Alabama Life Insurance Exam Q’s & A’s Already Passed!!
What are commercial insurers also referred to as?
Private Insurance Companies
Commercial Insurers are in the business of selling insurance for ___ ________.
a profit
What two groups can commercial insurance be broken into?
Stock Companies & Mutual Insurers
What is a stock insurer?
incorporated to make a profit for its stockholders. nonparticipating because the
policyholders do not receive dividends unless they are stockholders. dividends are
subject to taxation.
Which type of commercial insurer is nonparticipating?
stock companies
Which type of commercial insurer is participating?
mutual insurers
what is a mutual insurer?
owned by policyholders. participating policies because policyholders get to participate in
receiving dividends and electing directors. dividends are not subject to taxation unless
they collect interest.
Are dividends subject to taxation in a NONPAR company?
Yes
Are dividends subject to taxation in a PAR company?
No; only the interest, if collected, is taxable
If a company operates as both PAR and NONPAR what is it called ?
a Mixed Insurer
Are dividends guaranteed?
Never
An insurer selling more than one type of insurance is called a?
Multi-Line Insurer
Strong Assessment Mutual Companies are classified by:
the way that they charge premiums
What type of mutual company operates on a loss-sharing basis, where each
member is assessed a portion of losses?
Pure Assessment Company
What type of mutual company charges a premium at the beginning to cover
losses, and returns a surplus, or levies additional amounts to meet expenses and
losses?
Advance Premium Assessment Company
What are fraternal benefit societies?
special types of mutual companies that are non-profit religious, ethnic, or charitable
organizations.
Who would a fraternal benefit society supply insurance to?
Only its members
What are risk retention groups?
mutual companies formed by groups of people with the same profession or industry
, What are reciprocal insurers?
unincorporated groups of people providing insurance for one another through individual
indemnity agreements. Each individual who is a member of the reciprocal is known as a
subscriber.
what is an indemnity contract?
It is a contract involving two parties in which the first party agrees to indemnify and
reimburse the second party for covered debts or losses should they take place.
Attorney-in-fact
A person given the authority to act on behalf of another under a power of attorney.
what is Reinsurance?
an arrangement by which the primary insurer that initially writes the insurance transfers
to another insurer part or all of the potential losses associated with such insurance
The company transferring the risk is called?
ceding company
The company assuming the risk is called?
reinsurer
what is a captive insurer?
insurer owned by a parent firm for the purpose of insuring the parent firm's loss
exposures
Home service insurers are also called:
industrial insurance
Home Service Insurance
sold by home service or debit life insurance companies. Face amounts are small &
premiums are paid weekly
What does OASDI mean?
Old-Age, Survivors, and Disability Insurance
Who does social security provide benefits for?
the elderly (retirement) and survivors of parents who died young and those who qualify
for federal disability
Who does medicare provide insurance for?
health insurance for the elderly
who does medicaid provide insurance for?
health insurance for the financially needy
What are SGLI and VGLI?
service members/veterans group life insurance
Who does TRICARE cover?
Active, retired, survivors and their families of the Armed Forces.
Self-insurance
the process of establishing a monetary fund to cover the cost of a loss
Self Insurance is NOT a method of transferring risk, they establish their
________________.
own self-funded plans for cost of loss.
A self funded plan is a plan which an _______ pays insurance benefits from a
fund derived from employer's current revenues.
employer
Define Lloyd's of London
What are commercial insurers also referred to as?
Private Insurance Companies
Commercial Insurers are in the business of selling insurance for ___ ________.
a profit
What two groups can commercial insurance be broken into?
Stock Companies & Mutual Insurers
What is a stock insurer?
incorporated to make a profit for its stockholders. nonparticipating because the
policyholders do not receive dividends unless they are stockholders. dividends are
subject to taxation.
Which type of commercial insurer is nonparticipating?
stock companies
Which type of commercial insurer is participating?
mutual insurers
what is a mutual insurer?
owned by policyholders. participating policies because policyholders get to participate in
receiving dividends and electing directors. dividends are not subject to taxation unless
they collect interest.
Are dividends subject to taxation in a NONPAR company?
Yes
Are dividends subject to taxation in a PAR company?
No; only the interest, if collected, is taxable
If a company operates as both PAR and NONPAR what is it called ?
a Mixed Insurer
Are dividends guaranteed?
Never
An insurer selling more than one type of insurance is called a?
Multi-Line Insurer
Strong Assessment Mutual Companies are classified by:
the way that they charge premiums
What type of mutual company operates on a loss-sharing basis, where each
member is assessed a portion of losses?
Pure Assessment Company
What type of mutual company charges a premium at the beginning to cover
losses, and returns a surplus, or levies additional amounts to meet expenses and
losses?
Advance Premium Assessment Company
What are fraternal benefit societies?
special types of mutual companies that are non-profit religious, ethnic, or charitable
organizations.
Who would a fraternal benefit society supply insurance to?
Only its members
What are risk retention groups?
mutual companies formed by groups of people with the same profession or industry
, What are reciprocal insurers?
unincorporated groups of people providing insurance for one another through individual
indemnity agreements. Each individual who is a member of the reciprocal is known as a
subscriber.
what is an indemnity contract?
It is a contract involving two parties in which the first party agrees to indemnify and
reimburse the second party for covered debts or losses should they take place.
Attorney-in-fact
A person given the authority to act on behalf of another under a power of attorney.
what is Reinsurance?
an arrangement by which the primary insurer that initially writes the insurance transfers
to another insurer part or all of the potential losses associated with such insurance
The company transferring the risk is called?
ceding company
The company assuming the risk is called?
reinsurer
what is a captive insurer?
insurer owned by a parent firm for the purpose of insuring the parent firm's loss
exposures
Home service insurers are also called:
industrial insurance
Home Service Insurance
sold by home service or debit life insurance companies. Face amounts are small &
premiums are paid weekly
What does OASDI mean?
Old-Age, Survivors, and Disability Insurance
Who does social security provide benefits for?
the elderly (retirement) and survivors of parents who died young and those who qualify
for federal disability
Who does medicare provide insurance for?
health insurance for the elderly
who does medicaid provide insurance for?
health insurance for the financially needy
What are SGLI and VGLI?
service members/veterans group life insurance
Who does TRICARE cover?
Active, retired, survivors and their families of the Armed Forces.
Self-insurance
the process of establishing a monetary fund to cover the cost of a loss
Self Insurance is NOT a method of transferring risk, they establish their
________________.
own self-funded plans for cost of loss.
A self funded plan is a plan which an _______ pays insurance benefits from a
fund derived from employer's current revenues.
employer
Define Lloyd's of London
