LOMA 308 Module 2 Questions and Answers

LOMA 308 Module 2 Questions and Answers Suppose that you want to start your own insurance company. The first thing you need to decide is what kind of structure your company will have. Which organizational structures do you think you can choose from? a. sole proprietorship b. partnership c. corporation - Answer-c. - Laws in most jurisdictions require insurance companies to be organized as corporations. In this lesson, you'll learn why that structure is required. You'll also learn how organizational form and management affect the way an insurance company does business. Sole Proprietorship - Answer-is created, owned, and operated by one person. he owner earns all company profits and is responsible for all company debts. Company operations cease if the owner dies. The company is considered a privately held company because ownership is restricted to a specified individual. privately held company - Answer-A company in which ownership is restricted to specified individuals. Contrast with publicly held company. partnership - Answer-is created, owned, and operated by two or more partners. Partners earn all company profits and are responsible for all company debts. A two-owner partnership dissolves if a partner dies or withdraws; a partnership with many owners will continue as long as there are two or more owners. The company is considered a privately held company because ownership is limited to specified individuals. Corporation - Answer-is a legal entity created by government authority. It's separate from its owners, so owners can't be held responsible for company debts. Operations continue even if one or more owners die or withdraw. It can sue or be sued, enter into contracts, and own property. It can be a privately held company or a publicly held company that sells ownership shares to the public. publicly held company - Answer-A company that sells ownership shares to the public. Contrast with privately held company. requirements for incorporation - Answer-In the U.S., insurance companies are incorporated at the state level. A description of the company, including its name, location, plan for organizing operations, and the type of business it intends to conduct The names of the company's original directors The amount of initial investment being made by company owners