards

Which type of insurance policy pays a death benefit only if the insured dies within a specified period?

Answer: Term life

Term life insurance provides coverage for a set period and pays a death benefit only if the insured dies during that term.

In real estate, what does 'escrow' refer to?

Answer: A neutral third-party account holding funds during a transaction

Escrow is a neutral account managed by a third party that holds funds and documents until all conditions of a real estate transaction are met.

A contractor who performs work without a required state license may face which consequence?

Answer: Civil penalties and inability to enforce contracts

Unlicensed contractors can face civil fines and may be barred from pursuing legal remedies to collect payment for their work.

What is the purpose of a 'deductible' in an insurance policy?

Answer: The portion of a loss the policyholder must pay before insurance kicks in

A deductible is the out-of-pocket amount the insured must pay before the insurance company begins covering the remaining loss.

Under most state real estate laws, dual agency occurs when a licensee represents:

Answer: Both the buyer and seller in the same transaction

Dual agency means a single agent or brokerage represents both the buyer and the seller in the same real estate transaction, requiring disclosure and consent.

Which document legally transfers ownership of real property from seller to buyer?

Answer: Deed

A deed is the legal instrument that conveys ownership of real property from the grantor (seller) to the grantee (buyer) upon delivery and acceptance.

In insurance, 'subrogation' allows an insurer to:

Answer: Recover claim costs from a responsible third party after paying the insured

Subrogation gives the insurer the legal right to pursue a third party responsible for an insurance loss after compensating the insured policyholder.