LOMA 308 Module 2 Exam Questions
with All Correct Answers
Which committee analyzes and evaluates the tax implications of company policies,
programs, and regulatory actions?
Investment
Audit
Executive
Risk
Tax - Answer-Tax
Which committee provides overall guidance and control of an insurer's risk management
efforts?
Investment
Audit
Executive
Risk
Tax - Answer-Risk
Which of these organizational forms do you think is protected against takeover or
control by another type of company?
A. Stock company
B. Mutual company - Answer-B. - In most jurisdictions, mutual insurance companies can
merge with or acquire other mutual companies (with regulatory approval), but they can't
be taken over or controlled by another type of company. Stock companies can be
acquired by other stock insurance companies or publicly held companies if the acquiring
company holds most or all of the acquired company's stock.
Which of these organizational forms do you think provides social as well as insurance
benefits to members?
A. Stock company
B. Mutual company
C. Fraternal benefit society - Answer-C. - All of these forms offer insurance coverage.
However, only fraternal benefit societies also offer social and other non-insurance
benefits to members.
The Dexter Insurance Company requires employees to use a ''key'' to translate all
outgoing information into coded text and requires receivers to use that same ''key'' to
decode the message. The process Dexter uses to protect outgoing information is an
example of
,Encryption using a public system
Encryption using a private system
Authentication using a public system
Authentication using a private system - Answer-public - Encryption translates regular
text into coded text, known as cypher text. If encryption involves a public system, then
both the sender and the receiver use the same key to decode the message. A private
system uses different keys for coding and decoding messages. Authentication is a
process used to confirm the identity of individuals who are authorized to access
company data.
Companies can ensure that operations continue even during power failures, system
shutdowns, or equipment breakdowns by creating a disaster recovery plan. This plan
should include
Procedures for duplicating and storing critical programs and documents
Back-ups for IT and communication systems
An evaluation of expected outcomes from using different processing and storage
options
All of the above - Answer-all of them
Suppose that you want to start your own insurance company. The first thing you need to
decide is what kind of structure your company will have. Which organizational structures
do you think you can choose from?
a. sole proprietorship
b. partnership
c. corporation - Answer-c. - Laws in most jurisdictions require insurance companies to
be organized as corporations. In this lesson, you'll learn why that structure is required.
You'll also learn how organizational form and management affect the way an insurance
company does business.
Sole Proprietorship - Answer-is created, owned, and operated by one person.
he owner earns all company profits and is responsible for all company debts.
Company operations cease if the owner dies.
The company is considered a privately held company because ownership is restricted to
a specified individual.
privately held company - Answer-A company in which ownership is restricted to
specified individuals. Contrast with publicly held company.
partnership - Answer-is created, owned, and operated by two or more partners.
Partners earn all company profits and are responsible for all company debts.
A two-owner partnership dissolves if a partner dies or withdraws; a partnership with
many owners will continue as long as there are two or more owners.
,The company is considered a privately held company because ownership is limited to
specified individuals.
Corporation - Answer-is a legal entity created by government authority.
It's separate from its owners, so owners can't be held responsible for company debts.
Operations continue even if one or more owners die or withdraw.
It can sue or be sued, enter into contracts, and own property.
It can be a privately held company or a publicly held company that sells ownership
shares to the public.
publicly held company - Answer-A company that sells ownership shares to the public.
Contrast with privately held company.
requirements for incorporation - Answer-In the U.S., insurance companies are
incorporated at the state level.
A description of the company, including its name, location, plan for organizing
operations, and the type of business it intends to conduct
The names of the company's original directors
The amount of initial investment being made by company owners
Licensing - Answer-license granting the insurer the legal authority to conduct insurance
business in a specific jurisdiction. An insurer that intends to do business in more than
one jurisdiction must obtain a license from each jurisdiction. In the U.S., that means a
license from each state in which the insurer will operate.
The purpose of licensing is to ensure that an insurance company is
Financially sound and able to meet its obligation to policyowners
Directed by knowledgeable and capable managers
Which of the following are characteristics of a sole proprietorship? (Choose all that
apply.)
