Question 1

There have been three major types of changes in the insurance industry in the past two decades. Which of the below is ONE of these?

Accepted Answer

A)  internationalization of the insurance industry 
B)  deregulation of the accounting system 
C)  regulation of the accounting system 
D)  naturalization 
A)  internationalization of the insurance industry 
B)  deregulation of the accounting system 
C)  regulation of the accounting system 
D)  naturalization

Question 2

Name some major differences in (a) the portfolios of life companies and P&C companies, and (b) investment strategy between public (or stock) and mutual insurance companies of the same type.

Accepted Answer

(a) The major differences in the portfol

Question 3

In terms of ownership, there are two main forms of insurance companies: stock and mutual. A hybrid form, the mutual holding company, has been approved in some states.

Accepted Answer

A) True 
 B)False

Question 4

Traditional cash value life insurance, usually called ________ insurance, has a guaranteed buildup of cash value based on the general account portfolio of the insurance company.

Accepted Answer

A)  term life 
B)  cash value life 
C)  whole life 
D)  guaranteed life 
A)  term life 
B)  cash value life 
C)  whole life 
D)  guaranteed life

Question 5

Explain survivorship insurance or second-to-die insurance.

Accepted Answer

Most whole life insurance policies are d

Question 6

Roth IRAs are qualified employer-sponsored IRAs wherein the contributions by the business are tax deductible to the business.

Accepted Answer

A) True 
 B)False

Question 7

Cash value insurance products may be "guaranteed" or "variable"; with fixed or flexible premiums; and, with or without a survivorship feature.

Accepted Answer

A) True 
 B)False

Question 8

Long-term care insurance is a fairly new line of business and is offered by different types of companies, but mainly life insurance companies.

Accepted Answer

A) True 
 B)False

Question 9

A new form of insurance company, which is a hybrid between a pure mutual and a pure stock company, has been approved by some states and implemented by some insurance companies in these states since their introduction in 1996. This form is called a ________.

Accepted Answer

A)  stock insurance company (SI
C)  
B)  mutual insurance company (MI
C)  
C)  mutual molding company (MM
C)  
D)  mutual holding company (MH
C)  
A)  stock insurance company (SI
C)  
B)  mutual insurance company (MI
C)  
C)  mutual molding company (MM
C)  
D)  mutual holding company (MH
C)

Question 10

Describe the investing framework for a mutual company and its potential return. Comment on the profitability of this framework and return as compared to a stock company.

Accepted Answer

Mutual insurance companies can adopt a l

Question 11

What does the overall investment portfolio of an insurance company support? What do separate account products depend on?

Accepted Answer

The overall investment portfol

Question 12

Contrast the fundamental difference between an insurance company and a bread manufacturer.

Accepted Answer

A fundamental aspect of the insurance in

Question 13

The general account of an insurance company refers to ________.

Accepted Answer

A)  the investment portfolio of the overall company. 
B)  the liability of the overall company. 
C)  the fixed annuities of the policy holders. 
D)  the investment portfolio of the policy holders. 
A)  the investment portfolio of the overall company. 
B)  the liability of the overall company. 
C)  the fixed annuities of the policy holders. 
D)  the investment portfolio of the policy holders.

Question 14

Among the major types of products distributed to groups are ________.

Accepted Answer

A)  term and whole life insurance, medical insurance, disability insurance, and investment products. 
B)  automobile insurance, medical insurance, disability insurance, and homeowners insurance. 
C)  term life insurance, medical insurance, business property insurance, and liability insurance. 
D)  whole life insurance, property insurance, medical insurance, and investment products insurance. 
A)  term and whole life insurance, medical insurance, disability insurance, and investment products. 
B)  automobile insurance, medical insurance, disability insurance, and homeowners insurance. 
C)  term life insurance, medical insurance, business property insurance, and liability insurance. 
D)  whole life insurance, property insurance, medical insurance, and investment products insurance.

