PA Accident & Health Insurance License Practice Questions and Correct Answers

Reserve Is funds held by the company to help fulfill future claims. Minimum are Set by state department. ($ in the bucket) Stock Companies owned by stockholders, fixed premium, nonparticipating policies. Nonparticipating Plan The insured is NOT entitled to share in the divisible surplus of the company ( No $ back from the bucket) Multi-line insurers Companies that sell more than one line of insurance ( One-stop shop) Mutual Companies The owners are the policyholders. Is both customer & owner, get dividends ($ in bucket) Reinsurers make arrangements with other insurance companies to transfer a portion of their risk to the reinsurer. The company transferring the risk is called the Ceding Company and the company assuming the risk is the Reinsurer. Buyers Guide A booklet that describes insurance policies and concepts, and provides general information to help an applicant make an informed decision. Must be given to applicant before initial premium accepted. (Often used in life insurance, long-term care insurance & annuities) Annuities a fixed sum of money paid to someone each year, typically for the rest of their life. Fraternal Benefit Societies Nonprofit organization that provides insurance to its members. Producers or agents who ONLY sell within their society premium threshold often have less strict licensing requirements Fair Credit Reporting Act It's a federal law requiring an individual to be informed if he/she is being investigated & required to be notified prior to be investigated NAIC National Association of Insurance Commissioners, an organization composed of insurance commissioners from all 50 states, the District of Columbia and the 4 U.S territories, formed to resolve insurance regulatory issues. Policy Summary Is the summary of the terms of an insurance policy, including the conditions, coverage limitation & premiums. Often used in life insurance, long-term care insurance and annuities. Lloyd's of London not an insurer, but a society of members who underwrite insurance.(Stock Exchange Underwriters) Help settle claims, disputes, provide coverage that might be unavailable in certain areas. McCarran-Ferguson Act (1945) states that continued regulation and taxation of the insurance industry by the states are in the public interest. $10,000 or up to one year in jail is the penalty.