Basic Principles of Life and Health Insurance Chap Exam Review 1

A nonparticipating policy will

not pay dividends

Which of the following is a type of insurance where an insurer transfers loss exposures from policies written for its insureds?

Reinsurance

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?

$10,000

Which of the following is NOT considered advertising?

A rating from a rating service company, such as A.M. Best

A plan in which an employer pays insurance benefits from a fund derived from the employer's current revenues is called

A self-funded plan

Why are dividends from a mutual insurer not subject to taxation?

Because dividends are considered to be a return of premium

Which of the following is an insurer established by a parent company for the purpose of insuring the parent company's loss exposures?

Captive insurer

Fraternal Benefit Society has each of the following characteristics EXCEPT

Exist For profit

Which of the following statements regarding a life insurance policy dividend is TRUE?

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?

Mutual insurer

An insurer's ability to make unpredictable payouts to policyowners is called

liquidity

An insurer's claim settlement practices are regulated by the

State insurance departments

A life insurance company has transferred some of its risk to another insurer. The insurer assuming the risk is called the

reinsurer

Which of the following is a contract that involves one party which indemnifies another when a loss arises from an unknown event?

Insurance policy

A nonparticipating company is sometimes called a(n)

stock insurer

The Do Not Call Registry offers exemptions for calls placed from all of the following EXCEPT

insurance sales calls

A type of insurer that is owned by its policyowners is called

mutual

An insurer owned by its policyholders is called a

mutual insurer

What is a participating life insurance policy?

Contract that allows the policyowner to receive a share of surplus in the form of policy dividends