Florida Life and Health Insurance License Practice Test

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Master the Florida Life and Health Insurance License Exam with our comprehensive practice test guide. Ensure your success with expert tips, detailed study materials, and realistic practice questions designed to mimic the actual exam.

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As a condition for a loan, a bank requires the borrower to purchase credit insurance from a specific company. What is the bank guilty of?

Coercion
Fraud
Negligence
Misrepresentation

The correct answer is: Coercion

By requiring the borrower to purchase credit insurance from a specific company, the bank is engaging in coercion. This means that the bank is using its power or authority to force the borrower into purchasing a product or service that they may not necessarily need or want. It is not considered fair or ethical for a financial institution to strong-arm a borrower into making a specific purchase, as this limits their freedom of choice and can result in them paying for unnecessary expenses. Options B, C, and D are incorrect because they do not accurately describe the bank's actions in this scenario. The bank is not committing fraud, negligence, or misrepresentation by requiring the borrower to purchase a specific form of insurance.