Question 15

Three decades ago, there were three distinct types of products for individuals: insurance products that included ________; savings/ investment products that included ________; retirement products included ________.

Accepted Answer

A)  health insurance; stocks, bonds, and mutual funds; term life and whole life 
B)  health insurance; stocks, bonds, and mutual funds; Social Security and IRAs 
C)  term life and whole life; stocks, bonds, and mutual funds; Social Security and IRAs 
D)  term life and whole life; short-term government securities; Social Security and IRAs 
A)  health insurance; stocks, bonds, and mutual funds; term life and whole life 
B)  health insurance; stocks, bonds, and mutual funds; Social Security and IRAs 
C)  term life and whole life; stocks, bonds, and mutual funds; Social Security and IRAs 
D)  term life and whole life; short-term government securities; Social Security and IRAs

Question 16

Which of the below is TRUE of term life insurance?

Accepted Answer

A)  Term insurance is pure life insurance. 
B)  If the insured retires at the age of 62 while the policy is intact, the beneficiary of the policy receives the benefit. 
C)  If the insured does not die within the period, the policy is valid and still has a cash value. 
D)  The policyholder can borrow against the policy. 
A)  Term insurance is pure life insurance. 
B)  If the insured retires at the age of 62 while the policy is intact, the beneficiary of the policy receives the benefit. 
C)  If the insured does not die within the period, the policy is valid and still has a cash value. 
D)  The policyholder can borrow against the policy.

Question 17

The risk insured by ________ is insurance against financial loss caused by damage, destruction, or loss to property as the result of an identifiable event that is sudden, unexpected, or unusual.

Accepted Answer

A)  long-term health care companies 
B)  disability insurance companies 
C)  umbrella insurance companies 
D)  property and casualty insurance companies 
A)  long-term health care companies 
B)  disability insurance companies 
C)  umbrella insurance companies 
D)  property and casualty insurance companies

Question 18

Which of the below statements is FALSE?

Accepted Answer

A)  Structured settlements are fixed, guaranteed periodic payments over a long period of time, typically resulting from a settlement on a disability policy or other type of insurance policy. 
B)  The first major investment-oriented product developed by life insurance companies was the guaranteed investment contract (GI
C) . 
C)  The "insurance wrapper" on the mutual fund that makes it an annuity can be of various forms with the most common "wrapper"being the guarantee by the insurance company that the annuity policyholder will get back no less that the amount invested in the annuity. 
D)  Insurance companies sell investment products such as GICs (which are "mutual funds in an insurance wrapper") and annuities (which are essentially zero coupon bonds). 
A)  Structured settlements are fixed, guaranteed periodic payments over a long period of time, typically resulting from a settlement on a disability policy or other type of insurance policy. 
B)  The first major investment-oriented product developed by life insurance companies was the guaranteed investment contract (GI
C) . 
C)  The "insurance wrapper" on the mutual fund that makes it an annuity can be of various forms with the most common "wrapper"being the guarantee by the insurance company that the annuity policyholder will get back no less that the amount invested in the annuity. 
D)  Insurance companies sell investment products such as GICs (which are "mutual funds in an insurance wrapper") and annuities (which are essentially zero coupon bonds).

Question 19

Which of the below statements is FALSE?

Accepted Answer

A)  401(k) plans are plans provided by an employer whereby an employee may elect to contribute pretax dollars to a qualified tax-deferred retirement plan. 
B)  While a 401(k) is an employer-sponsored retirement program, the most common types of IRAs are personal tax-deferred retirement plans set up at the initiative of the employee/investor. 
C)  Traditional and Roth IRAs are vehicles for individuals to set up their own retirement plans outside their employment. 
D)  Rollover IRAs may be used when an individual is staying with an employer and wants to continue this retirement plan. 
A)  401(k) plans are plans provided by an employer whereby an employee may elect to contribute pretax dollars to a qualified tax-deferred retirement plan. 
B)  While a 401(k) is an employer-sponsored retirement program, the most common types of IRAs are personal tax-deferred retirement plans set up at the initiative of the employee/investor. 
C)  Traditional and Roth IRAs are vehicles for individuals to set up their own retirement plans outside their employment. 
D)  Rollover IRAs may be used when an individual is staying with an employer and wants to continue this retirement plan.

