Quiz on Basic Principles of Life and Health Insurance

What is the primary role of the Actuarial Department in an insurance company?

• To investigate claims and arrange settlements

• To acquire prospective applicants through advertising

• To calculate policy rates, reserves, and dividends

• To process, investigate, and pay claims

Which of the following best describes an Alien Insurer?

• An insurer that has not received a certificate of authority

• An insurer with its principal office in the state it is authorized

• An insurer that only sells one line of insurance

• An insurer whose principal office is outside the United States

What is the difference between an Agent and a Broker in the insurance industry?

• An agent can bind coverage, while a broker cannot

• A broker can bind coverage, while an agent cannot

• Both can bind coverage

• Neither can bind coverage

What is a Captive Insurer?

• An insurer that provides coverage for unusual risks

• An insurer that offers multiple lines of insurance

• An insurer that is not authorized to operate in a state

• An insurer owned by a parent firm to insure its own risks

Which department is responsible for acquiring clients through one-on-one meetings?

• Marketing Division

• Actuarial Department

• Sales Department

• Claims Department

What is a Mutual Insurance Company characterized by?

• Being a government-owned entity

• Being owned by policy owners and issuing participating insurance

• Issuing nonparticipating policies

• Being owned by stockholders

What is the role of a Reinsurer?

• To sell insurance directly to consumers

• To calculate policy rates and dividends

• To provide financial protection to insurance companies

• To investigate and settle claims

What is the primary function of the Underwriting Department?

• To process and pay claims

• To review applications and assign risk classifications

• To acquire prospective applicants

• To calculate policy rates and reserves

Which of the following is NOT a characteristic of a Stock Insurance Company?

• Owned by policy owners

• Provides a safety margin through stockholder investment

• Issues nonparticipating policies

• Owned by stockholders

What distinguishes a Fraternal Benefit Society from other insurers?

• It provides insurance to its members as a non-profit

• It is owned by stockholders

• It is a for-profit organization

• It only sells one line of insurance