Alabama Life Insurance Exam UPDATED
Study Guide QUESTIONS AND
CORRECT ANSWERS
What are commercial insurers also referred to as? - CORRECT ANSWERS
Private Insurance Companies
Commercial Insurers are in the business of selling insurance for ___ ________.
- CORRECT ANSWERS a profit
What two groups can commercial insurance be broken into? - CORRECT
ANSWERS Stock Companies & Mutual Insurers
What is a stock insurer? - CORRECT ANSWERS 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? - CORRECT
ANSWERS stock companies
Which type of commercial insurer is participating? - CORRECT ANSWERS
mutual insurers
what is a mutual insurer? - CORRECT ANSWERS 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? - CORRECT
ANSWERS Yes
, Are dividends subject to taxation in a PAR company? - CORRECT ANSWERS
No; only the interest, if collected, is taxable
If a company operates as both PAR and NONPAR what is it called ? -
CORRECT ANSWERS a Mixed Insurer
Are dividends guaranteed? - CORRECT ANSWERS Never
An insurer selling more than one type of insurance is called a? - CORRECT
ANSWERS Multi-Line Insurer
Strong Assessment Mutual Companies are classified by: - CORRECT
ANSWERS 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? - CORRECT ANSWERS 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? - CORRECT ANSWERS Advance Premium Assessment
Company
What are fraternal benefit societies? - CORRECT ANSWERS special
types of mutual companies that are non-profit religious, ethnic, or charitable
organizations.
Who would a fraternal benefit society supply insurance to? - CORRECT
ANSWERS Only its members
Study Guide QUESTIONS AND
CORRECT ANSWERS
What are commercial insurers also referred to as? - CORRECT ANSWERS
Private Insurance Companies
Commercial Insurers are in the business of selling insurance for ___ ________.
- CORRECT ANSWERS a profit
What two groups can commercial insurance be broken into? - CORRECT
ANSWERS Stock Companies & Mutual Insurers
What is a stock insurer? - CORRECT ANSWERS 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? - CORRECT
ANSWERS stock companies
Which type of commercial insurer is participating? - CORRECT ANSWERS
mutual insurers
what is a mutual insurer? - CORRECT ANSWERS 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? - CORRECT
ANSWERS Yes
, Are dividends subject to taxation in a PAR company? - CORRECT ANSWERS
No; only the interest, if collected, is taxable
If a company operates as both PAR and NONPAR what is it called ? -
CORRECT ANSWERS a Mixed Insurer
Are dividends guaranteed? - CORRECT ANSWERS Never
An insurer selling more than one type of insurance is called a? - CORRECT
ANSWERS Multi-Line Insurer
Strong Assessment Mutual Companies are classified by: - CORRECT
ANSWERS 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? - CORRECT ANSWERS 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? - CORRECT ANSWERS Advance Premium Assessment
Company
What are fraternal benefit societies? - CORRECT ANSWERS special
types of mutual companies that are non-profit religious, ethnic, or charitable
organizations.
Who would a fraternal benefit society supply insurance to? - CORRECT
ANSWERS Only its members
