The Insurance Industry Quiz! Trivia
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- 1.
Producers are expected to adhere to all of the following standards to protect consumers and promote suitable sales EXCEPT
- A.
Selling to customers' needs
- B.
Determining the suitability of recommended products
- C.
Assessing prospects' financial ability to pay commissions
- D.
Full and accurate disclosure
Correct Answer
C. Assessing prospects' financial ability to pay commissionsExplanation
Producers are expected to adhere to all of the mentioned standards to protect consumers and promote suitable sales. This includes selling to customers' needs, determining the suitability of recommended products, and providing full and accurate disclosure. However, assessing prospects' financial ability to pay commissions is not directly related to protecting consumers or promoting suitable sales. It is more focused on the producer's financial interests rather than consumer protection.Rate this question:
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- 2.
An insurance company organized and headquartered in Florida can be described as what type of company in Florida?
- A.
Alien
- B.
Home-based
- C.
Foreign
- D.
Domestic
Correct Answer
D. DomesticExplanation
A company that is organized and headquartered in Florida is considered a domestic company in Florida. This means that the company is based and operates within the state of Florida, as opposed to being located outside of the state or country (foreign), or being based at an individual's home (home-based). The term "alien" does not apply to a company's type in this context.Rate this question:
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- 3.
Which of the following statements regarding types of insurers is NOT correct?
- A.
Reinsurers usually deal with group policyowners
- B.
Mutual insurance companies are "owned" by thier policyowners
- C.
Stock insurance companies seek a profit for their shareholders
- D.
Fraternal benefit societies must be nonprofit organizations
Correct Answer
A. Reinsurers usually deal with group policyownersExplanation
Reinsurers do not usually deal with group policyowners. Reinsurers provide insurance to other insurance companies, not directly to policyowners. They help insurance companies manage their risk by taking on a portion of their policies. Therefore, the statement that reinsurers usually deal with group policyowners is incorrect.Rate this question:
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- 4.
Regarding landmark cases and laws involving the regulation of insurance, which of the following statements is NOT correct?
- A.
Insurers are required to disclose when an applicant's consumer/credit history is being investigated.
- B.
The Securities and Exchange Commission (SEC) may regulate insurers that sell variable annuities and variable life insurance
- C.
The Federal Trade Comission (FTC) directly supervises all insurance marketing activities
- D.
The New York Insuance Code has long been a model for state insurance regulation
Correct Answer
C. The Federal Trade Comission (FTC) directly supervises all insurance marketing activitiesExplanation
The Federal Trade Commission (FTC) does not directly supervise all insurance marketing activities. The correct answer is stating that the FTC directly supervises all insurance marketing activities. However, this is not correct as the FTC primarily focuses on regulating and enforcing consumer protection laws, including those related to unfair or deceptive practices in the marketplace. The regulation of insurance marketing activities is primarily handled by state insurance departments and regulatory bodies.Rate this question:
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- 5.
Which of the following statements regarding the National Association of Insurance Commissioners (NAIC) is NOT correct?
- A.
The NAIC is empowered to prosecute and punish criminal violators in the insurance industry
- B.
The NAIC seeks to preserve state rather than federal regulation of the insurance industry.
- C.
The NAIC promotes uniformity in state insurance laws and regulations.
- D.
The NAIC seeks to promote efficient administration of insurance laws and regulations
Correct Answer
A. The NAIC is empowered to prosecute and punish criminal violators in the insurance industryExplanation
The NAIC is not empowered to prosecute and punish criminal violators in the insurance industry. This responsibility falls under the jurisdiction of law enforcement agencies and the legal system. The NAIC's role is to promote uniformity in state insurance laws and regulations, preserve state regulation of the insurance industry, and promote efficient administration of insurance laws and regulations.Rate this question:
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- 6.
In an insurance transaction, licensed agents legally represent which of the following?
- A.
Insurer
- B.
Applicant and insured
- C.
State office of insurance regulation
- D.
Themselves
Correct Answer
A. InsurerExplanation
Licensed agents legally represent the insurer in an insurance transaction. They act as intermediaries between the insurer and the policyholders, providing information, advice, and assistance in the purchase and management of insurance policies. Agents have a fiduciary duty to act in the best interest of the insurer and are authorized to bind the insurer to contracts. They are responsible for ensuring that policyholders understand the terms and conditions of their insurance coverage and for facilitating the claims process on behalf of the insurer.Rate this question:
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- 7.
A life insurance company organized in Illinois, with its home office in Philadelphia, is licensed to conduct business in Florida. In Florida, this company is classified as a(n)
- A.
Domestic company
- B.
