Question 1

Regarding the taxation of life insurance:

Accepted Answer

A)   The inside buildup of cash value life insurance policies is not taxed as income or capital gains.
B)   The beneficiary of the death benefit of life insurance policy is not subject to an income tax.
C)   The death benefit of the policy is never subject to estate tax.
D)   a and b only.
E)   All of the above.

Question 2

STAT surplus:

Accepted Answer

A)   Is defined by accountants for their purposes.
B)   Is required by monitoring agencies to assure financial stability.
C)   Is measured in an identical manner to GAAP, but their purposes are different.
D)   a and b only.
E)   All of the above.

Question 3

While an annuity imposes an expense fee on the fund's performance, mutual funds impose a mortality and expense fee.

Accepted Answer

A) True 
 B)False

Question 4

Insurance companies are really a composite of several companies, which include:

Accepted Answer

A)   Manufacturer.
B)   Investment company.
C)   Distribution component.
D)   All of the above.
E)   None of the above.

Question 5

Insurance companies have increasingly sold products that have a significant investment component in addition to their insurance component. Major investment oriented products include:

Accepted Answer

A)   Guaranteed investment contracts.
B)   Annuities.
C)   Insurance wrappers.
D)   a and b only.
E)   All of the above.

Question 6

One reason given for the accelerated demutualization of insurance companies is the:

Accepted Answer

A)   Gramm-Leach-Bliley Act.
B)   Glass-Steagall Act.
C)   McCarran Ferguson Act.
D)   GIC Act.
E)   SEC Act. A

Question 7

The two fundamentally different types of life insurance are term insurance and:

Accepted Answer

A)   Permanent life insurance.
B)   Cash-value life insurance.
C)   Investment-type life insurance.
D)   Whole life insurance.
E)   All of the above.

Question 8

Long-term care insurance provides fixed guaranteed periodic payments over a long period of time, typically resulting from a settlement on a disability or other type of policy.

Accepted Answer

A) True 
 B)False

Question 9

The various types of insurance policies differ in the statistical or actuarial accuracy of estimates of when the event insured against will occur and the amount of the payment.

Accepted Answer

A) True 
 B)False

Question 10

Pension plan sponsors often purchase which of the following as a pension investment?

Accepted Answer

A)   Property and casualty insurance.
B)   Structured settlements.
C)   "Own occ" disability insurance.
D)   Guaranteed investment contracts.
E)   None of the above.

Question 11

An annuity is often described as:

Accepted Answer

A)   A stock insurance fund in a mutual company wrapper.
B)   An insurance premium in an underwriting wrapper.
C)   A mutual fund in an insurance wrapper.
D)   Term insurance in a cash-value wrapper.
E)   An L&H company in a P&C company wrapper.

Question 12

The process of deciding which type of risk to insure against is referred to as the underwriting process.

Accepted Answer

A) True 
 B)False

Question 13

"Any occ" disability insurance:

Accepted Answer

A)   Insures against the inability of an employed person to earn an income in his own or any occupation.
B)   Is typically written for professionals.
C)   Is typically written for blue-collar workers.
D)   a and b only.
E)   a and c only.

Question 14

Insurance policies are legally binding policies for which the policyholder pays insurance premiums.

Accepted Answer

A) True 
 B)False

Question 15

Discuss the distinctions between L&H and P&C companies.

Accepted Answer

a. More difficult for P&C to project whe...

Question 16

Growth in the cash value of investment-type life insurance is known as reserves.

Accepted Answer

A) True 
 B)False

Question 17

Discuss the two major forms of life insurance companies.

Accepted Answer

a. Stock versus mutual.
b. Stock: similar to a corporation; shares are owned and traded publicly; shareholders care only about the performance of their shares and have a short-term view.
c. Mutual: no stock, policyholders are owners; care only about the company's ability to pay on their policies and have a long-term view.
d. Stock answer to two constituencies, shareholders and policy holders, while at a mutual the policy holders and owners are the same.
e. Demutualization.

Question 18

An insurance company is defined by the type of risk insured against.

Accepted Answer

A) True 
 B)False

Question 19

According to the reinsurance transaction, the "reinsurer" is:

Accepted Answer

A)   The insurer transferring the risk.
B)   The insurer accepting the risk.
C)   The insurer that wrote the policy.
D)   The policy holder whose policy is transferred.
E)   None of the above.

