LOMA 361 - CHAPTER 8 EXAM QUESTIONS WITH CORRECT ANSWERS LATEST UPDATE 2026
asset valuation reserve (AVR) - Answers For life insurance companies in the United States, a
reserve that minimizes the effects of both realized and unrealized gains and losses on an
insurer's invested assets when those gains and losses are related to the credit quality of the
assets a risk known as credit risk-or fluctuations in the prices of securities-a risk known as equity
risk.
commission - Answers Monetary compensation paid to an agent; usually expressed as a
percentage of the gross premiums paid by customers.
contractual payments - Answers Payments on supplementary contracts.
credit risk - Answers In the context of the asset valuation reserve, the risk that a financial
obligation will not be paid.
deposit-type contract - Answers Under statutory accounting principles, a contract that does not
expose the insurer to mortality risk or morbidity risk.
dividend accumulations - Answers Dividends that a policyowner elects to leave on deposit at
interest with the insurer.
guaranteed interest contract (GIC) - Answers A contract in which the contract holder places one
or more deposits with an insurer for a stated period in exchange for repayment of those
deposits plus interest at a guaranteed rate.
interest maintenance reserve (IMR) - Answers For life insurance companies in the United States,
a reserve that helps absorb realized gains and losses on an insurer's debt securities, such as
bonds, mortgages, and preferred stock, when those gains or losses are caused by changes in
market interest rates rather than changes in the credit quality of the assets.
interest-rate risk - Answers In the context of the interest maintenance reserve (IMR), the risk
that unpredictable movements in market interest rates will cause the value of a life insurer's
debt securities to change.
investment contract - Answers According to GAAP, a long-duration contract that does not
expose the insurer to significant risks arising from policyowner or contract owner mortality.
nonforfeiture options - Answers The various ways in which a policyowner can apply the cash
value of a life insurance policy if the policy lapses.
nonforfeiture values - Answers The benefits, such as cash or insurance, that an insurer
guarantees to a policyowner if the insurance contract lapses.
asset valuation reserve (AVR) - Answers For life insurance companies in the United States, a
reserve that minimizes the effects of both realized and unrealized gains and losses on an
insurer's invested assets when those gains and losses are related to the credit quality of the
assets a risk known as credit risk-or fluctuations in the prices of securities-a risk known as equity
risk.
commission - Answers Monetary compensation paid to an agent; usually expressed as a
percentage of the gross premiums paid by customers.
contractual payments - Answers Payments on supplementary contracts.
credit risk - Answers In the context of the asset valuation reserve, the risk that a financial
obligation will not be paid.
deposit-type contract - Answers Under statutory accounting principles, a contract that does not
expose the insurer to mortality risk or morbidity risk.
dividend accumulations - Answers Dividends that a policyowner elects to leave on deposit at
interest with the insurer.
guaranteed interest contract (GIC) - Answers A contract in which the contract holder places one
or more deposits with an insurer for a stated period in exchange for repayment of those
deposits plus interest at a guaranteed rate.
interest maintenance reserve (IMR) - Answers For life insurance companies in the United States,
a reserve that helps absorb realized gains and losses on an insurer's debt securities, such as
bonds, mortgages, and preferred stock, when those gains or losses are caused by changes in
market interest rates rather than changes in the credit quality of the assets.
interest-rate risk - Answers In the context of the interest maintenance reserve (IMR), the risk
that unpredictable movements in market interest rates will cause the value of a life insurer's
debt securities to change.
investment contract - Answers According to GAAP, a long-duration contract that does not
expose the insurer to significant risks arising from policyowner or contract owner mortality.
nonforfeiture options - Answers The various ways in which a policyowner can apply the cash
value of a life insurance policy if the policy lapses.
nonforfeiture values - Answers The benefits, such as cash or insurance, that an insurer
guarantees to a policyowner if the insurance contract lapses.
