Chapter 1: Basic Principles Of Life And Health Insurance

15 Questions | Total Attempts: 104

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Chapter 1: Basic Principles Of Life And Health Insurance - Quiz

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Questions and Answers
  • 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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