Alabama Life Insurance Exam (Correct Answers
2026/2027 updated Latest.
1. What are commercial insurers also referred to as? - Correct answer Private Insurance
Companies
2. Commercial Insurers are in the business of selling insurance for .-
Correct answer a profit
3. What two groups can commercial insurance be broken into? - Correct answer Stock
Companies & Mutual Insurers
4. What is a stock insurer? - Correct answer 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.
5. Which type of commercial insurer is nonparticipating? - Correct answer stock companies
6. Which type of commercial insurer is participating? - Correct answer mutual insurers
7. what is a mutual insurer? - Correct answer 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.
8. Are dividends subject to taxation in a NONPAR company? - Correct answer Yes
9. Are dividends subject to taxation in a PAR company? - Correct answer No; only the
interest, if collected, is taxable
10. If a company operates as both PAR and NONPAR what is it called ? - Correct answer a
Mixed Insurer
11. Are dividends guaranteed? - Correct answer Never
12. An insurer selling more than one type of insurance is called a? - Correct answer Multi-
Line Insurer
13. Strong Assessment Mutual Companies are classified by: - Correct answer the way that
they charge premiums
14. What type of mutual company operates on a loss-sharing basis, where each member is
assessed a portion of losses? - Correct answer Pure Assessment Company
15. 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
answer Advance Premium Assessment Company
Alabama Life Insurance Exam (Correct
Answers 2023
, 16. What are fraternal benefit societies? - Correct answer special types of mutual companies
that are non-profit religious, ethnic, or charitable organizations.
17. Who would a fraternal benefit society supply insurance to? - Correct answer Only its
members
18. What are risk retention groups? - Correct answer mutual companies formed by groups of
people with the same profession or industry
19. What are reciprocal insurers? - Correct answer 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.
20. what is an indemnity contract? - Correct answer 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.
21. Attorney-in-fact - Correct answer A person given the authority to act on behalf of another
under a power of attorney.
22. what is Reinsurance? - Correct answer 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
23. The company transferring the risk is called? - Correct answer ceding company
24. The company assuming the risk is called? - Correct answer reinsurer
25. what is a captive insurer? - Correct answer insurer owned by a parent firm for the
purpose of insuring the parent firm's loss exposures
26. Home service insurers are also called: - Correct answer industrial insurance
27. Home Service Insurance - Correct answer sold by home service or debit life insurance
companies. Face amounts are small & premiums are paid weekly
28. What does OASDI mean? - Correct answer Old-Age, Survivors, and Disability Insurance
29. Who does social security provide benefits for? - Correct answer the elderly (retirement)
and survivors of parents who died young and those who qualify for federal disability
30. Who does medicare provide insurance for? - Correct answer health insurance for the
elderly
31. who does medicaid provide insurance for? - Correct answer health insurance for the
financially needy
Alabama Life Insurance Exam (Correct
Answers 2023
2026/2027 updated Latest.
1. What are commercial insurers also referred to as? - Correct answer Private Insurance
Companies
2. Commercial Insurers are in the business of selling insurance for .-
Correct answer a profit
3. What two groups can commercial insurance be broken into? - Correct answer Stock
Companies & Mutual Insurers
4. What is a stock insurer? - Correct answer 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.
5. Which type of commercial insurer is nonparticipating? - Correct answer stock companies
6. Which type of commercial insurer is participating? - Correct answer mutual insurers
7. what is a mutual insurer? - Correct answer 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.
8. Are dividends subject to taxation in a NONPAR company? - Correct answer Yes
9. Are dividends subject to taxation in a PAR company? - Correct answer No; only the
interest, if collected, is taxable
10. If a company operates as both PAR and NONPAR what is it called ? - Correct answer a
Mixed Insurer
11. Are dividends guaranteed? - Correct answer Never
12. An insurer selling more than one type of insurance is called a? - Correct answer Multi-
Line Insurer
13. Strong Assessment Mutual Companies are classified by: - Correct answer the way that
they charge premiums
14. What type of mutual company operates on a loss-sharing basis, where each member is
assessed a portion of losses? - Correct answer Pure Assessment Company
15. 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
answer Advance Premium Assessment Company
Alabama Life Insurance Exam (Correct
Answers 2023
, 16. What are fraternal benefit societies? - Correct answer special types of mutual companies
that are non-profit religious, ethnic, or charitable organizations.
17. Who would a fraternal benefit society supply insurance to? - Correct answer Only its
members
18. What are risk retention groups? - Correct answer mutual companies formed by groups of
people with the same profession or industry
19. What are reciprocal insurers? - Correct answer 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.
20. what is an indemnity contract? - Correct answer 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.
21. Attorney-in-fact - Correct answer A person given the authority to act on behalf of another
under a power of attorney.
22. what is Reinsurance? - Correct answer 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
23. The company transferring the risk is called? - Correct answer ceding company
24. The company assuming the risk is called? - Correct answer reinsurer
25. what is a captive insurer? - Correct answer insurer owned by a parent firm for the
purpose of insuring the parent firm's loss exposures
26. Home service insurers are also called: - Correct answer industrial insurance
27. Home Service Insurance - Correct answer sold by home service or debit life insurance
companies. Face amounts are small & premiums are paid weekly
28. What does OASDI mean? - Correct answer Old-Age, Survivors, and Disability Insurance
29. Who does social security provide benefits for? - Correct answer the elderly (retirement)
and survivors of parents who died young and those who qualify for federal disability
30. Who does medicare provide insurance for? - Correct answer health insurance for the
elderly
31. who does medicaid provide insurance for? - Correct answer health insurance for the
financially needy
Alabama Life Insurance Exam (Correct
Answers 2023
