CH 1: Basic Principles of Life and Health Insurance and Annuities

Question 1

What are the types of Insurance companies?

Answer 1

1. Commercial Insurers (Private insurance companies)
2. Stock Companies
3. Mutual Companies

Question 2

What do Commercial Insurers do?

Answer 2

Sell insurance for a profit

Question 3

What do Commercial Insurers sell?

Answer 3

Accident, Health, Life, and Annuities

Question 4

What kind of Insurer is a commercial insurer?

Answer 4

Multi-line insurer

Question 5

What 2 groups are Commercial Insurance divided into?

Answer 5

Stock and Mutual Insurers

Question 6

What do Stock Companies do?

Answer 6

Organized and incorporated under state laws to make a profit for stockholders(shareholders)

Question 7

What are Stock Insurers also called?

Answer 7

Nonparticipating insurers

Question 8

Transformation of a stock insurer into a mutual insurer

Answer 8

Mutualization

Question 9

Transformation of a mutual insurer into a stock insurer

Answer 9

Demutualization

Question 10

Who are Mutual Companies owned by?

Answer 10

Policyholders

Question 11

What are mutual insurers also known as?

Answer 11

Participating Insurers

Question 12

Who participates in receiving dividends and electing board directors?

Answer 12

Policyholders

Question 13

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

Answer 13

The dividends are considered to be a return of premium.

Question 14

What is a Participating Insurer?

Answer 14

Policyholders participate in recieving dividends and electing the board of directors.

Question 15

What is a Nonparticipating Insurer?

Answer 15

Policyholders do not participate in receiving dividends or electing the board of directors, Unless a stockholder of the company.

Question 16

A company operating as both a Participating and Nonparticipating insurer is known as…

Answer 16

Mixed Insurer