Which of the following is an expense for a life insurance company? A) loss reserves B) death benefits paid to a beneficiary C) unrealized capital gains D) realized capital gains ANSWER Answer: B
Date: September 19th, 2020
Pac-Coast Insurance (PCI) concentrates its underwriting activities in California. The company is concerned that if a catastrophic earthquake occurs, it might threaten the solvency of the company. To address this risk, PCI issued some debt securities. If a catastrophic earthquake occurs, PCI does not have to repay the full amount borrowed or pay interest. The […]
Date: September 19th, 2020
Under one method of estimating a loss reserve, the reserve is based on life expectancy, duration of disability, and similar factors. This method of estimating loss reserves is called the A) judgment method. B) tabular value method. C) loss ratio method. D) average value method. ANSWER Answer: B
Date: September 19th, 2020
One method through which reinsurance is provided is through an organization of insurers that underwrites insurance on a joint basis. Through the organization, financial capacity is available for large commercial risks. This reinsurance arrangement is a(n) A) quota-share treaty. B) surplus-share treaty. C) excess-of-loss treaty. D) reinsurance pool. ANSWER Answer: D
Date: September 19th, 2020
Which of the following statements is true regarding the information systems functional area of an insurance company? I. Computers and information systems are able to perform some tasks that previously were performed directly by employees. II. Information systems can speed the processing of policies by insurers. A) I only B) II only C) both I […]
Date: September 19th, 2020
The price per unit of insurance is called the A) premium. B) loss adjustment expense. C) rate. D) loss reserve. ANSWER Answer: C
Date: September 19th, 2020
Which of the following statements is (are) true about life insurance company investments? I. The majority of life insurance company general account assets are invested in bonds. II. The majority of life insurance company separate account assets are invested in stocks. A) I only B) II only C) both I and II D) neither I […]
Date: September 19th, 2020
Catastrophe bonds are made available to institutional investors in the capital markets through an entity that is specially created for that purpose. This is entity is called a A) risk retention group. B) fraternal insurance company. C) captive insurance company. D) special purpose reinsurance vehicle. ANSWER Answer: D
Date: September 19th, 2020
Most insurance companies require their marketing representatives to submit an evaluation of the prospective insured. This important source of underwriting information is called the A) application. B) agent’s report. C) inspection report. D) physical inspection. ANSWER Answer: B
Date: September 19th, 2020
Gwen is in charge of accounting at Integrity Insurance Company. Integrity is a publicly-traded insurer. In describing her job, Gwen said, “There aren’t too many businesses where you are required to keep two sets of books.” Gwen’s comment most likely refers to her company A) preparing accounting statements using statutory and GAAP accounting. B) preparing […]
Date: September 19th, 2020
