The Do Not Call Registry offers exemptions for calls placed from all of the following EXCEPT
A) charities
B) political organizations
C) insurance sales calls
D) surveys
C) insurance sales calls
What is the primary purpose of a rating service company such as A.M Best?
A) Determine which insurer offers the best rates
B) Determine which insurer offers the best policies
C) Determine financial strength of an insurance company
D) Determine which agent
C) Determine financial strength of an insurance company
One important function of an insurance company is to identify and sell to potential customers. Which of these BEST describes this function?
A) Underwriting
B) Marketing
C) Reinsurance
D) Regulation
B) Marketing
Why are dividends from a mutual insurer not subject to taxation?
A) Because insurance premiums are tax-deductible
B) Because dividends are already subject to capital gains
C) Because dividends are payable directly to the policyholder
D) Because dividends
D) Because dividends are considered to be a return of premium
What is a participating life insurance policy?
A) Agreement that allows two or more beneficiaries to share in the death benefit
B) Contract that gives beneficiaries the right to participate in any dividends
C) Contract that allows the policyowner to recei
C) Contract that allows the policyowner to receive a share of surplus in the form of policy dividends
Which of the following is a contract that involves one party which indemnifies another when a loss arises from an unknown event?
A) Insurance policy
B) Indemnification agreement
C) Loss contract
D) Warranty arrangement
A) Insurance policy
When a mutual insurer becomes a stock company, the process is called
A) Mutualization
B) Demutualization
C) Reinsurance
D) Reorganization
B) Demutualization
Fraternal Benefit Society has each of the following characteristics EXCEPT
A) Incorporated
B) Without capital stock
C) Exist for profit
D) Exist for the benefit of its member
C) Exist for profit
A type of insurer that is owned by its policyowners is called
A) domestic
B) mutual
C) stock
D) in-house
B) mutual
The Fair Credit and Reporting Act's main purpose is to
A) assist in the underwriting of insurance policies
B) protect insurers from an applicant's misrepresentation
C) protect consumers with guidelines regarding credit reporting and distribution
D) assist
C) protect consumers with guidelines regarding credit reporting and distribution
Which of the following is an insurer established by a parent company for the purpose of insuring the parent company's loss exposures?
A) Participating insurer
B) Fraternal insurer
C) Captive insurer
D) Mutual insurer
C) Captive insurer
Which of the following is NOT a characteristic of reinsurance?
A) Increases the unearned premium reserve
B) Protects against a very large claim
C) Enables insurer to meet certain objectives
D) A specialized branch of the insurance industry
A) Increases the unearned premium reserve
Which of the following statements regarding a life insurance policy dividend is TRUE?
A) It represents a refund of overcharged premium in a non-participating whole life policy
B) It represents the build-up of cash value in a permanent insurance policy
C)
C) It is the distribution of excess of funds accumulated by the insurer on participating policies
A participating company is also referred to as which type of insurer?
A) Re-insurer
B) Mutual insurer
C) Domestic insurer
D) Reciprocal insurer
B) Mutual insurer
An insurer's ability to make unpredictable payouts to policyowners is called
A) investment values
B) liquidity
C) assets
D) capital
B) liquidity
What kind of life insurance policy issued by a mutual insurer provides a return of divisible surplus?
A) nonparticipating life insurance policy
B) participating life insurance policy
C) divisible surplus life insurance policy
D) straight life insurance po
B) participating life insurance policy
Ken is a producer who has obtained Consumer Information Reports under false pretenses. Under the Fair Credit Reporting Act, what is the maximum penalty that may be imposed on Ken?
A) $1,000
B) $3,000
C) $5,000
D) $7,000
C) $5,000
A nonparticipating company is sometimes called a(n)
A) alien insurer
B) mutual insurer
C) reinsurer
D) stock insurer
D) stock insurer
John owns an insurance policy that gives him the right to share in the insurer's surplus. What kind of policy is this?
A) Nonparticipating
B) Participating
C) Contributory
D) Surplus
B) Participating
Which of the following is NOT a benefit of insurance?
A) Losses due to fraud are eliminated
B) Reduces the uncertainty of loss exposures
C) Makes a loss whole again
D) Source of investment funds
A) Losses due to fraud are eliminated
What is considered to be the primary reason for buying life insurance?
A) Provide death benefits
B) Provide money for retirement
C) Provide living benefits
D) Provide money for college
A) Provide death benefits
An insurer owned by its policyholders is called a
A) stock insurer
B) reinsurer
C) mutual insurer
D) multi-line insurer
C) mutual insurer
Which of the following is NOT considered advertising?
A) A rating from a rating service company, such as A.M. Best
B) An illustration
C) A sales presentation
D) Direct mailing from an agency
A) A rating from a rating service company, such as A.M. Best
An insurer enters into a contract with a third party to insure itself against losses from insurance policies it issues. What is this agreement called?
A) Reinsurance
B) Reserves
C) Mutual
D) Multi-line
A) Reinsurance
A nonparticipating policy will
A) provide a return of premium
B) provide tax advantages
C) not pay dividends
D) give policyowners special privileges
C) not pay dividends
A life insurance company has transferred some of its risk to another insurer. The insurer assuming the risk is called the
A) mutual insurer
B) reinsurer
C) reciprocal insurer
D) participating insurer
B) reinsurer
AAA Insurance Company has transferred a portion of its loss exposure to BBB Insurance Company. In this reinsurance transaction, what is AAA Insurance Company called?
A) Captive insurer
B) Tertiary insurer
C) Primary insurer
D) Secondary insurer
C) Primary insurer
Karen is a producer who has obtained personal information about a client without having a legitimate reason to do so. Under the McCarran-Ferguson Act, what is the minimum penalty for this?
A) $0
B) $5,000
C) $10,000
D) $15,000
C) $10,000
Which of the following is a type of insurance where an insurer transfers loss exposures from policies written for its insureds?
A) Treaty insurance
B) Reinsurance
C) Mutual insurance
D) Captive insurance
B) Reinsurance
A plan in which an employer pays insurance benefits from a fund derived from the employer's current revenues is called
A) A self-derived plan
B) A multiple-employer plan
C) A blanket plan
D) A self-funded plan
D) A self-funded plan
An insurer's claim settlement practices are regulated by the
A) Securities and Exchange Commission (SEC)
B) National Association of Claims Adjusters (NACA)
C) National Association of Insurance Commissioners (NAIC)
D) State insurance departments
D) State insurance departments