WFG Life Insurance Exam Questions and Answers with Verified
Solutions | Latest 2026 Update
Q: Commercial Insurers
Answer:
(also known as private insurance companies) are in the business of selling
insurance for a profit. Divided into two main groups: stock & mutual insurers
Q: Multi-line insurer
Answer:
An insurance company selling more than one line of insurance
Q: Stock Companies
Answer:
are organized and incorporated under state laws for the purpose of making aprofit
for its stockholders (shareholders).
Q: nonparticipating insurers (stock insurers)
Answer:
policyholders do not participate in receiving dividends or electing the board of
directors, unless they are also a stockholder of the company.
Q: Mutual Companies
Answer:
are owned by their policyholders.
Q: Participating Insurers (Mutual Insurers)
Answer:
policyholders that PARTICIPATE in receiving dividends and electing the board of
directors. When declared, mutual company dividends are paid to the policyholders.
Q: Mixed Insurer
Answer:
If a company operates as both a PARTICIPATING and NONPARTICIPATING
insurer.
,DIVIDENDS can NEVER be guaranteed regardless of the type of company
offering them.
Q: Strong Assessment Mutual Companies
Answer:
are classified by the way they charge premium.
Q: Pure Assessment Mutual Company
Answer:
operates based on loss-sharing by group members. No premium is payable in
advance. Instead, each member is assessed an individual portion of losses
thatoccur.
Q: An advance premium assessment mutual
Answer:
charges a premium at the beginning of the policy period. If the original premiums
exceed the operating expenses and losses, the surplus is returned to the
policyholders as dividends. However, if total premiums are not enough to meet
losses, additional assessments are levied against the members.
Q: Fraternal Benefit Societies
Answer:
are special types of mutual companies, nonprofit religious, ethnic or charitable
organizations that provide insurance solely to their members.
Fraternal must be formed for reasons other than obtaining insurance. An example
of fraternal societies is Knights of Columbus.
Q: Risk retention groups
Answer:
are mutual companies formed by a group of people in the same industry or
profession.
Examples would be pharmacists, dentists, and engineers.
Q: Service Providers
Answer:
offer benefits to subscribers in return for the payment of a premium.
,Examples of service providers are Health Maintenance Organizations (HMO) and
Preferred Provider Organizations (PPO).
Q: subscribers
Answer:
These services are packaged into various plans, and those who purchase the plans
Q: Reciprocal insurers
Answer:
are unincorporated groups of individual members that provide insurance for other
members through indemnity contracts.
Q: Attorney in Fact
Answer:
Each member acts as both insurer and insured and are managed by
Q: Reinsurers
Answer:
make arrangements with other insurance companies to transfer a portion of their
risk to the reinsurer
Q: the Reinsurer
Answer:
the company assuming the risk
Q: Ceding Company
Answer:
The company transferring the risk
Q: Captive Insurer
Answer:
insurer established and owned by the parent company to insure the parent
company's loss exposure.
Q: Home Service Insurers
, Answer:
(also known as industrial insurance), is sold by home service or debit life insurance
companies. Face amounts are small; usually $1,000 to $2,000 and premiums are
paid weekly.
Q: Government Insurance
Answer:
Federal and state government are also insurers. They provide social insurance
programs, to protect against universal risks by redistributing income to help people
who cannot afford the cost of incurring such losses themselves. These programs
have far reaching effects and millions of people depend on them.
Q: Types of Government Insurance (5 types)
Answer:
Social Security (Old Age Survivor Disability Insurance OASDI - Provides income
benefits for the elderly (retirement), survivors of those who died young (young
child of a deceased parent), and those qualifying for federal disability.
Q: Medicare
Answer:
Health insurance to CARE for the elderly
Q: Medicaid
Answer:
Health insurance to AID the financially needy.
