LOMA 361 TEST EVALUATION ANSWERS AND
QUESTIONS SET A+
✔✔Policy owner dividends due and unpaid - ✔✔Represent those dividends payable to
the policy owner in the current year that have not been disbursed or otherwise applied
as of the financial reporting date for the current year
must establish a liability whenever the policy owner has earned the dividends but has
not yet received it or applied it to a dividend payment option.
amount recorded apply to the current year.
policy owner dividends that have been declared during the year but that have not yet
been paid as of the year end
✔✔Policy owner dividends payable in the following calendar year - ✔✔Dividends
apportioned for payment are the estimated amount of a policy owner dividends declared
by an insurance company's Board of Directors prior to the end of the statement near
that are not yet paid or do at the end of the year
dividends not yet apportioned for payment are all dividends payable in the following
calendar year that have not been declared
amounts in the liability account are estimated on the basis of each policies anniversary
date.
The exact amount of the insurers liability for policy owner dividends payable in the
following calendar year is unknown
✔✔dividend accumulations - ✔✔result when a policy owner elect to leave policy owner
dividends on deposit at interest with the insurer.
The ensure establishes a liability for any Dividend accumulations, as well as for the
accrued interest on those accumulations
Also known as dividends left on deposit.
,See page 9 of written notes.
*example is a deposit type contract.
* deferred annuity during accumulation = investment contract
✔✔Policy owner dividend payment options - ✔✔These enable participating policy
owners to select the manner in which they want their policy owner dividends disbursed.
Page 213
Five types :
dividends paid in cash, dividends applied to pay premiums, dividend accumulations,
dividends applied to purchase paid up additions, dividends applied to purchase one
year term insurance
✔✔Nonforfeiture Options - ✔✔The various ways in which a policy owner can apply the
cash value of a life insurance policy if the policy lapses
Can take the form of cash surrender's, reduced paid up insurance, or extended term
insurance
✔✔Nonforfeiture Values - ✔✔Those guaranteed values in a life insurance policy that
cannot be taken from the insured, even if he or she ceases to pay premiums.
✔✔Supplementary contract - ✔✔arises from the election of a settlement option by a life
insurance beneficiary. payments are usually called contractual payments
✔✔suspense account - ✔✔An account that is used to record transactions that cannot
be posted immediately to a specified account
Premium suspense is the liability account used to record transactions that are intended
as premiums, but the insure cannot accept as income until a particular event occurs
Insurers usually use these types of accounts for premium payment amounts that are
renewal premiums, different from the amounts in the insurer records, or lacking critical
information such as a policy number
page 229
These accounts are also used when the insurer has received the initial premium but is
still waiting on an underwriting decision for the policy
The end result here is a debit to cash and a credit to premium income
✔✔Premiums paid in advance - ✔✔Premiums that and ensure has received but that are
due on or after the next policy anniversary date
, Premium deposits are usually in this category and those are amounts that and insurers
policy owners leave on deposit with the ensure to pay for several years of premiums at
one time
✔✔Premium deposit fund - ✔✔Placing premium deposits into a liability account so that
when an individual premium becomes due, the insured pays it from this account and
credits the premium income
✔✔deposit-type contracts - ✔✔Under SAP , Deposit type contracts that lack a mortality
risk component.
amounts received as payments are not considered premium income but instead I
reported directly to the appropriate liability account on the insurers statutory balance
sheet known as liability for the posit type contracts.
Contracts that do not subject the company to any risk arising from policyholder mortality
or morbidity.
In other words contracts that provide benefit payments that do not depend upon the
death or continued survival of an individual or group of individuals
Examples include guaranteed interest contracts, annuity certain, supplemental contracts
without life contingencies and dividend accumulations
amounts received as patents are reported on the statutory balance sheet aka "liability
for deposit type contracts."
these payments are accounted for as policy owner account balances which means that
policy owners have more discretion over deposits and withdrawals .
Under GAAP, accounting for investment contracts is similar to accounting for interest
bearing or other financial instruments for the balance a cruise to benefit of the policy
owner or contract owner. Under this approach, premiums or deposit received for
investment contracts are recorded as a deposit liability rather than as a revenue. Typical
GAAP account title for this liability is funds held under deposit contracts
✔✔Guaranteed interest contracts (GIC) - ✔✔The contract holder places one or more
deposits with the insurer for a stated. In exchange for repayment of those deposits plus
interest at a guaranteed rate. These are often used as funding vehicles for group
retirement plans
page 231
✔✔Investment Contract - ✔✔According to GAAP, long duration contracts that do not
expose the insurer to significant risks arising from policy owner or contract owner
mortality
examples include guaranteed interest contracts and most deferred annuity contracts
during the accumulation phase
QUESTIONS SET A+
✔✔Policy owner dividends due and unpaid - ✔✔Represent those dividends payable to
the policy owner in the current year that have not been disbursed or otherwise applied
as of the financial reporting date for the current year
must establish a liability whenever the policy owner has earned the dividends but has
not yet received it or applied it to a dividend payment option.
