Questions and Answers
The Do Not Call Registry offers exemptions for calls placed from all of the following EXCEPT:
Why are dividends from a mutual insurer not subject to taxation?
Dividends are considered to be a return of premium.
What do you call the insurer assuming the risk when one insurance company transfers some of its risk to another?
Reinsurer.
What is the primary reason for buying life insurance?
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A producer who obtains personal information about a client without a legitimate reason can be subject to __________ under the McCarran-Ferguson Act.
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A producer who obtains consumer information reports under false pretenses can be subject to __________ under the Fair Credit Reporting Act.
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A non-participating policy will not pay dividends.
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An insurer's claim settlement practices are regulated by the?
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What type of life insurance policy issued by a mutual insurer provides a return of divisible surplus?
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What do you call a plan in which an employer pays insurance benefits from a fund derived from the employer's current revenues?
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An insurer's ability to make unpredictable payouts to policyowners is called?
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A non-participating company is sometimes called a?
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What is the primary purpose of a rating service company, such as AM Best?
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The Fair Credit and Reporting Act's main purpose is to?
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A type of insurer owned by its policyholders is called a?
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Fraternal Benefit Society has all of the following characteristics EXCEPT:
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What is not considered advertising?
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Study Notes
Basic Principles of Insurance & Annuities
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Do Not Call Registry: Exemptions include charities, political organizations, and surveys; excluded are insurance sales calls.
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Mutual Insurer Dividends: Dividends are not taxed since they are classified as returns of premium.
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Reinsurer Definition: When one insurance company transfers risk to another, the receiving insurer is known as a reinsurer.
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Life Insurance Purpose: The main rationale for purchasing life insurance is to provide death benefits to beneficiaries.
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McCarran-Ferguson Act Penalties: A producer who collects personal client information without valid reasons faces a $10,000 fine and possible one-year imprisonment.
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Fair Credit Reporting Act Penalties: Obtaining consumer information reports under false pretenses may lead to a $5,000 fine and up to one year in jail.
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Non-participating Policy: Policies that do not pay dividends are categorized as non-participating.
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Claim Settlement Regulation: State insurance departments oversee and regulate how insurers process claim settlements.
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Participating Life Insurance Policy: A type of life insurance issued by mutual insurers that allows policyholders to receive a return of divisible surplus.
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Self-funded Plan: This is a plan where employers fund insurance benefits directly from their operational revenues rather than through purchased insurance.
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Liquidity in Insurance: Refers to an insurer’s capability to meet unexpected claims payouts due to financial stability.
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Stock Insurer: A company that operates without being owned by policyholders is referred to as a nonparticipating company or stock insurer.
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Rating Services Purpose: Companies like AM Best assess the financial strength of insurance providers.
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Fair Credit Reporting Act Objectives: Established to protect consumer rights through regulations on credit reporting and distribution.
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Mutual Insurer Ownership: An insurer owned by its policyholders is classified as a mutual insurer.
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Fraternal Benefit Society Characteristics: These organizations are typically incorporated, do not have capital stock, and exist for the benefit of their members, not for profit.
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AM Best Ratings: Ratings from AM Best are not considered a form of advertising.
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Description
Test your knowledge on the foundational concepts of insurance and annuities with these flashcards. This quiz covers essential topics such as exemptions in the Do Not Call Registry and tax implications of dividends from mutual insurers.
