TEST BANK FOR AD BANKER LIFE INSURANCE EXAM – MERGED
COMPREHENSIVE PRACTICE QUESTIONS AND ANSWERS FOR
LICENSING PREPARATION, INSURANCE CERTIFICATION REVIEW, AND
LIFE INSURANCE EXAM PREP GUIDE
Insurers
CORRECT ANS>> (Insurance Companies Or Carriers) Provide Insurance Coverage By Issuing
Particular Insurance Policies Or Contracts
Insurance Agencies
CORRECT ANS>> Independent Sales Organizations That Provide Service And Distribute
Insurance Policies To Consumers
Insurance Agents Or Producers
CORRECT ANS>> Are Licensed Individuals Representing An Insurance Company When
Transacting Insurance Business
Who Primarily Regulates The Insurance Industry?
CORRECT ANS>> The Insurance Industry Is Regulated Primarily At The State Level Through The
Legislative, Judicial, And Executive Branches
Legislative Branch
CORRECT ANS>> Writes And Passes State Insurance Laws Or Statues Designed To Protect The
Insuring Public
Judicial Branch
CORRECT ANS>> Responsible For Interpreting And Determining The Constitutionality Of The
Statues
,(Interprets The Law And Makes Sure It Is Constitutionally Allowed)
Executive Branch
CORRECT ANS>> (Executes/Enforces The Law) Has The Power To Issue Rules And Regulations To
Help Enforce Statues
NAIC
CORRECT ANS>> National Association Of Insurance Commissioners
National Association Of Insurance Commissioners (NAIC)
CORRECT ANS>> Provides Resources, Research, Legislative And Regulatory Recommendations
And Interpretations For State Insurance Regulators. Members May Accept Or Reject
Recommendations. It Has No Legal Authority To Enact Or Enforce Insurance Laws. The Primary
Goal Of The Association Is To Promote State Uniformity.
Stock Insurance Company
CORRECT ANS>> Owned By Its Stockholders/Shareholders Who Elect A Board Of Directors To
Manage The Company, The Board Then Elects Officers To Handle Day-To-Day Activities.
Stockholders Share In The Company's Profits And May Receive Corporate Dividends Taxable As
Ordinary Income IF Declared By The Directors. (Dividends Not Guaranteed)
Traditionally, This Type Of Insurer Issue Non-Participating Policies, Since The Policyholders Are
Not Entitled To Dividends
Mutual Insurance Company
CORRECT ANS>> Owned By Policyholders/Members Who Are Considered The Owners But Do
Not Directly Manage The Company. Board Of Directors Elected By The Policyholders/Members
To Manage The Company And Officers Are Elected By The Board To Handle Day-To-Day
Operations.
When And If Declared By The Board, Policyholders May Receive Non-Taxable Dividends As A
Return Of Unused Premium. (Not Guaranteed) This Type Of Insurer Typically Issues Participating
Policies.
,Fraternal Insurers Or Fraternal Benefit Societies
CORRECT ANS>> Primarily Social Organizations That Engage In Charitable And Benevolent
Activities That Primarily Provide Life Insurance To Its Members. Usually Organized On A
Nonprofit Basis. Members Are Typically From A Religious Organization, Lodge, Order, Or Society.
Domestic Insurer
CORRECT ANS>> An Insurer Doing Business In The Jurisdiction In Which It Is Incorporated. Ex.
GA Incorporated Insurer Operating In GA
Foreign Insurer
CORRECT ANS>> An Insurer Licensed To Operate In A State But Incorporated In Another State.
Ex. GA Incorporated Insurer Operating In TX
Alien Insurer
CORRECT ANS>> An Insurance Company That Is Incorporated Outside The United States. Ex.
Canadian Insurer Operating In GA
Admitted/Authorized Insurer
CORRECT ANS>> Insurer Who Is Approved To Transact Insurance Via A Certificate Of Authority
From The State's Department Of Insurance.
Non-Admitted/Unauthorized Insurer
CORRECT ANS>> Insurer Not Authorized To Transact Insurance In A Given State By Not
Complying With State Requirements Or By Not Seeking Admission
Fair Credit Reporting Act
, CORRECT ANS>> Protects The Consumer's Right To The Privacy Of Credit And Financial
Information, Ensuring That All Collected Data Is Confidential, Accurate, Relevant And Properly
Used.
FCRA
CORRECT ANS>> Fair Credit Reporting Act
Fair Credit Reporting Act
CORRECT ANS>> Protects The Consumer's Right To The Privacy Of Credit And Financial
Information, Ensuring That All Collected Data Is Confidential, Accurate, Relevant And Properly
Used.
Credit Reports May Be Obtained Only To Determine The Financial And Moral Status Of An
Applicant, Such As For Employment Screening Or Loan Approval, Or To Assist In Underwriting By
An Insurer.
Pre-Notification
CORRECT ANS>> The Insurer Must Notify The Insurance Applicant (Consumer) That A Credit
Report May Be Requested As Part Of The Insurer's Underwriting Requirements, And Must Have
Pre-Authorization By Obtaining The Applicant's Written Consent To Request The Report.
Signature Obtained At The Time Of Application
Post-Notification
CORRECT ANS>> If Adverse Action Is Taken, Such As Denial Of Coverage, The Insurer Must
Notify The Applicant By Stating The Reasons For The Adverse Action And The Right To Request A
Copy Of The Credit Report. The Insurer Must Provide The Information As To How The Applicant
Can Request A Copy Of The Report From The Consumer Agency That Compiled The Report.