amount recorded apply to the current year.
policy owner dividends that have been declared during the year but that have not yet
been paid as of the year end
✔✔Policy owner dividends payable in the following calendar year - ✔✔Dividends
apportioned for payment are the estimated amount of a policy owner dividends declared
by an insurance company's Board of Directors prior to the end of the statement near
that are not yet paid or do at the end of the year
dividends not yet apportioned for payment are all dividends payable in the following
calendar year that have not been declared
amounts in the liability account are estimated on the basis of each policies anniversary
date.
The exact amount of the insurers liability for policy owner dividends payable in the
following calendar year is unknown
✔✔dividend accumulations - ✔✔result when a policy owner elect to leave policy owner
dividends on deposit at interest with the insurer.
The ensure establishes a liability for any Dividend accumulations, as well as for the
accrued interest on those accumulations
Also known as dividends left on deposit.
,See page 9 of written notes.
*example is a deposit type contract.
* deferred annuity during accumulation = investment contract
✔✔Policy owner dividend payment options - ✔✔These enable participating policy
owners to select the manner in which they want their policy owner dividends disbursed.
Page 213
Five types :
dividends paid in cash, dividends applied to pay premiums, dividend accumulations,
dividends applied to purchase paid up additions, dividends applied to purchase one
year term insurance
✔✔Nonforfeiture Options - ✔✔The various ways in which a policy owner can apply the
cash value of a life insurance policy if the policy lapses
Can take the form of cash surrender's, reduced paid up insurance, or extended term
insurance
✔✔Nonforfeiture Values - ✔✔Those guaranteed values in a life insurance policy that
cannot be taken from the insured, even if he or she ceases to pay premiums.
✔✔Supplementary contract - ✔✔arises from the election of a settlement option by a life
insurance beneficiary. payments are usually called contractual payments
✔✔suspense account - ✔✔An account that is used to record transactions that cannot
be posted immediately to a specified account
Premium suspense is the liability account used to record transactions that are intended
as premiums, but the insure cannot accept as income until a particular event occurs
Insurers usually use these types of accounts for premium payment amounts that are
renewal premiums, different from the amounts in the insurer records, or lacking critical
information such as a policy number
page 229
These accounts are also used when the insurer has received the initial premium but is
still waiting on an underwriting decision for the policy
The end result here is a debit to cash and a credit to premium income
✔✔Premiums paid in advance - ✔✔Premiums that and ensure has received but that are
due on or after the next policy anniversary date
, Premium deposits are usually in this category and those are amounts that and insurers
policy owners leave on deposit with the ensure to pay for several years of premiums at
one time
✔✔Premium deposit fund - ✔✔Placing premium deposits into a liability account so that
when an individual premium becomes due, the insured pays it from this account and
credits the premium income
✔✔deposit-type contracts - ✔✔Under SAP , Deposit type contracts that lack a mortality
risk component.
amounts received as payments are not considered premium income but instead I
reported directly to the appropriate liability account on the insurers statutory balance
sheet known as liability for the posit type contracts.
Contracts that do not subject the company to any risk arising from policyholder mortality
or morbidity.
In other words contracts that provide benefit payments that do not depend upon the
death or continued survival of an individual or group of individuals
Examples include guaranteed interest contracts, annuity certain, supplemental contracts
without life contingencies and dividend accumulations
amounts received as patents are reported on the statutory balance sheet aka "liability
for deposit type contracts."
these payments are accounted for as policy owner account balances which means that
policy owners have more discretion over deposits and withdrawals .
Under GAAP, accounting for investment contracts is similar to accounting for interest
bearing or other financial instruments for the balance a cruise to benefit of the policy
owner or contract owner. Under this approach, premiums or deposit received for
investment contracts are recorded as a deposit liability rather than as a revenue. Typical
GAAP account title for this liability is funds held under deposit contracts
✔✔Guaranteed interest contracts (GIC) - ✔✔The contract holder places one or more
deposits with the insurer for a stated. In exchange for repayment of those deposits plus
interest at a guaranteed rate. These are often used as funding vehicles for group
retirement plans
page 231
✔✔Investment Contract - ✔✔According to GAAP, long duration contracts that do not
expose the insurer to significant risks arising from policy owner or contract owner
mortality
examples include guaranteed interest contracts and most deferred annuity contracts
during the accumulation phase
