health stuff good ol Flashcards
A nonparticipating company is sometimes called a
Stock insurer (because policyholders do not participate in dividends resulting from stock ownership)
A nonparticipating policy will
Not pay dividends (when an insurer offers a policy that is nonparticipating, the insurer’s policy does not pay dividends)
An insurer’s claim settlement practices are regulated by the
State insurance departments.
A _____ company is owned by its shareholders
Stock
Why are dividends from a mutual insurer not subject to taxation?
Because dividends are considered to be a return of premium. (Dividends are not subject to taxation because paying dividends is equivalent to returning a premium.)
What kind of life insurance policy issued by a mutual insurer provides a return of divisible surplus?
A participating life insurance policy. (A mutual insurer issues life insurance policies that provide a return of divisible surplus.)
Karen is a producer who has obtained personal information about a client without having a legitimate reason to do so. Under the McCarran-Ferguson Act, what is the minimum penalty for this?
$10,000 (A fine of 10K or up to one year in jail is the penalty for any person who obtains information about a client without having a legitimate reason to receive it.)
What is the primary purpose of a rating service company such as A.M Best?
Determine financial strength of an insurance company. (The primary purpose of a rating service company is to determine the financial strength of the company being rated. Also worth noting these ratings are NOT considered advertisement.)
ABC Insurance Company transfers part of their risk to XYZ Insurance Company. This situation is called
Reinsurance. (Reinsurance is a situation in which an insurer transfers part of their risk to another insurer.)
A type of insurer that is owned by its policyowners is called:
Mutual. A mutual insurer is owned by its policyowners.
