Mass State Life Insurance updated 2025
with verified solutions | 2025 LATEST
UPDATED.
Which of the following describes a participating life insurance policy?
A participating life policy is one in which the policyowner receives dividends deriving from the
company's divisible surplus
What type of reinsurance contract between two insurers involves an automatic sharing of the risks
assumed?
Under treaty reinsurance, each party automatically accepts specific percentages of the insurer's
business.
At what point must a life insurance applicant be informed of their rights that fall under the Fair Credit
Reporting Act?
Upon completion of the application
The State Guaranty Association guarantees
that a claim will be paid if an admitted insurer becomes insolvent
Dividends from a mutual insurance company are paid to whom?
Policyholders
What is considered the accounting measurement of an insurance company's future obligations to its
policyowners?
,reserves
A group-owned insurance company that is formed to assume and spread the liability risks of its
members is known as a
risk retention group
Which of the following is a syndicate established by a group of insurers to share underwriting duties?
Lloyd's organization
An agent's authority to bind an insurer to an insurance contract may be granted in the
agent's contract and the insurance company's appointment
Dividends from a stock insurance company are normally sent to
shareholders
Law of Large numbers
-insurance is based on the sharing of risks among a large group of people
-states that the larger the number of people, the more predictable the actual losses will be
-companies use this data to calculate rates
Speculative risk
-involves opportunity for either loss or gain
-not covered by insurance companies
,pure risk
-a situation that can only result in a loss, there is no opportunity for financial gain
-only type of risk that is insurable
treatment of risk through: avoidance
simply avoiding as many risks as possible
-effective but not always practical
treatment of risk through- reduction
since we cannot avoid risk entirely we often attempt to lessen the possibility of a loss by taking acting to
reduce the risk
-
treatment of risk through- sharing
when a group of individuals or businesses with similar exposures share the losses that occur within that
group
-reciprocal insurance exchange is a formal risk sharing arrangement
treatment of risk through- retention
also known as self-insurance: when individuals have the financial ability to fund losses by themselves
when they occur
treatment of risk through- transfer
, the most effective way to handle risk
- risk is transferred to another party - insurance is the most common method of transferring risk from an
individual or group to an insurance company
elements of insurable risk
-must be due to chance
-cannot be catastrophic
-must be randomly selected
• Loss exposure to be insured must be large - Insurance company must be able to predict
loss ( based on law of large numbers)
- Loss must be definite and measurable - Time, place, amount, and when payable
nature of insurance
-to provide financial protection against losses that may be incurred due to a chance happening or event
such as death, illness, or accident
-protection is provided through an insurance policy which is a simple device for accumulating funds to
meet these uncertain losses
ABC Company is attempting to minimize the severity of potential losses within its company. The
company is engaged in risk
Risk reduction can reduce the chance that a particular loss will occur, or it can reduce the amount of a
potential loss if it occurs.
How can an insurance company minimize exposure to loss?
Many insurers are able to minimize exposure to loss by reinsuring risks.
with verified solutions | 2025 LATEST
UPDATED.
Which of the following describes a participating life insurance policy?
A participating life policy is one in which the policyowner receives dividends deriving from the
company's divisible surplus
What type of reinsurance contract between two insurers involves an automatic sharing of the risks
assumed?
Under treaty reinsurance, each party automatically accepts specific percentages of the insurer's
business.
At what point must a life insurance applicant be informed of their rights that fall under the Fair Credit
Reporting Act?
Upon completion of the application
The State Guaranty Association guarantees
that a claim will be paid if an admitted insurer becomes insolvent
Dividends from a mutual insurance company are paid to whom?
Policyholders
What is considered the accounting measurement of an insurance company's future obligations to its
policyowners?
,reserves
A group-owned insurance company that is formed to assume and spread the liability risks of its
members is known as a
risk retention group
Which of the following is a syndicate established by a group of insurers to share underwriting duties?
Lloyd's organization
An agent's authority to bind an insurer to an insurance contract may be granted in the
agent's contract and the insurance company's appointment
Dividends from a stock insurance company are normally sent to
shareholders
Law of Large numbers
-insurance is based on the sharing of risks among a large group of people
-states that the larger the number of people, the more predictable the actual losses will be
-companies use this data to calculate rates
Speculative risk
-involves opportunity for either loss or gain
-not covered by insurance companies
,pure risk
-a situation that can only result in a loss, there is no opportunity for financial gain
-only type of risk that is insurable
treatment of risk through: avoidance
simply avoiding as many risks as possible
-effective but not always practical
treatment of risk through- reduction
since we cannot avoid risk entirely we often attempt to lessen the possibility of a loss by taking acting to
reduce the risk
-
treatment of risk through- sharing
when a group of individuals or businesses with similar exposures share the losses that occur within that
group
-reciprocal insurance exchange is a formal risk sharing arrangement
treatment of risk through- retention
also known as self-insurance: when individuals have the financial ability to fund losses by themselves
when they occur
treatment of risk through- transfer
, the most effective way to handle risk
- risk is transferred to another party - insurance is the most common method of transferring risk from an
individual or group to an insurance company
elements of insurable risk
-must be due to chance
-cannot be catastrophic
-must be randomly selected
• Loss exposure to be insured must be large - Insurance company must be able to predict
loss ( based on law of large numbers)
- Loss must be definite and measurable - Time, place, amount, and when payable
nature of insurance
-to provide financial protection against losses that may be incurred due to a chance happening or event
such as death, illness, or accident
-protection is provided through an insurance policy which is a simple device for accumulating funds to
meet these uncertain losses
ABC Company is attempting to minimize the severity of potential losses within its company. The
company is engaged in risk
Risk reduction can reduce the chance that a particular loss will occur, or it can reduce the amount of a
potential loss if it occurs.
How can an insurance company minimize exposure to loss?
Many insurers are able to minimize exposure to loss by reinsuring risks.
