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LOMA 308 Module 2 Questions and
Correct Answers/ Latest Update /
Already Graded
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
Ans: 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
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Ans: 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
Ans: A company in which ownership is restricted to specified individuals.
Contrast with publicly held company.
partnership
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Ans: 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
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Ans: 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
Ans: A company that sells ownership shares to the public. Contrast with
privately held company.
requirements for incorporation
LOMA 308 Module 2 Questions and
Correct Answers/ Latest Update /
Already Graded
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
Ans: 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
,2 | Page
Ans: 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
Ans: A company in which ownership is restricted to specified individuals.
Contrast with publicly held company.
partnership
,3 | Page
Ans: 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
, 4 | Page
Ans: 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
Ans: A company that sells ownership shares to the public. Contrast with
privately held company.
requirements for incorporation