USA Patriot Act
COMPREHENSIVE PRACTICE QUESTIONS AND ANSWERS FOR
LICENSING PREPARATION, INSURANCE CERTIFICATION REVIEW, AND
LIFE INSURANCE EXAM PREP GUIDE
Insurers
CORRECT ANS>> (Insurance Companies Or Carriers) Provide Insurance Coverage By Issuing
Particular Insurance Policies Or Contracts
Insurance Agencies
CORRECT ANS>> Independent Sales Organizations That Provide Service And Distribute
Insurance Policies To Consumers
Insurance Agents Or Producers
CORRECT ANS>> Are Licensed Individuals Representing An Insurance Company When
Transacting Insurance Business
Who Primarily Regulates The Insurance Industry?
CORRECT ANS>> The Insurance Industry Is Regulated Primarily At The State Level Through The
Legislative, Judicial, And Executive Branches
Legislative Branch
CORRECT ANS>> Writes And Passes State Insurance Laws Or Statues Designed To Protect The
Insuring Public
Judicial Branch
CORRECT ANS>> Responsible For Interpreting And Determining The Constitutionality Of The
Statues
,(Interprets The Law And Makes Sure It Is Constitutionally Allowed)
Executive Branch
CORRECT ANS>> (Executes/Enforces The Law) Has The Power To Issue Rules And Regulations To
Help Enforce Statues
NAIC
CORRECT ANS>> National Association Of Insurance Commissioners
National Association Of Insurance Commissioners (NAIC)
CORRECT ANS>> Provides Resources, Research, Legislative And Regulatory Recommendations
And Interpretations For State Insurance Regulators. Members May Accept Or Reject
Recommendations. It Has No Legal Authority To Enact Or Enforce Insurance Laws. The Primary
Goal Of The Association Is To Promote State Uniformity.
Stock Insurance Company
CORRECT ANS>> Owned By Its Stockholders/Shareholders Who Elect A Board Of Directors To
Manage The Company, The Board Then Elects Officers To Handle Day-To-Day Activities.
Stockholders Share In The Company's Profits And May Receive Corporate Dividends Taxable As
Ordinary Income IF Declared By The Directors. (Dividends Not Guaranteed)
Traditionally, This Type Of Insurer Issue Non-Participating Policies, Since The Policyholders Are
Not Entitled To Dividends
Mutual Insurance Company
CORRECT ANS>> Owned By Policyholders/Members Who Are Considered The Owners But Do
Not Directly Manage The Company. Board Of Directors Elected By The Policyholders/Members
To Manage The Company And Officers Are Elected By The Board To Handle Day-To-Day
Operations.
When And If Declared By The Board, Policyholders May Receive Non-Taxable Dividends As A
Return Of Unused Premium. (Not Guaranteed) This Type Of Insurer Typically Issues Participating
Policies.
,Fraternal Insurers Or Fraternal Benefit Societies
CORRECT ANS>> Primarily Social Organizations That Engage In Charitable And Benevolent
Activities That Primarily Provide Life Insurance To Its Members. Usually Organized On A
Nonprofit Basis. Members Are Typically From A Religious Organization, Lodge, Order, Or Society.
Domestic Insurer
CORRECT ANS>> An Insurer Doing Business In The Jurisdiction In Which It Is Incorporated. Ex.
GA Incorporated Insurer Operating In GA
Foreign Insurer
CORRECT ANS>> An Insurer Licensed To Operate In A State But Incorporated In Another State.
Ex. GA Incorporated Insurer Operating In TX
Alien Insurer
CORRECT ANS>> An Insurance Company That Is Incorporated Outside The United States. Ex.
Canadian Insurer Operating In GA
Admitted/Authorized Insurer
CORRECT ANS>> Insurer Who Is Approved To Transact Insurance Via A Certificate Of Authority
From The State's Department Of Insurance.
Non-Admitted/Unauthorized Insurer
CORRECT ANS>> Insurer Not Authorized To Transact Insurance In A Given State By Not
Complying With State Requirements Or By Not Seeking Admission
Fair Credit Reporting Act
, CORRECT ANS>> Protects The Consumer's Right To The Privacy Of Credit And Financial
Information, Ensuring That All Collected Data Is Confidential, Accurate, Relevant And Properly
Used.
FCRA
CORRECT ANS>> Fair Credit Reporting Act
Fair Credit Reporting Act
CORRECT ANS>> Protects The Consumer's Right To The Privacy Of Credit And Financial
Information, Ensuring That All Collected Data Is Confidential, Accurate, Relevant And Properly
Used.
Credit Reports May Be Obtained Only To Determine The Financial And Moral Status Of An
Applicant, Such As For Employment Screening Or Loan Approval, Or To Assist In Underwriting By
An Insurer.
Pre-Notification
CORRECT ANS>> The Insurer Must Notify The Insurance Applicant (Consumer) That A Credit
Report May Be Requested As Part Of The Insurer's Underwriting Requirements, And Must Have
Pre-Authorization By Obtaining The Applicant's Written Consent To Request The Report.
Signature Obtained At The Time Of Application
Post-Notification
CORRECT ANS>> If Adverse Action Is Taken, Such As Denial Of Coverage, The Insurer Must
Notify The Applicant By Stating The Reasons For The Adverse Action And The Right To Request A
Copy Of The Credit Report. The Insurer Must Provide The Information As To How The Applicant
Can Request A Copy Of The Report From The Consumer Agency That Compiled The Report.
USA Patriot Act
