Chapter 1 (Insurers)

Question 1

__________ are owned by the sockholders who provide the capital necessary to establish and operate the insurance company and who share in any profits or losses.

Answer 1

Stock companies

Question 2

Traditionally, stock companies issue ___________ policies, in which policyowners do not share in profits or losses.

Answer 2

nonparticipating

Question 3

A nonparticipating (stock) policy does not pay dividends to policyowners; however,___________ are paid to stockholders.

Answer 3

taxable dividends

Question 3

__________ are owned by the policyowners and issue participating policies.( are nontaxable & dividends are not guaranteed)

Answer 3

Mutual companies

Question 4

Before insurers may transact business in a specific state, they must apply for and be granted a license or ___________ from the state department of insurance

Answer 4

Certificate of Authority

Question 5

insurers who meet the state’s financial requirements and are approved to transact business in the state are considered ___________ into the state as a legal insurer.

Answer 5

authorized or admitted

Question 6

Those insurers who have not been approved to do business in the state are considered __________

Answer 6

unauthorized or nonadmitted.

Question 7

Insurance companies are classified according to the ____________

Answer 7

location of incorporation (domicile).

Question 8

A ________ insurer is an insurance company that is incorporated in this state.

Answer 8

domestic

Question 9

A ___________ insurer is an insurance company that is incorporated in another state, the District of Columbia, or a territorial possession.

Answer 9

foreign

Question 10

An ________ insurer is an insurance company that is incorporated outside the United States.

Answer 10

alien