LOMA 361 - CHAPTER 7 EXAM QUESTIONS WITH CORRECT ANSWERS LATEST UPDATE 2026
actuarial assumptions - Answers The assumed values used in a life insurance or an annuity
product design.
actuary - Answers An expert in financial risk management and the mathematics and modeling of
insurance, annuities, and financial instruments.
aggregate reserves - Answers Reserves for a block of insurance policies or contracts, a line of
business, or an entire company.
contractual reserve - Answers A liability that identifies the amount that, together with future
premiums and investment earnings, represents the expected amount of future benefits payable
on an insurer's in-force business.
GAAP accounting records - Answers Accounting records designed for financial reporting to
investors, noninsurance regulators (such as the SEC in the United States), and the general
public.
internal accounting records - Answers Accounting records designed for financial reporting to a
company's management team, whose primary interest is in having appropriate data for making
decisions.
modified reserve valuation - Answers Under statutory accounting, a method of calculating
contractual reserves in which an insurer sets a lower-than-level first-year contractual reserve in
recognition of a product's high first-year expenses.
Net GAAP reserves - Answers An insurer's reported GAAP reserves minus its deferred
acquisition costs (DAC).
noncontractal reserve - Answers A liability amount that an insurer estimates it will need to pay
the insurer's business obligations that are not directly attributable to benefits payable for a
specified product.
released reserve - Answers A contractual reserve that was originally established in connection
with an in-force policy but is no longer required.
reserve credit - Answers The solvency-basis accounting entry the direct writer uses to record a
reduction of reserves due to the use of reinsurance.
reserve destrengthening - Answers For an insurer, the act of decreasing a reserve amount,
which results in an increase in the insurer's capital or surplus.
actuarial assumptions - Answers The assumed values used in a life insurance or an annuity
product design.
actuary - Answers An expert in financial risk management and the mathematics and modeling of
insurance, annuities, and financial instruments.
aggregate reserves - Answers Reserves for a block of insurance policies or contracts, a line of
business, or an entire company.
contractual reserve - Answers A liability that identifies the amount that, together with future
premiums and investment earnings, represents the expected amount of future benefits payable
on an insurer's in-force business.
GAAP accounting records - Answers Accounting records designed for financial reporting to
investors, noninsurance regulators (such as the SEC in the United States), and the general
public.
internal accounting records - Answers Accounting records designed for financial reporting to a
company's management team, whose primary interest is in having appropriate data for making
decisions.
modified reserve valuation - Answers Under statutory accounting, a method of calculating
contractual reserves in which an insurer sets a lower-than-level first-year contractual reserve in
recognition of a product's high first-year expenses.
Net GAAP reserves - Answers An insurer's reported GAAP reserves minus its deferred
acquisition costs (DAC).
noncontractal reserve - Answers A liability amount that an insurer estimates it will need to pay
the insurer's business obligations that are not directly attributable to benefits payable for a
specified product.
released reserve - Answers A contractual reserve that was originally established in connection
with an in-force policy but is no longer required.
reserve credit - Answers The solvency-basis accounting entry the direct writer uses to record a
reduction of reserves due to the use of reinsurance.
reserve destrengthening - Answers For an insurer, the act of decreasing a reserve amount,
which results in an increase in the insurer's capital or surplus.
