Chapter 1: Basic Principles Of Life And Health Insurance
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- 1.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
- 2.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
- 3.A nonparticipating company is sometimes called a(n)
- A.
Alien insurer
- B.
Mutual insurer
- C.
Reinsurer
- D.
Stock insurer
- 4.What kind of life insurance policy issued by a mutual insurer provided 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 policy
- 5.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 an insurer n determining an applicant's creditworthiness
- 6.Why ae 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 are considered to be a return of premium
- 7.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
- 8.A plan in which an employer pays insurance benefits from a fund derived from the employer's current
- A.
A self-derived plan
- B.
A multiple-employer plan
- C.
A blanket plan
- D.
A self-funded plan
- 9.Ken is a producer who has obtained Consumer Information Reports under false pretenses. Under the Fair Cedit 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
- 10.Fraternal Benefit Society has each of the following characteristics EXCEPT
- A.
Incorporated
- B.
Without capial stock
- C.
Exist For profit
- D.
Exist for the benefit of its members
- 11.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 fro an agency
- 12.A type of insurer that is owned by its policyowners is called
- A.
Domestic
- B.
Mutual
- C.
Stock
- D.
In-house
- 13.What is the primary purpose of a rating service company such as A. 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 to use locally
- 14.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
- 15.An insurer's ability to make unpredictable payouts to policyowners is called
- A.
Investment values
- B.
Liquidity
- C.
Assets
- D.
Capital
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