Question 20

Investment returns for an insurance company may vary considerably with the performance of the financial markets.

Accepted Answer

A) True 
 B)False  True

Exam 4: Insurance Companies

Regarding the taxation of life insurance:

Correct Answer
verified

STAT surplus:

Correct Answer
verified

While an annuity imposes an expense fee on the fund's performance, mutual funds impose a mortality and expense fee.

Correct Answer
verified

Insurance companies are really a composite of several companies, which include:

Correct Answer
verified

Insurance companies have increasingly sold products that have a significant investment component in addition to their insurance component. Major investment oriented products include:

Correct Answer
verified

One reason given for the accelerated demutualization of insurance companies is the:

Correct Answer
verified
A

The two fundamentally different types of life insurance are term insurance and:

Correct Answer
verified

Long-term care insurance provides fixed guaranteed periodic payments over a long period of time, typically resulting from a settlement on a disability or other type of policy.

Correct Answer
verified

The various types of insurance policies differ in the statistical or actuarial accuracy of estimates of when the event insured against will occur and the amount of the payment.

Correct Answer
verified

Pension plan sponsors often purchase which of the following as a pension investment?

Correct Answer
verified

An annuity is often described as:

Correct Answer
verified

The process of deciding which type of risk to insure against is referred to as the underwriting process.

Correct Answer
verified

"Any occ" disability insurance:

Correct Answer
verified

Insurance policies are legally binding policies for which the policyholder pays insurance premiums.

Correct Answer
verified

Discuss the distinctions between L&H and P&C companies.

Correct Answer
verified
a. More difficult for P&C to project whe...
View Answer

Growth in the cash value of investment-type life insurance is known as reserves.

Correct Answer
verified

Discuss the two major forms of life insurance companies.

An insurance company is defined by the type of risk insured against.

Correct Answer
verified

According to the reinsurance transaction, the "reinsurer" is:

Correct Answer
verified

Investment returns for an insurance company may vary considerably with the performance of the financial markets.

Correct Answer
verified
True

Exam 4: Insurance Companies

Regarding the taxation of life insurance:

Correct AnswerverifiedShow Answer

STAT surplus:

Correct AnswerverifiedShow Answer

While an annuity imposes an expense fee on the fund's performance, mutual funds impose a mortality and expense fee.

Correct AnswerverifiedShow Answer

Insurance companies are really a composite of several companies, which include:

Correct AnswerverifiedShow Answer

Insurance companies have increasingly sold products that have a significant investment component in addition to their insurance component. Major investment oriented products include:

Correct AnswerverifiedShow Answer

One reason given for the accelerated demutualization of insurance companies is the:

Correct AnswerverifiedA

The two fundamentally different types of life insurance are term insurance and:

Correct AnswerverifiedShow Answer

Long-term care insurance provides fixed guaranteed periodic payments over a long period of time, typically resulting from a settlement on a disability or other type of policy.

Correct AnswerverifiedShow Answer

The various types of insurance policies differ in the statistical or actuarial accuracy of estimates of when the event insured against will occur and the amount of the payment.

Correct AnswerverifiedShow Answer

Pension plan sponsors often purchase which of the following as a pension investment?

Correct AnswerverifiedShow Answer

An annuity is often described as:

Correct AnswerverifiedShow Answer

The process of deciding which type of risk to insure against is referred to as the underwriting process.

Correct AnswerverifiedShow Answer

"Any occ" disability insurance:

Correct AnswerverifiedShow Answer

Insurance policies are legally binding policies for which the policyholder pays insurance premiums.

Correct AnswerverifiedShow Answer

Discuss the distinctions between L&H and P&C companies.

Correct Answerverifieda. More difficult for P&C to project whe...View AnswerShow Answer

Growth in the cash value of investment-type life insurance is known as reserves.

Correct AnswerverifiedShow Answer

Discuss the two major forms of life insurance companies.

An insurance company is defined by the type of risk insured against.

Correct AnswerverifiedShow Answer

According to the reinsurance transaction, the "reinsurer" is:

Correct AnswerverifiedShow Answer

Investment returns for an insurance company may vary considerably with the performance of the financial markets.

Correct AnswerverifiedTrue

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A

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a. More difficult for P&C to project whe...
View Answer

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True