LOMA 291 Exam Questions and
Answers 100% Pass
Stakeholders (constituents) - ✔✔A party that has an interest in how a company
conducts its business
Dividend - ✔✔Compensation that a company may pay to owners upon a vote by thr
company's board of directors
Reinsurance - ✔✔Insurance that one insurance company, the direct writer, purchases
from another insurance company, the reinsurer, to transfer all or part of the risk on
insurance policies that the direct writer issued
Inside directors - ✔✔A member of the board of directors who also holds a position
within the company
Outside directors (independent directors) - ✔✔A member of the board of directors who
does not bold a position within the company
Ombudsman Program - ✔✔An independent, impartial and confidential professional
who provides ethical guidance on specific problems
100% Pass Guarantee Emilly Charlotte, All Rights Reserved © 2025 1
,Line function - ✔✔A department or other organizational unit that produces or
administers products or services
Ex. Product development, marketing, distribution & sales, underwriting & new
business, customer service, reinsurance administration, claims
Support functions (staff function) - ✔✔A department or other organizational unit that
provides support services to line functions or to other support functions but does not
produce or administer products
Ex. Accounting & financial reporting, audit, corporate communications, legal &
compliance, finance, HR, IT, treasury, risk management
Vertical organization - ✔✔An organization w a long chain of command and a narrow
span of control
Flat Organization - ✔✔An organization w a short chain of command and a wide span of
control. Also called a horizontal organization
Organization by product - ✔✔An organizational structure which arranged a company's
major divisions according to the company's product lines
100% Pass Guarantee Emilly Charlotte, All Rights Reserved © 2025 2
,Ex. Annuities & Life Insurance, Property & Casualty Insurance
Organization by territory - ✔✔An organizational structure which arranged a company's
major divisions according to the geographic areas in which it operates
Ex. Americas, Asia Pacific, Europe
Organization by customer group - ✔✔An organizational structure which arranges a
company's major divisions according to the customer group each unit serves
Ex. Group products (commercial), Individual Business (personal)
Organization by distribution channel - ✔✔An organizational structure which arranges a
company's major divisions according to the distribution channels that deliver products
to customers
Required return - ✔✔The return an investor needs to earn in order to make the
investment, given the risk of the investment; typically found by adding the risk free rate
of return to the risk premium
Risk free rate - ✔✔The return on a risk free investment (the least risky investment
opportunity available)
100% Pass Guarantee Emilly Charlotte, All Rights Reserved © 2025 3
, Risk premium - ✔✔The component of investment return that compensates the investor
for taking on the risk associated w a specific investment; the rate of return required in
addition to the risk free rate for the investor to make the investment
Investment risk - ✔✔The possibility that an investor will fail to earn some or all of an
expected return or will lose all or part of the original investment
Market risk (financial market risk) - ✔✔A risk of unexpected outcomes due to
fluctuations in the market values in a given financial market
Interest rate risk - ✔✔The risk that unpredictable movements or stagnation in market
interest rates will cause assets to lose value or liabilities to gain value
Default risk - ✔✔The risk that a borrower will fail to repay their debt
Liquidity risk - ✔✔The risk of being unable to quickly convert an asset to cash for its
underlying value
Pricing risk - ✔✔The risk that an insurer's actual experience with pricing factors such as
operating costs or mortality rates will be significantly worse than expected, causing the
insurer to lose money on its products
Business risk - ✔✔The risk that changes in a company's external environment will affect
its operations
100% Pass Guarantee Emilly Charlotte, All Rights Reserved © 2025 4
Answers 100% Pass
Stakeholders (constituents) - ✔✔A party that has an interest in how a company
conducts its business
Dividend - ✔✔Compensation that a company may pay to owners upon a vote by thr
company's board of directors
Reinsurance - ✔✔Insurance that one insurance company, the direct writer, purchases
from another insurance company, the reinsurer, to transfer all or part of the risk on
insurance policies that the direct writer issued
Inside directors - ✔✔A member of the board of directors who also holds a position
within the company
Outside directors (independent directors) - ✔✔A member of the board of directors who
does not bold a position within the company
Ombudsman Program - ✔✔An independent, impartial and confidential professional
who provides ethical guidance on specific problems
100% Pass Guarantee Emilly Charlotte, All Rights Reserved © 2025 1
,Line function - ✔✔A department or other organizational unit that produces or
administers products or services
Ex. Product development, marketing, distribution & sales, underwriting & new
business, customer service, reinsurance administration, claims
Support functions (staff function) - ✔✔A department or other organizational unit that
provides support services to line functions or to other support functions but does not
produce or administer products
Ex. Accounting & financial reporting, audit, corporate communications, legal &
compliance, finance, HR, IT, treasury, risk management
Vertical organization - ✔✔An organization w a long chain of command and a narrow
span of control
Flat Organization - ✔✔An organization w a short chain of command and a wide span of
control. Also called a horizontal organization
Organization by product - ✔✔An organizational structure which arranged a company's
major divisions according to the company's product lines
100% Pass Guarantee Emilly Charlotte, All Rights Reserved © 2025 2
,Ex. Annuities & Life Insurance, Property & Casualty Insurance
Organization by territory - ✔✔An organizational structure which arranged a company's
major divisions according to the geographic areas in which it operates
Ex. Americas, Asia Pacific, Europe
Organization by customer group - ✔✔An organizational structure which arranges a
company's major divisions according to the customer group each unit serves
Ex. Group products (commercial), Individual Business (personal)
Organization by distribution channel - ✔✔An organizational structure which arranges a
company's major divisions according to the distribution channels that deliver products
to customers
Required return - ✔✔The return an investor needs to earn in order to make the
investment, given the risk of the investment; typically found by adding the risk free rate
of return to the risk premium
Risk free rate - ✔✔The return on a risk free investment (the least risky investment
opportunity available)
100% Pass Guarantee Emilly Charlotte, All Rights Reserved © 2025 3
, Risk premium - ✔✔The component of investment return that compensates the investor
for taking on the risk associated w a specific investment; the rate of return required in
addition to the risk free rate for the investor to make the investment
Investment risk - ✔✔The possibility that an investor will fail to earn some or all of an
expected return or will lose all or part of the original investment
Market risk (financial market risk) - ✔✔A risk of unexpected outcomes due to
fluctuations in the market values in a given financial market
Interest rate risk - ✔✔The risk that unpredictable movements or stagnation in market
interest rates will cause assets to lose value or liabilities to gain value
Default risk - ✔✔The risk that a borrower will fail to repay their debt
Liquidity risk - ✔✔The risk of being unable to quickly convert an asset to cash for its
underlying value
Pricing risk - ✔✔The risk that an insurer's actual experience with pricing factors such as
operating costs or mortality rates will be significantly worse than expected, causing the
insurer to lose money on its products
Business risk - ✔✔The risk that changes in a company's external environment will affect
its operations
100% Pass Guarantee Emilly Charlotte, All Rights Reserved © 2025 4