Alien company
- C.
Foreign company
- D.
Regional company
Correct Answer
C. Foreign companyExplanation
The life insurance company organized in Illinois, with its home office in Philadelphia, is licensed to operate in Florida. In Florida, a company that is organized outside of the state is classified as a foreign company. Therefore, the correct answer is foreign company.Rate this question:
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- 8.
Which of the following is not a service provider?
- A.
HMO
- B.
Benefit plans offering medical services to subscribers
- C.
Lloyd's of London
- D.
PPO
Correct Answer
C. Lloyd's of LondonExplanation
Lloyd's of London is not a service provider because it is not a healthcare organization or insurance provider. It is a specialized insurance market that provides insurance and reinsurance services to various entities. Unlike HMO and PPO, which are healthcare service providers, Lloyd's of London operates as a marketplace where insurance underwriters and brokers come together to provide coverage for a wide range of risks.Rate this question:
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- 9.
The head of a state office of insurance regulation is generally responsible for all of the following EXCEPT
- A.
Licensing and supervising agents and brokers
- B.
Overseeing insurance companies' marketing practices
- C.
Issuing rules and regulations
- D.
Making insurance laws
Correct Answer
D. Making insurance lawsExplanation
The head of a state office of insurance regulation is generally responsible for licensing and supervising agents and brokers, overseeing insurance companies' marketing practices, and issuing rules and regulations. However, making insurance laws is not typically within their purview. This task is usually the responsibility of the legislative branch of government.Rate this question:
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- 10.
In addition to the state, the organization that regulates variable life and variable annuities are the
- A.
Federal Trade Commission (FTC)
- B.
National Association of Insurance Commissioners (NAIC)
- C.
Securities and Exchange Commission (SEC)
- D.
Federal Communications Commission (FCC)
Correct Answer
C. Securities and Exchange Commission (SEC)Explanation
The correct answer is the Securities and Exchange Commission (SEC). The SEC is responsible for regulating and overseeing the securities industry, including variable life insurance and variable annuities. These financial products involve investments in securities, so it falls under the jurisdiction of the SEC. The SEC ensures that these products are offered and sold in a fair and transparent manner, protecting investors and maintaining the integrity of the market. The other options listed, such as the FTC, NAIC, and FCC, do not have the authority or expertise to regulate variable life and variable annuities.Rate this question:
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- 11.
The Buyer's Guide is intended to accomplish all of the following EXCEPT
- A.
Help buyers choose the most suitable plan
- B.
Explain basic product features
- C.
Provide information about the recommended policy
- D.
Ensure that buyers obtain the lowest price for insurance
Correct Answer
D. Ensure that buyers obtain the lowest price for insuranceExplanation
The Buyer's Guide is a tool designed to assist buyers in making informed decisions about insurance plans. It achieves this by helping buyers choose the most suitable plan, explaining basic product features, and providing information about the recommended policy. However, it does not aim to ensure that buyers obtain the lowest price for insurance. This suggests that while the Buyer's Guide provides valuable information, it does not prioritize finding the cheapest insurance option for buyers.Rate this question:
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- 12.
The State Guaranty Association guarantees
- A.
That a policy will be issued
- B.
That a claim will be paid if an insurer becomes insolvent
- C.
That dividends will be paid
- D.
The rate of return on a policy
Correct Answer
B. That a claim will be paid if an insurer becomes insolventExplanation
The State Guaranty Association guarantees that a claim will be paid if an insurer becomes insolvent. This means that if an insurance company goes bankrupt and is unable to fulfill its financial obligations, the State Guaranty Association will step in and ensure that policyholders still receive the payment they are entitled to. This guarantee provides a safety net for individuals who rely on insurance coverage and helps maintain trust and stability in the insurance industry.Rate this question:
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- 13.
All of the following methods support the sale of insurance through agents and brokers EXCEPT
- A.
Independent agency system
- B.
Personal producing general agency system
- C.
Career agency system
- D.
Direct selling system
Correct Answer
D. Direct selling systemExplanation
The direct selling system does not support the sale of insurance through agents and brokers. In this system, insurance is sold directly to consumers without the involvement of intermediaries such as agents or brokers. Instead, the company's employees or representatives directly approach and sell insurance policies to customers. This method eliminates the need for agents and brokers, who play a significant role in the other systems mentioned (independent agency system, personal producing general agency system, and career agency system) by acting as intermediaries between the insurance company and the customers.Rate this question:
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Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.
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Current Version
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Mar 21, 2023Quiz Edited by
ProProfs Editorial Team -
Sep 22, 2008Quiz Created by
Sdalessa
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