Types Of Insurers And Marketing Systems

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Question 1
Free
Multiple Choice

Which of the following statements about stock insurers is true?

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A

They issue assessable policies.

B

They are not permitted to write property and liability insurance.

C

Stockholders bear any losses and share in any profits.

D

They are owned by their policyholders.

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Question 2
Free
Multiple Choice

Which of the following statements about mutual insurers is true?

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A

They are legally organized as partnerships.

B

They have a board of directors which is selected by state insurance departments.

C

They are owned by their stockholders.

D

They may pay dividends to their policyholders.

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Question 3
Free
Multiple Choice

Why are some mutual insurers referred to as "assessment mutuals"?

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A

They charge low premiums because the loss exposures of their insureds are thoroughly assessed before a policy is written.

B

They are noted for being very thorough in their assessment of investment opportunities.

C

They are assessed for state premium taxes only if they make a profit.

D

They can assess policyholders if premiums are insufficient to pay losses and expenses.

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Question 4
Free
Multiple Choice

The corporate structure of mutual insurers has changed in recent years. All of the following are examples of significant changes EXCEPT

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A

demutualization of some insurers.

B

sharp increase in the number of mutual insurance companies.

C

increase in company mergers.

D

formation of mutual holding companies.

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Question 5
Free
Multiple Choice

Which of the following statements is true about fraternal insurers?

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A

They are legally organized as stock insurers.

B

They specialize in writing life and health insurance.

C

They are taxed more heavily than other types of insurers because of discriminatory marketing practices.

D

They account for the majority of life insurance in force in the United States.

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Question 6
Multiple Choice

Which of the following statements about reciprocal exchanges is (are) true?
I)Reciprocal exchanges usually specialize in health insurance.
II)Reciprocal exchanges are unincorporated mutual insurance companies.

Choose correct answer/s
A
I only
B
II only
C
both I and II
D
neither I nor II
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Question 7
Multiple Choice

Which of the following statements about Lloyd's of London is true?

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A
Coverage is actually written by syndicates who belong to Lloyd's of London.
B
New individual members or Names who belong to the various syndicates have unlimited legal liability.
C
It operates as an admitted insurer throughout the United States.
D
It allows underwriters to write coverage without meeting stringent financial requirements.
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Question 8
Multiple Choice

Temporary evidence of insurance until a policy is actually issued is provided by a(n)

Choose correct answer/s
A
binder.
B
brokerage agreement.
C
pre-approval form.
D
endorsement.
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Question 9
Multiple Choice

Which of the following statements about insurance brokers is (are) true?
I)They legally represent the insured rather than the insurance company.
II)They are prohibited from being licensed as agents.

Choose correct answer/s
A
I only
B
II only
C
both I and II
D
neither I nor II
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Question 10
Multiple Choice

Neil needs insurance that is unavailable in the state where he lives. To obtain insurance from a nonadmitted insurer, Neil should contact a

Choose correct answer/s
A
surplus lines broker.
B
nonadmitted agent.
C
general agency broker.
D
direct writer.
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Question 11
Multiple Choice

Which of the following statements about life insurance marketing systems is true?

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A
Insurance brokers are not permitted to sell life insurance.
B
Some exclusive agents who market property and liability insurance also sell life insurance.
C
Independent insurance agents are not permitted to market life insurance.
D
Financial institutions such as banks are not permitted to market life insurance.
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Question 12
Multiple Choice

Which of the following statements about personal producing general agents is (are) true?
I)They often have the option of recruiting and training sub-agents.
II)They are independent agents who produce substantial amounts of life insurance with one insurer.

Choose correct answer/s
A
I only
B
II only
C
both I and II
D
neither I nor II
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Question 13
Multiple Choice

Advantages of the direct response system for marketing life insurance include which of the following?
I)Advertising can be specifically directed to selected markets.
II)Complex products can be easily sold.

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A
I only
B
II only
C
both I and II
D
neither I nor II
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Question 14
Multiple Choice

Which of the following statements about the exclusive agency system for marketing property and liability insurance is true?

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A
Exclusive agents typically have complete ownership of policy expirations.
B
A higher commission rate is usually paid on exclusive agents' renewal business than on new business.
C
Exclusive agents represent several different insurance companies.
D
New exclusive agents may start as employees and after a training period become independent contractors.
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Question 15
Multiple Choice

All of the following statements about the independent agency system are true EXCEPT

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A
Agents are often authorized to adjust small claims.
B
Agents are compensated on the basis of commissions.
C
The insurer rather than the agent owns the renewal rights to the business.
D
The agent is an independent business person who represents several insurers.
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Question 16
Multiple Choice

A property and casualty insurer in which the salesperson is an employee of the insurer, not an independent contractor, is called a

Choose correct answer/s
A
fraternal insurance company.
B
risk retention group.
C
direct writer.
D
captive insurance company.
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Question 17
Multiple Choice

Which of the following statements about the sale of property and liability insurance through the direct response system is (are) true?
I)Selling expenses are higher because market segmentation tends to be less precise than with other marketing methods.
II)It is the most appropriate system for selling complex products.

Choose correct answer/s
A
I only
B
II only
C
both I and II
D
neither I nor II
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Question 18
Multiple Choice

Under one life insurance marketing system, agents conduct sales interviews at the workplace with the approval of the management of the business. There are few direct costs to the employer, and this marketing system is especially appropriate for low-income and middle-income workers. This life insurance marketing system is called the

Choose correct answer/s
A
direct response system.
B
worksite marketing system.
C
independent agency system.
D
personal producing general agency system.
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Question 19
Multiple Choice

Which of the following is a characteristic of a typical mass merchandising plan?

Choose correct answer/s
A
higher commission scales for agents and higher administrative expenses
B
payment of premiums through payroll deduction
C
group rather than individual underwriting
D
contributions by the employer to the cost of coverage
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Question 20
Multiple Choice

David is a successful independent insurance agent. Recently, one of the life insurance companies with whom he places business offered him a special financial arrangement. If David meets sales targets, he will receive large bonuses. He will also be able to recruit and train sub-agents and receive an over-riding commission based on the amount of life insurance the sub-agents sell. Based on this description, David is a(n)

Choose correct answer/s
A
insurance broker.
B
personal-producing general agent.
C
direct writer.
D
multiple life exclusive agent.
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