Chapter 1 Basic Principals

Question 1

Which of these describes a participating life insurance policy?
A. Policy owners are entitled to receive dividends
B. Policy owners pay assessments for company losses
C. Stock companies allow their policy owners to share and company earnings
D. Policy owners are not entitled to vote for members of the board of directors

Answer 1

Policyowners Are entitled to receive dividends

Question 2

Who elects the governing body of a mutual insurance company?
A. Chairman of the board
B. Bond holders
C. Stockholders
D. Policyholders

Answer 2

Policyholder

Question 3

What is the name of the law that requires insurers to disclose information gather practices and where the information was obtained?
A. State guaranty association
B. Fair labor standards board
C. Fair credit reporting act
D. National Association of insurance commissioners

Answer 3

Fair Credit reporting Act

Provides individual privacy protection, fair & accurate credit reporting

Question 4

A nonprofit incorporate society that does not have capital stock and operates for the sole benefit of its members is known as:
A. Fraternal benefit society
B. Stock insurer
C. Mutual insurer
D. Life and health insurance guaranty Association

Answer 4

Fraternal benefit society

Nonprofit, religious, or charitable organizations

Question 5

What point must a life insurance applicant be informed of their rights that fall under the fair credit reporting act?
A. Before the appointment is scheduled
B. On completion of the application
C. At the policy’s delivery
D. When the insured receives the MIB report

Answer 5

Upon completion of the application

Question 6

Insurance contracts are known as ____ Because certain future conditions are act must occur before any claims can be paid:
A. Aleatory
B. Conditional

Answer 6

Conditional