Podcast
Questions and Answers
What is the main purpose of the Fair Credit and Reporting Act?
What is the main purpose of the Fair Credit and Reporting Act?
Protect consumers with guidelines regarding credit reporting and distribution.
What is a plan in which an employer pays insurance benefits from a fund derived from the employer's current revenues called?
What is a plan in which an employer pays insurance benefits from a fund derived from the employer's current revenues called?
A self-funded plan.
What kind of life insurance policy issued by a mutual insurer provides a return of divisible surplus?
What kind of life insurance policy issued by a mutual insurer provides a return of divisible surplus?
Participating life insurance policy.
Why are dividends from a mutual insurer not subject to taxation?
Why are dividends from a mutual insurer not subject to taxation?
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Under the Fair Credit Reporting Act, what is the maximum penalty that may be imposed on Ken for obtaining consumer information reports under false pretenses?
Under the Fair Credit Reporting Act, what is the maximum penalty that may be imposed on Ken for obtaining consumer information reports under false pretenses?
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What is the minimum penalty for Karen, who attained personal information about a client without a legitimate reason under the McCarran-Ferguson Act?
What is the minimum penalty for Karen, who attained personal information about a client without a legitimate reason under the McCarran-Ferguson Act?
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A fraternal benefit society has each of the following characteristics EXCEPT:
A fraternal benefit society has each of the following characteristics EXCEPT:
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Who regulates an insurer's claim settlement practices?
Who regulates an insurer's claim settlement practices?
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What type of insurer is owned by its policy owners?
What type of insurer is owned by its policy owners?
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Study Notes
Fair Credit and Reporting Act
- Main purpose is to protect consumers through guidelines on credit reporting and distribution.
- Ensures accurate information is reported and gives consumers rights to dispute inaccuracies.
Self-Funded Plan
- An insurance plan where the employer pays benefits from its own revenue rather than through insurance premiums.
- Allows for more control over funds and potentially lower costs for the employer.
Participating Life Insurance Policy
- Life insurance offered by a mutual insurer that provides a return of divisible surplus to policyholders.
- Policyholders may receive dividends based on the insurer's profits.
Tax Treatment of Dividends
- Dividends from mutual insurers are not taxed as they are considered a return of premium, not income.
- This treatment provides a financial benefit to policyholders.
Penalties for False Information
- Maximum penalty under the Fair Credit Reporting Act for obtaining consumer reports under false pretenses is $5,000 and up to one year in prison.
- Stricter regulations aim to deter fraudulent practices in the handling of consumer information.
Penalties under McCarran-Ferguson Act
- Minimum penalty for obtaining personal information without legitimate reason is $10,000 or up to one year in jail.
- Protects consumer privacy and imposes severe consequences for violations.
Characteristics of Fraternal Benefit Societies
- Do not exist for profit; aim to provide benefits to members.
- Incorporated and organized without capital stock, emphasizing member benefits over profits.
Regulation of Insurer's Claim Practices
- Claim settlement practices are regulated by state insurance departments.
- Ensures fair treatment of claimants and compliance with state laws.
Mutual Insurer Definition
- A mutual insurer is owned by its policyowners, who are also its insured.
- Allows policyowners to have a say in management and receive dividends, aligning interests between the company and its members.
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Description
Test your knowledge with these flashcards based on Chapter 1 of Xcel. Cover key concepts like credit reporting guidelines and self-funded insurance plans. Perfect for reviewing essential terms and definitions.
