ALABAMA LIFE INSURANCE EXAM 2024 WITH 100% CORRECT ANSWERS

What are commercial insurers also referred to as? - ANSWERS Private Insurance Companies Commercial Insurers are in the business of selling insurance for ___ ________. - ANSWERS a profit What two groups can commercial insurance be broken into? - ANSWERS Stock Companies & Mutual Insurers What is a stock insurer? - 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? - ANSWERS stock companies Which type of commercial insurer is participating? - ANSWERS mutual insurers what is a mutual insurer? - 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? - ANSWERS Yes Are dividends subject to taxation in a PAR company? - ANSWERS No; only the interest, if collected, is taxable If a company operates as both PAR and NONPAR what is it called ? - ANSWERS a Mixed Insurer Are dividends guaranteed? - ANSWERS Never An insurer selling more than one type of insurance is called a? - ANSWERS Multi-Line Insurer Strong Assessment Mutual Companies are classified by: - 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? - 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? - ANSWERS Advance Premium Assessment Company What are fraternal benefit societies? - ANSWERS special types of mutual companies that are non-profit religious, ethnic, or charitable organizations. Who would a fraternal benefit society supply insurance to? - ANSWERS Only its members What are risk retention groups? - ANSWERS mutual companies formed by groups of people with the same profession or industry What are reciprocal insurers? - ANSWERS 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. what is an indemnity contract? - ANSWERS 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. Attorney-in-fact - ANSWERS A person given the authority to act on behalf of another under a power of attorney. what is Reinsurance? - ANSWERS 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 The company transferring the risk is called? - ANSWERS ceding company The company assuming the risk is called? - ANSWERS reinsurer what is a captive insurer? - ANSWERS insurer owned by a parent firm for the purpose of insuring the parent firm's loss exposures Home service insurers are also called: - ANSWERS industrial insurance Home Service Insurance - ANSWERS sold by home service or debit life insurance companies. Face amounts are small & premiums are paid weekly What does OASDI mean? - ANSWERS Old-Age, Survivors, and Disability Insurance Who does social security provide benefits for? - ANSWERS the elderly (retirement) and survivors of parents who died young and those who qualify for federal disability Who does medicare provide insurance for? - ANSWERS health insurance for the elderly who does medicaid provide insurance for? - ANSWERS health insurance for the financially needy What are SGLI and VGLI? - ANSWERS service members/veterans group life insurance Who does TRICARE cover? - ANSWERS Active, retired, survivors and their families of the Armed Forces. Self-insurance - ANSWERS the process of establishing a monetary fund to cover the cost of a loss Self Insurance is NOT a method of transferring risk, they establish their ________________. - ANSWERS own self-funded plans for cost of loss. A self funded plan is a plan which an _______ pays insurance benefits from a fund derived from employer's current revenues. - ANSWERS employer Define Lloyd's of London - ANSWERS NOT an insurance company; members of the association form syndicates to underwrite and issue insurance-like coverage. "group of investors who share in unusual risk" distribution system - ANSWERS the ways insurance products are marketed and sold to the public Agents are recruited, trained and supervised by either a managing employee or General Agent who is contracted with the insurance company. - ANSWERS Career Agency Systems In a career agency system, all produces under the system are __________ agents - ANSWERS Captive Agents work for an independent agency selling policies from several insurance companies. The agents are NOT employees of the ins company, but work for the system. - ANSWERS Personal Producing General Agency System (PPGA) Independent Agents represent a number of insurance companies through separate contractual agreements, and are paid commission based on their sales. - ANSWERS Independent Agency System (American Agency System) US Supreme Court ruled that insurance transactions crossing state lines are NOT interstate commerce - ANSWERS 1861 Paul v Virginia