WFG Final Exam | 370 Questions with 100% Correct Answers | Latest Update | Verified | 135 Pages
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Course
WFG
Institution
WFG
John owns an insurance policy that gives him the right to share in the insurer's surplus. What kind of
policy is this?
-Non-participating
-Contributory
-Participating
-Surplus - "Participating".
Participating policies give the policyowner the right to
share in the insurer's surplus.
Which o...
WFG Final Exam | 370 Questions with
100% Correct Answers | Latest Update |
Verified
John owns an insurance policy that gives him the right to share in the insurer's surplus. What kind of
policy is this?
-Non-participating
-Contributory
-Participating
-Surplus - ✔✔"Participating".
Participating policies give the policyowner the right to
share in the insurer's surplus.
Which of the following is NOT a benefit of insurance?
-Reduces the uncertainty of loss exposures
-Losses due to fraud are eliminated
-Makes a loss whole again
-Source of investment funds - ✔✔"Losses due to fraud are eliminated"
is NOT a
benefit of insurance.
What is a participating life insurance policy?
-Contract that allows the policyowner to receive a share of surplus in the form of
,policy dividends
-Agreement that allows two or more beneficiaries to share in the death benefit
-Agreement that insures two or more lives
-Contract that gives beneficiaries the right to participate in any dividends - ✔✔"Contract that allows the
policyowner to receive a share of surplus in the form of policy dividends"
A participating life insurance policy is defined as a contract that allows the policyowner to receive a
share of surplus in the form of policy dividends.
Which of the following is a type of insurance where an insurer transfers
loss exposures from policies written for its insureds?
-Treaty insurance
-Mutual insurance
-Reinsurance
-Captive insurance - ✔✔"Reinsurance".
Reinsurance is an arrangement by which an insurance company transfers a portion of a risk it has
assumed to another insurer.
A participating company is also referred to as which type of insurer?
-Mutual insurer
-Reciprocal insurer
-Domestic insurer
-Re-insurer - ✔✔"Mutual insurer"
A mutual insurer is also referred to as a participating company.
,When a mutual insurer becomes a stock company, the process is called
-Demutualization
-Reinsurance
-Mutualization
-Reorganization - ✔✔"Demutualization".
The process whereby a mutual insurer becomes a stock company is called demutualization.
Which of the following is a contract that involves one party which
indemnifies another when a loss arises from an unknown event?
-Insurance policy
-Indemnification arrangement
-Loss contract
-Warranty arrangement - ✔✔"Insurance policy".
An insurance policy is a contract where one party promises to indemnify another against loss that arises
from an unknown event.
Which of the following statements regarding a life insurance policy
dividend is TRUE?
-It represents the build-up of cash value in a permanent insurance policy
-It is a stockholders return on his investment in the company
-It represents a refund of overcharged premium in a non-participating whole life
policy
-It is the distribution of excess of funds accumulated by the insurer on
participating policies - ✔✔"It is the distribution of excess of funds accumulated by the insurer on
, participating policies"
Dividends paid to policyowners of participating
contracts represent a refund of excess premiums charged.
Remember, since the premiums were initially paid with after-tax dollars, there is no income tax
consequence to the policyowner.
One important function of an insurance company is to identify and sell
to potential customers. Which of these BEST describes this function?
-Underwriting
-Regulation
-Reinsurance
-Marketing - ✔✔"Marketing".
Marketing can be best defined as identifying and selling to potential
customers.
.
Which of the following is an insurer established by a parent company
for the purpose of insuring the parent company's loss exposures?
-Mutual insurer
-Participating insurer
-Fraternal insurer
-Captive insurer - ✔✔"Captive insurer".
An insurer established and owned by a parent firm for the purpose of insuring the parent firm's loss
exposures is
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