Alabama Life Insurance Exam (Correct Answers 2025 Latest.., Exams of Nursing

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Alabama Life Insurance Exam (Correct Answers

2025 Latest..

1. What are commercial insurers also referred to as? - Correct answer Private

Insurance Companies

2. Commercial Insurers are in the business of selling insurance for ___ ________. -

Correct answer a profit

3. What two groups can commercial insurance be broken into? - Correct answer

Stock Companies & Mutual Insurers

4. What is a stock insurer? - Correct answer incorporated to make a profit for its

stockholders. nonparticipating because the policyholders do not receive dividends unless they are stockholders. dividends are subject to taxation.

5. Which type of commercial insurer is nonparticipating? - Correct answer stock

companies

6. Which type of commercial insurer is participating? - Correct answer mutual

insurers

7. what is a mutual insurer? - Correct answer owned by policyholders. participating

policies because policyholders get to participate in receiving dividends and electing directors. dividends are not subject to taxation unless they collect interest.

8. Are dividends subject to taxation in a NONPAR company? - Correct answer Yes

9. Are dividends subject to taxation in a PAR company? - Correct answer No; only

the interest, if collected, is taxable

10. If a company operates as both PAR and NONPAR what is it called? - Correct

answer a Mixed Insurer

11. Are dividends guaranteed? - Correct answer Never

12. An insurer selling more than one type of insurance is called a? - Correct answer

Multi-Line Insurer

13. Strong Assessment Mutual Companies are classified by: - Correct answer the way

that they charge premiums

Alabama Life Insurance Exam (Correct

14. What type of mutual company operates on a loss-sharing basis, where each member is

assessed a portion of losses? - Correct answer Pure Assessment Company

15. What type of mutual company charges a premium at the beginning to cover losses, and returns a surplus, or levies additional amounts to meet expenses and losses? -

Correct answer Advance Premium Assessment Company

16. What are fraternal benefit societies? - Correct answer special types of mutual

companies that are non-profit religious, ethnic, or charitable organizations.

17. Who would a fraternal benefit society supply insurance to? - Correct answer Only

its members

18. What are risk retention groups? - Correct answer mutual companies formed by

groups of people with the same profession or industry

19. What are reciprocal insurers? - Correct answer unincorporated groups of people

providing insurance for one another through individual indemnity agreements. Each individual who is a member of the reciprocal is known as a subscriber.

20. what is an indemnity contract? - Correct answer It is a contract involving two

parties in which the first party agrees to indemnify and reimburse the second party for covered debts or losses should they take place.

21. Attorney-in-fact - Correct answer A person given the authority to act on behalf of

another under a power of attorney.

22. what is Reinsurance? - Correct answer an arrangement by which the primary

insurer that initially writes the insurance transfers to another insurer part or all of the potential losses associated with such insurance

23. The company transferring the risk is called? - Correct answer ceding company

24. The company assuming the risk is called? - Correct answer reinsurer

25. what is a captive insurer? - Correct answer insurer owned by a parent firm for the

purpose of insuring the parent firm's loss exposures

26. Home service insurers are also called: - Correct answer industrial insurance

27. Home Service Insurance - Correct answer sold by home service or debit life

insurance companies. Face amounts are small & premiums are paid weekly

Alabama Life Insurance Exam (Correct

41. Agents work for an independent agency selling policies from several insurance companies. The agents are NOT employees of the ins company, but work for the

system. - Correct answer Personal Producing General Agency System (PPGA)

42. Independent Agents represent a number of insurance companies through separate

contractual agreements, and are paid commission based on their sales. - Correct

answer Independent Agency System (American Agency System)

43. US Supreme Court ruled that insurance transactions crossing state lines are NOT

interstate commerce - Correct answer 1861 Paul v Virginia

44. gave the authority to the states to regulate insurance. - Correct answer 1905

Armstrong Investigation Act

45. Ruled that insurance transactions crossing state lines ARE interstate commerce and

subject to federal regulation. - Correct answer 1944 US v. South-Eastern

Underwriters Association

46. states that while the federal govt has the authority to regulate the insurance industry, it would not exercise its right if the state level adequately regulates the industry. -

Correct answer 1945 McCarran-Ferguson Act

47. The minimum penalty of a producer for obtaining personal info on a client without a legit

reason is a ____________. - Correct answer fine of $10,

48. provides individuals privacy protection and fair and accurate credit reporting, notifying

them when a credit check will be performed as well - Correct answer 1970 Fair

Credit Reporting Act (FCRA)

49. this law repealed the glass-steagull act; allows banks, retail brokerages, and insurance

companies to enter each other's line of business - Correct answer 1999 Gramm-

Leach-Bliley Act (Financial Services Modernization Act)

50. As it relates to the Insurance industry, is designed to detect and deter terrorists and their funding by imposing anti-money laundering requirements on brokerage firms and

financial institutions. - Correct answer 2001 USA PATRIOT ACT

51. Insurance calls are not exempt from the no call registry. - Correct answer 2003

National Do Not Call Registry

52. what is the NAIC? - Correct answer National Association of Insurance

Commissioners

53. An organization composed of commissioners from all 50 states, the district of Columbia, and the four US territories. They are responsible for recommending appropriate laws and

Alabama Life Insurance Exam (Correct

regulations - Correct answer The National Association of Insurance

Commissioners

54. What is the advertising code? - Correct answer The code specifies certain words

and phrases that are considered misleading and are not to be used in advertising of any kind.

55. Gives chief financial officer the authority to investigate insurance companies and

producers to impose penalties. - Correct answer Unfair Trade Practices Act

56. What is selling to needs? - Correct answer an agent must first determine a client's

needs, and then determine which policy fits their needs best.

57. Full an Accurate Disclosure - Correct answer an ethical agent must inform

consumer's of the benefits and limitations of recommend products.

58. Documentation - Correct answer an ethical agent must document each client's

meetings and transactions.

59. Buyer's Guide - Correct answer A booklet that describes insurance policies and

concepts, and provides general information to help an applicant make an informed decision.

60. Policy Summary - Correct answer helps consumers evaluate the suitability of the

recommended product

61. Reserves - Correct answer the accountability measurement of an insurer's future

obligations to its policyholders.

62. Liquidity - Correct answer an insurer's ability to make unpredictable payouts to

policyowners.

63. Protects policy owners in the event of any insurance company going out of business,

becoming insolvent, or the inability to pay claims - Correct answer State Guarantee

Association

64. A condition or situation that creates or increases a possibility of loss is a: - Correct

answer hazard

65. Types of hazards: - Correct answer moral, morale, and physical

66. Define Moral Hazard and give an example. - Correct answer an idea that a party

protected from risk in some way will act differently than if they didn't have that protection (dishonesty, drugs, alcohol abuse, etc)

Alabama Life Insurance Exam (Correct