A. Owned and operated by one person
B. All profits on sales belong to company owner(s)
C. Privately held organization
D. Operations cease if only one owner remains
E. Owned and operated by two or more people
F. Created by government authority
G. Owner(s) responsible for company debts
H. Publicly held organization
I. Owner(s) not responsible for company debts - Answer-A, B, C, & G
Which of the following are characteristics of a partnership? (Choose all that apply.)
A. Owned and operated by one person
B. All profits on sales belong to company owner(s)
, C. Privately held organization
D. Operations cease if only one owner remains
E. Owned and operated by two or more people
F. Created by government authority
G. Owner(s) responsible for company debts
H. Publicly held organization
I. Owner(s) not responsible for company debts - Answer-B, C, D, E & G
Which of the following are characteristics of a corporation? (Choose all that apply.)
A. Owned and operated by one person
B. All profits on sales belong to company owner(s)
C. Privately held organization
D. Operations cease if only one owner remains
E. Owned and operated by two or more people
F. Created by government authority
G. Owner(s) responsible for company debts
H. Publicly held organization
I. Owner(s) not responsible for company debts - Answer-C, E, F, H & I
In the United States, an insurance company must be incorporated at
A. The state level only
B. The federal level only
C. Either the state level or the federal level
D. Both the state level and the federal level - Answer-A.- In the U.S., insurance
companies are incorporated at the state level. In Canada, insurers can be incorporated
at the provincial or federal level. In India and many other countries, insurers are
incorporated at the federal level.
In the United States, an insurance company must be licensed in
A. The state in which it is incorporated
B. The state in which its home office is located
C. Each state in which it does business
D. All states - Answer-C. - In addition to fulfilling incorporation requirements, insurers
operating in the U.S. must obtain a license from each jurisdiction in which they intend to
conduct business.
Which of these organizational forms do you think is the most common?
A. Stock company
B. Mutual company
C. Fraternal benefit society - Answer-A. - Most of the insurers in the U.S. are organized
as stock companies.
Stock Insurance - Answer-companies are owned by the people and organizations that
buy shares of the company's stock. If financial conditions are favorable, stockholders
may receive periodic dividends, which represent a return on their investment.
with All Correct Answers
Which committee analyzes and evaluates the tax implications of company policies,
programs, and regulatory actions?
Investment
Audit
Executive
Risk
Tax - Answer-Tax
Which committee provides overall guidance and control of an insurer's risk management
efforts?
Investment
Audit
Executive
Risk
Tax - Answer-Risk
Which of these organizational forms do you think is protected against takeover or
control by another type of company?
A. Stock company
B. Mutual company - Answer-B. - In most jurisdictions, mutual insurance companies can
merge with or acquire other mutual companies (with regulatory approval), but they can't
be taken over or controlled by another type of company. Stock companies can be
acquired by other stock insurance companies or publicly held companies if the acquiring
company holds most or all of the acquired company's stock.
Which of these organizational forms do you think provides social as well as insurance
benefits to members?
A. Stock company
B. Mutual company
C. Fraternal benefit society - Answer-C. - All of these forms offer insurance coverage.
However, only fraternal benefit societies also offer social and other non-insurance
benefits to members.
The Dexter Insurance Company requires employees to use a ''key'' to translate all
outgoing information into coded text and requires receivers to use that same ''key'' to
decode the message. The process Dexter uses to protect outgoing information is an
example of
,Encryption using a public system
Encryption using a private system
Authentication using a public system
Authentication using a private system - Answer-public - Encryption translates regular
text into coded text, known as cypher text. If encryption involves a public system, then
both the sender and the receiver use the same key to decode the message. A private
system uses different keys for coding and decoding messages. Authentication is a
process used to confirm the identity of individuals who are authorized to access
company data.
Companies can ensure that operations continue even during power failures, system
shutdowns, or equipment breakdowns by creating a disaster recovery plan. This plan
should include
Procedures for duplicating and storing critical programs and documents
Back-ups for IT and communication systems
An evaluation of expected outcomes from using different processing and storage
options
All of the above - Answer-all of them
Suppose that you want to start your own insurance company. The first thing you need to
decide is what kind of structure your company will have. Which organizational structures
do you think you can choose from?
a. sole proprietorship
b. partnership
c. corporation - Answer-c. - Laws in most jurisdictions require insurance companies to
be organized as corporations. In this lesson, you'll learn why that structure is required.
