Northwestern mutual life insurance Exam
Questions and Answers Graded A+
The role of insurance - Correct answer-To transfer the risk of financial loss from an
individual or business to an insurance company
Life insurance guarantees what - Correct answer-A specific sum of money when
someone dies
Health insurance provides what - Correct answer-Funds to cover medical bills and
loss of money due to disability
Annuities provide what - Correct answer-A stream of income by making a series of
payments over a certain period of time
Private insurance - Correct answer-Known as commercial insurance companies.
Funded through premiums and sell insurance for a profit.
Government insurance - Correct answer-Funded with taxes and serve national and
state social purposes
Stock Insurance Company - Correct answer-Owned by stockholders, issues
nonparticipating policies.
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,Mutual Insurer - Correct answer-An insurer that is owned by its policyholders and
formed as a corporation for the purpose of providing insurance to them.
Mutualization occurs when:
Select one:
a. A mutual insurer becomes a stock insurer
b. A stock insurer becomes a mutual insurer
c. A nonprofit insurer becomes a mutual insurer
d. A nonprofit insurer becomes a stock insurer - Correct answer-B
Demutualization - Correct answer-The process of a mutual company being
converted into a stock company.
Lloyds of London - Correct answer-This is NOT an insurer but a group of
individuals and companies that underwrite unusual insurance policies.
Reinsurers - Correct answer-Specialized branch of the insurance industry that
insures other insurance companies' risk; insurance company sells reinsurer the risk
ceding company - Correct answer-The company transferring the risk
Reinsurer - Correct answer-The company assuming the risk
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, Home service insurers - Correct answer-is industrial insurance sold by home
service or debit life insurance companies. Usually 1,000-2,000$, premiums are
collected weekly
Service providers - Correct answer-offer benefits to subscribers in return for the
payment of a premium, HMOs/PPOs
Govt insurance programs - Correct answer-Social security, Medicare, Medicaid
How is insurance sold? - Correct answer-Most consumers purchase insurance from
licensed insurance producers. Agents who rep a company (captive) or brokers who
rep several companies (independent)
1045 McCarran and Ferguson Act - Correct answer-States that while federal govt
has authority to regulate the insurance industry, it would only interfere in agency
was run ineffectively and inadequately by the states.
1970 Fair Credit Reporting Act - Correct answer-requires fair and accurate
reporting of information about consumers, including applications for insurance.
Insurers must inform applicants about any investigations that are being made upon
completion of the application.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
Questions and Answers Graded A+
The role of insurance - Correct answer-To transfer the risk of financial loss from an
individual or business to an insurance company
Life insurance guarantees what - Correct answer-A specific sum of money when
someone dies
Health insurance provides what - Correct answer-Funds to cover medical bills and
loss of money due to disability
Annuities provide what - Correct answer-A stream of income by making a series of
payments over a certain period of time
Private insurance - Correct answer-Known as commercial insurance companies.
Funded through premiums and sell insurance for a profit.
Government insurance - Correct answer-Funded with taxes and serve national and
state social purposes
Stock Insurance Company - Correct answer-Owned by stockholders, issues
nonparticipating policies.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 1
,Mutual Insurer - Correct answer-An insurer that is owned by its policyholders and
formed as a corporation for the purpose of providing insurance to them.
Mutualization occurs when:
Select one:
a. A mutual insurer becomes a stock insurer
b. A stock insurer becomes a mutual insurer
c. A nonprofit insurer becomes a mutual insurer
d. A nonprofit insurer becomes a stock insurer - Correct answer-B
Demutualization - Correct answer-The process of a mutual company being
converted into a stock company.
Lloyds of London - Correct answer-This is NOT an insurer but a group of
individuals and companies that underwrite unusual insurance policies.
Reinsurers - Correct answer-Specialized branch of the insurance industry that
insures other insurance companies' risk; insurance company sells reinsurer the risk
ceding company - Correct answer-The company transferring the risk
Reinsurer - Correct answer-The company assuming the risk
©COPYRIGHT 2025, ALL RIGHTS RESERVED 2
, Home service insurers - Correct answer-is industrial insurance sold by home
service or debit life insurance companies. Usually 1,000-2,000$, premiums are
collected weekly
Service providers - Correct answer-offer benefits to subscribers in return for the
payment of a premium, HMOs/PPOs
Govt insurance programs - Correct answer-Social security, Medicare, Medicaid
How is insurance sold? - Correct answer-Most consumers purchase insurance from
licensed insurance producers. Agents who rep a company (captive) or brokers who
rep several companies (independent)
1045 McCarran and Ferguson Act - Correct answer-States that while federal govt
has authority to regulate the insurance industry, it would only interfere in agency
was run ineffectively and inadequately by the states.
1970 Fair Credit Reporting Act - Correct answer-requires fair and accurate
reporting of information about consumers, including applications for insurance.
Insurers must inform applicants about any investigations that are being made upon
completion of the application.
©COPYRIGHT 2025, ALL RIGHTS RESERVED 3
