Chapter 1: Principles of Life Insurance

Insurance is NOT characterized as which of the following - Transference of risk - Pooling of premium dollars - Method of risk management - As the number of insureds increase the number of losses decrease

As the number of insureds increase the number of losses decrease

Which of the following types of insurers limits the exposures it writes to those of its owners? - Restricted Insurer - Limited Insurer - Confined Insurer - Captive Insurer

Captive Insurer

When a ceding insurer transfers a portion of its risk to an assuming insurer on a case by case basis, this process is referred to as - Treaty Reinsurance - Quotative Pooling - Reciprocity - Facultative Reinsurance

Facultative Reinsurance

A(n) _________ agent may represent several insurers. - Captive - Free - Independent - Career

Independent

Which of the following financial products creates an instant estate, no matter when the date of death? - Mutual Funds - Life Insurance - Certificate of Deposit - Deferred Annuity

Life Insurance

Which of the following is a syndicate established by a group of insurers to share underwriting duties? - Reinsurer - Lloyd's Organization - NAIC - Multi-line Insurers

Lloyd's Organization

Which of the following accurately describes a participating insurance policy? - Policyowners may be entitled to receive dividends - Policyowners pay assessments for company losses - Policyowners are not entitled to vote for members of the board of directors - Stock companies allow their policyowners to share in any company earnings

Policyowners may be entitled to receive dividends

Which of the following is an unincorporated association whose members provide coverage for one another? - Self-insurer - Lloyds - Reciprocal - Surplus Lines

Reciprocal

A(n) _______ insurer assumes risk from another insurance company. - Reinsurance - Captive - Assumption - Reciprocal

Reinsurance

A stock insurance company is owned by its - Officers - Board of Directors - Policyowners - Shareholders

Shareholders

Dividends from a stock insurance company are normally sent to - Beneficiaries - Shareholders - Policyowners - Insureds

Shareholders

Which group is the do not call registry designed to protect against? - Telemarketers - Charities - Political Organizations - Relatives

Telemarketers

Dividends from a mutual insurance company are paid to whom? - Policyholders - Beneficiaries - Preferred Stockholders - Stockholders

Policyholders

Which of the following outlines the authority given to producer on behalf of the insurer? - Rebating Arrangement - Commingling Contract - Controlled Business Clause - Producer Contract

Producer Contract

An agents authority to bind an insurer to an insurance contract may be granted in - Agent's contract and the insurance company's appointment - Agent's license and insurance company's certificate of authority - Buyer's guide and policy summary - State guarantee association

Agent's contract and the insurance company's appointment

A reciprocal insurer typically have an administrator who manages the premiums collected from the group's members. This administrator is call a(n) - Reciprocal Commissioner - Attorney General - Attorney-in-fact - Reciprocal Director

Attorney-in-fact

A(n) ________ agent is an insurance agent who represents only ONE insurance company. - Exclusive - Captive - Domestic - Inclusive

Captive

What is the accounting measurement of an insurance company's future obligations to its policyowners? - Credits - Reserves - Surplus Account - Retention Fund

Reserves

A group-owned insurance company that is formed to assume and spread the liability risks of its members is known as a - Treaty Insurer - Risk Retention Group - Risk Assumption Group - Captive Insurer

Risk Retention Group

Who regulates an insurer's claim settlement practices? - National Association of Claim Adjusters - State Attorney General - National Association of Insurance Commissioners - State Insurance Departments

State Insurance Departments

Which reinsurance contract between two insurers involves an automatic sharing of the risks assumed? - Arbitrage Reinsurance - Facultative Reinsurance - Excess Reinsurance - Treaty Reinsurance

Treaty Reinsurance