LOMA 291 QUESTIONS & ANSWERS
What is an ombudsman? - Answer -An independent, impartial, and confidential
professional with expertise in handling ethics problems
What are the four functions of management? - Answer -Planning, organizing, directing,
and controlling
What is the formula for required rate of return? - Answer -Risk-free rate + Risk premium
= Required Return
What are the three lines of defense in the risk management model? - Answer -1.
Operational management
2. Internal monitoring and oversight
3. Internal Audit
What is omnichannel distribution? - Answer -Distribution that enables personalized
sales to customers through multiple, integrated communication channels.
What is a trail commission? - Answer -A percentage of an annuity's accumulated value
paid periodically, usually annually, to the financial professional that sold the annuity.
What is churning? - Answer -A prohibited sales practice that occurs when a financial
professional induces a client to replace one policy after another, multiple times, so that
the financial professional can earn a series of first-year commissions on the
replacements.
What is twisting? - Answer -A prohibited sales practice that occurs when a financial
professional misrepresents the features of a policy to induce the customer to replace an
existing policy.
What is rebating? - Answer -A sales practice, prohibited in most jurisdictions, in which
an insurance financial professional offers a prospect an inducement, such as a cash
payment, to purchase a life insurance policy or an annuity contract, and the inducement
is not offered to all applicants in similar situations and is not stated in the policy itself.
Why would an insurance company establish a broker-dealer subsidiary? - Answer -To
sell variable life insurance and variable annuity products, as they are considered to be
securities
What is a registered rep? - Answer -A person registered with FINRA who works for a
broker-dealer selling securities.
What is a wholesaler? - Answer -A person who promotes an insurer's products to
intermediaries and provides the intermediaries with marketing support.
What is an ombudsman? - Answer -An independent, impartial, and confidential
professional with expertise in handling ethics problems
What are the four functions of management? - Answer -Planning, organizing, directing,
and controlling
What is the formula for required rate of return? - Answer -Risk-free rate + Risk premium
= Required Return
What are the three lines of defense in the risk management model? - Answer -1.
Operational management
2. Internal monitoring and oversight
3. Internal Audit
What is omnichannel distribution? - Answer -Distribution that enables personalized
sales to customers through multiple, integrated communication channels.
What is a trail commission? - Answer -A percentage of an annuity's accumulated value
paid periodically, usually annually, to the financial professional that sold the annuity.
What is churning? - Answer -A prohibited sales practice that occurs when a financial
professional induces a client to replace one policy after another, multiple times, so that
the financial professional can earn a series of first-year commissions on the
replacements.
What is twisting? - Answer -A prohibited sales practice that occurs when a financial
professional misrepresents the features of a policy to induce the customer to replace an
existing policy.
What is rebating? - Answer -A sales practice, prohibited in most jurisdictions, in which
an insurance financial professional offers a prospect an inducement, such as a cash
payment, to purchase a life insurance policy or an annuity contract, and the inducement
is not offered to all applicants in similar situations and is not stated in the policy itself.
Why would an insurance company establish a broker-dealer subsidiary? - Answer -To
sell variable life insurance and variable annuity products, as they are considered to be
securities
What is a registered rep? - Answer -A person registered with FINRA who works for a
broker-dealer selling securities.
What is a wholesaler? - Answer -A person who promotes an insurer's products to
intermediaries and provides the intermediaries with marketing support.
