Insurance Quiz

Why are dividends from a mutual insurer not subject to taxation?

• Because insurance premiums are tax-deductible

• Because dividends are payable directly to the policyholder

• Because dividends are considered to be a return of premium

• Because dividends are already subject to capital gains

What is considered to be the primary reason for buying life insurance?

• Provide death benefits

• Provide money for retirement

• Provide money for college

• Provide living benefits

A life insurance company has transferred some of its risk to another insurer. The insurer assuming the risk is called the

• reciprocal insurer

• mutual insurer

• participating insurer

• reinsurer

An insurer's ability to make unpredictable payouts to policyowners is called

• investment values

• capital

• assets

• liquidity

A(n) ______ company is owned by its shareholders.

• mutual

• interactive

• stock

• mixed

The Fair Credit and Reporting Act's main purpose is to

• assist in the underwriting of insurance policies

• assist an insurer in determining an applicant's creditworthiness

• protect insurers from an applicant's misrepresentation

• protect consumers with guidelines regarding credit reporting and distribution

Fraternal Benefit Society has each of the following characteristics EXCEPT

• Exist for profit

• Exist for the benefit of its members

• Incorporated

• Without capital stock

A nonparticipating company is sometimes called a(n)

• Stock insurer

• Alien insurer

• Mutual insurer

• Reinsurer

A plan in which an employer pays insurance benefits from a fund derived from the employer's current revenues is called

• A self-derived plan

• A self-funded plan

• A blanket plan

• A multiple-employer plan

An insurer's claim settlement practices are regulated by the

• State insurance departments

• National Association of Claims Adjusters (NACA)

• National Association of Insurance Commissioners (NAIC)

• Securities and Exchange Commission (SEC)