Basic Principles of Insurance & Annuities

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

liquidity.

What type of life insurance policy issued by a mutual insurer provides a return of divisible surplus?

participating life insurance policy.

A non-participating policy will:

Not pay dividends.

A producer who obtains consumer information reports under false pretenses can be subject to__________under the Fair Credit Reporting Act.

$5,000 fine and 1 year incarcerated.

A producer who obtains personal information about a client without a legitimate reason can be subject to __________ under the McCarran-Ferguson Act.

$10,000 fine and 1 year incarcerated.

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?

Dividends are considered to be a return of premium.

Fraternal Benefit Society has all of the following characteristics EXCEPT: -Incorporated -Without capital stock -Exist for profit -Exist for benefit of its members.

Exist for profit.

The Do Not Call Registry offers exemptions for calls placed from all of the following EXCEPT: -Charities -Political Organizations -Insurance Sales Calls -Surveys

Insurance Sales Calls

The Fair Credit and Reporting Act's main purpose is to

Protect consumers with guidelines regarding credit reporting and distribution.

Not considered advertising

Rating from AM Best

One insurance company is transferring some of its risk to another insurer. The insurer assuming the risk is called the

Reinsurer.

An insurer's claim settlement practices are regulated by the

State insurance departments.

A nonparticipating company is sometimes called a

Stock insurer.

What is the primary purpose of a rating service company, such as AM Best?

To determine financial strength of an insurance company.

What is the primary reason for buying life insurance?

To provide death benefits.

Type of insurer owned by its policyholders is called a

mutual insurer.