You'll also learn how organizational form and management affect the way an insurance
company does business.
Sole Proprietorship - Answer-is created, owned, and operated by one person.
he owner earns all company profits and is responsible for all company debts.
Company operations cease if the owner dies.
The company is considered a privately held company because ownership is restricted to
a specified individual.
privately held company - Answer-A company in which ownership is restricted to
specified individuals. Contrast with publicly held company.
partnership - Answer-is created, owned, and operated by two or more partners.
Partners earn all company profits and are responsible for all company debts.
A two-owner partnership dissolves if a partner dies or withdraws; a partnership with
many owners will continue as long as there are two or more owners.
,The company is considered a privately held company because ownership is limited to
specified individuals.
Corporation - Answer-is a legal entity created by government authority.
It's separate from its owners, so owners can't be held responsible for company debts.
Operations continue even if one or more owners die or withdraw.
It can sue or be sued, enter into contracts, and own property.
It can be a privately held company or a publicly held company that sells ownership
shares to the public.
publicly held company - Answer-A company that sells ownership shares to the public.
Contrast with privately held company.
requirements for incorporation - Answer-In the U.S., insurance companies are
incorporated at the state level.
A description of the company, including its name, location, plan for organizing
operations, and the type of business it intends to conduct
The names of the company's original directors
The amount of initial investment being made by company owners
Licensing - Answer-license granting the insurer the legal authority to conduct insurance
business in a specific jurisdiction. An insurer that intends to do business in more than
one jurisdiction must obtain a license from each jurisdiction. In the U.S., that means a
license from each state in which the insurer will operate.
The purpose of licensing is to ensure that an insurance company is
Financially sound and able to meet its obligation to policyowners
Directed by knowledgeable and capable managers
Which of the following are characteristics of a sole proprietorship? (Choose all that
apply.)
A. Owned and operated by one person
B. All profits on sales belong to company owner(s)
C. Privately held organization
D. Operations cease if only one owner remains
E. Owned and operated by two or more people
F. Created by government authority
G. Owner(s) responsible for company debts
H. Publicly held organization
I. Owner(s) not responsible for company debts - Answer-A, B, C, & G
Which of the following are characteristics of a partnership? (Choose all that apply.)
A. Owned and operated by one person
B. All profits on sales belong to company owner(s)
, C. Privately held organization
D. Operations cease if only one owner remains
E. Owned and operated by two or more people
F. Created by government authority
G. Owner(s) responsible for company debts
H. Publicly held organization
I. Owner(s) not responsible for company debts - Answer-B, C, D, E & G
Which of the following are characteristics of a corporation? (Choose all that apply.)
A. Owned and operated by one person
B. All profits on sales belong to company owner(s)
C. Privately held organization
D. Operations cease if only one owner remains
E. Owned and operated by two or more people
F. Created by government authority
G. Owner(s) responsible for company debts
H. Publicly held organization
I. Owner(s) not responsible for company debts - Answer-C, E, F, H & I
In the United States, an insurance company must be incorporated at
A. The state level only
B. The federal level only
C. Either the state level or the federal level
D. Both the state level and the federal level - Answer-A.- In the U.S., insurance
companies are incorporated at the state level. In Canada, insurers can be incorporated
at the provincial or federal level. In India and many other countries, insurers are
incorporated at the federal level.
In the United States, an insurance company must be licensed in
A. The state in which it is incorporated
B. The state in which its home office is located
C. Each state in which it does business
D. All states - Answer-C. - In addition to fulfilling incorporation requirements, insurers
operating in the U.S. must obtain a license from each jurisdiction in which they intend to
conduct business.
Which of these organizational forms do you think is the most common?
A. Stock company
B. Mutual company
C. Fraternal benefit society - Answer-A. - Most of the insurers in the U.S. are organized
as stock companies.
Stock Insurance - Answer-companies are owned by the people and organizations that
buy shares of the company's stock. If financial conditions are favorable, stockholders
may receive periodic dividends, which represent a return on their investment.