Question 20

Flexible premium life insurance combines the features of variable life and universal life policies, that is, the choice of separate account investment products and flexible premiums.

Accepted Answer

A) True 
 B)False

Exam 6: Insurance Companies

There have been three major types of changes in the insurance industry in the past two decades. Which of the below is ONE of these?

Name some major differences in (a) the portfolios of life companies and P&C companies, and (b) investment strategy between public (or stock) and mutual insurance companies of the same type.

In terms of ownership, there are two main forms of insurance companies: stock and mutual. A hybrid form, the mutual holding company, has been approved in some states.

Traditional cash value life insurance, usually called ________ insurance, has a guaranteed buildup of cash value based on the general account portfolio of the insurance company.

Explain survivorship insurance or second-to-die insurance.

Roth IRAs are qualified employer-sponsored IRAs wherein the contributions by the business are tax deductible to the business.

Cash value insurance products may be "guaranteed" or "variable"; with fixed or flexible premiums; and, with or without a survivorship feature.

Long-term care insurance is a fairly new line of business and is offered by different types of companies, but mainly life insurance companies.

A new form of insurance company, which is a hybrid between a pure mutual and a pure stock company, has been approved by some states and implemented by some insurance companies in these states since their introduction in 1996. This form is called a ________.

Describe the investing framework for a mutual company and its potential return. Comment on the profitability of this framework and return as compared to a stock company.

What does the overall investment portfolio of an insurance company support? What do separate account products depend on?

Contrast the fundamental difference between an insurance company and a bread manufacturer.

The general account of an insurance company refers to ________.

Among the major types of products distributed to groups are ________.

Three decades ago, there were three distinct types of products for individuals: insurance products that included ________; savings/ investment products that included ________; retirement products included ________.

Which of the below is TRUE of term life insurance?

The risk insured by ________ is insurance against financial loss caused by damage, destruction, or loss to property as the result of an identifiable event that is sudden, unexpected, or unusual.

Which of the below statements is FALSE?

Which of the below statements is FALSE?

Flexible premium life insurance combines the features of variable life and universal life policies, that is, the choice of separate account investment products and flexible premiums.

Introduction

Financial Institutions, Financial Intermediaries, and Asset Management Firms

Depository Institutions: Activities and Characteristics

The U.S. Federal Reserve and the Creation of Money

Monetary Policy in the United States

Investment Companies and Exchange Traded Funds

Pension Funds

Properties and Pricing of Financial Assets

The Level and Structure of Interest Rates

The Term Structure of Interest Rates

Risk/Return and Asset Pricing Models

Primary Markets and the Underwriting of Securities

Secondary Markets

Treasury and Agency Securities Markets

Municipal Securities Markets

Markets for Common Stock: The Basic Characteristics

Markets for Common Stock: Structure and Organization

Markets for Corporate Senior Instruments: I

Markets for Corporate Senior Instruments: II

The Markets for Bank Obligations

The Residential Mortgage Market

Mortgage-Backed Securities Market

Market for Commercial Mortgage Loans and Commercial Mortgage-Backed Securities

Market for Asset-Backed Securities

Financial Futures Markets

Options Markets

Pricing of Futures and Options Contracts

The Applications of Futures and Options Contracts

OTC Interest Rate Derivatives: Forward Rate Agreements, Swaps, Caps, and Floors

Market for Credit Risk Transfer Vehicles: Credit Derivatives and Collateralized Debt Obligations

The Market for Foreign Exchange and Risk Control Instruments

Filters

Three decades ago, there were three distinct types of products for individuals: insurance products that included ; savings/ investment products that included ; retirement products included .