S.G.L.I. and V.G.L.I (Serviceman's or Veteran's Group Life Insurance: life
insurance for active and retired members of the military)
Tri-Care (health insurance for members of the military and theirfamily)
Q: Self-Insurers
Answer:
retain risks and must have a large number of similar risks and enough capital to
pay claims. However, they may save money if the loss experience is lower than the
expected costs.
are not a method of transferring risk, rather establish their own self-funded plan to
cover potential losses
Solutions | Latest 2026 Update
Q: Commercial Insurers
Answer:
(also known as private insurance companies) are in the business of selling
insurance for a profit. Divided into two main groups: stock & mutual insurers
Q: Multi-line insurer
Answer:
An insurance company selling more than one line of insurance
Q: Stock Companies
Answer:
are organized and incorporated under state laws for the purpose of making aprofit
for its stockholders (shareholders).
Q: nonparticipating insurers (stock insurers)
Answer:
policyholders do not participate in receiving dividends or electing the board of
directors, unless they are also a stockholder of the company.
Q: Mutual Companies
Answer:
are owned by their policyholders.
Q: Participating Insurers (Mutual Insurers)
Answer:
policyholders that PARTICIPATE in receiving dividends and electing the board of
directors. When declared, mutual company dividends are paid to the policyholders.
Q: Mixed Insurer
Answer:
If a company operates as both a PARTICIPATING and NONPARTICIPATING
insurer.
,DIVIDENDS can NEVER be guaranteed regardless of the type of company
offering them.
Q: Strong Assessment Mutual Companies
Answer:
are classified by the way they charge premium.
Q: Pure Assessment Mutual Company
Answer:
operates based on loss-sharing by group members. No premium is payable in
advance. Instead, each member is assessed an individual portion of losses
thatoccur.
Q: An advance premium assessment mutual
Answer:
charges a premium at the beginning of the policy period. If the original premiums
exceed the operating expenses and losses, the surplus is returned to the
policyholders as dividends. However, if total premiums are not enough to meet
losses, additional assessments are levied against the members.
Q: Fraternal Benefit Societies
Answer:
are special types of mutual companies, nonprofit religious, ethnic or charitable
organizations that provide insurance solely to their members.
Fraternal must be formed for reasons other than obtaining insurance. An example
of fraternal societies is Knights of Columbus.
Q: Risk retention groups
Answer:
are mutual companies formed by a group of people in the same industry or
profession.
Examples would be pharmacists, dentists, and engineers.
Q: Service Providers
Answer:
offer benefits to subscribers in return for the payment of a premium.
,Examples of service providers are Health Maintenance Organizations (HMO) and
Preferred Provider Organizations (PPO).
Q: subscribers
Answer:
These services are packaged into various plans, and those who purchase the plans
Q: Reciprocal insurers
Answer:
are unincorporated groups of individual members that provide insurance for other
members through indemnity contracts.
Q: Attorney in Fact
Answer:
Each member acts as both insurer and insured and are managed by
Q: Reinsurers
Answer:
make arrangements with other insurance companies to transfer a portion of their
risk to the reinsurer
Q: the Reinsurer
Answer:
the company assuming the risk
Q: Ceding Company
Answer:
The company transferring the risk
Q: Captive Insurer
Answer:
insurer established and owned by the parent company to insure the parent
company's loss exposure.
Q: Home Service Insurers
, Answer:
(also known as industrial insurance), is sold by home service or debit life insurance
companies. Face amounts are small; usually $1,000 to $2,000 and premiums are
paid weekly.
Q: Government Insurance
Answer:
Federal and state government are also insurers. They provide social insurance
programs, to protect against universal risks by redistributing income to help people
who cannot afford the cost of incurring such losses themselves. These programs
have far reaching effects and millions of people depend on them.
Q: Types of Government Insurance (5 types)
Answer:
Social Security (Old Age Survivor Disability Insurance OASDI - Provides income
benefits for the elderly (retirement), survivors of those who died young (young
child of a deceased parent), and those qualifying for federal disability.
Q: Medicare
Answer:
Health insurance to CARE for the elderly
Q: Medicaid
Answer:
Health insurance to AID the financially needy.
S.G.L.I. and V.G.L.I (Serviceman's or Veteran's Group Life Insurance: life
insurance for active and retired members of the military)
Tri-Care (health insurance for members of the military and theirfamily)
Q: Self-Insurers
Answer:
retain risks and must have a large number of similar risks and enough capital to
pay claims. However, they may save money if the loss experience is lower than the
expected costs.
are not a method of transferring risk, rather establish their own self-funded plan to
cover potential losses
