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Exam 5: Types of Insurers and Marketing Systems

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Question 1

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Which of the following statements about the exclusive agency system for marketing property and liability insurance is true?

A) Exclusive agents typically have complete ownership of policy expirations.
B) A higher commission rate is usually paid on exclusive agents' renewal business than on new business.
C) Exclusive agents represent several different insurance companies.
D) New exclusive agents may start as employees and after a training period become independent contractors.

E) B) and C)
F) All of the above

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Question 2

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Which of the following statements about Lloyd's of London is true?

A) Coverage is actually written by syndicates who belong to Lloyd's of London.
B) New individual members or Names who belong to the various syndicates have unlimited legal liability.
C) It operates as an admitted insurer throughout the United States.
D) It allows underwriters to write coverage without meeting stringent financial requirements.

E) All of the above
F) B) and D)

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Question 3

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The financial services field is currently experiencing consolidation and convergence.If both of these trends continue,in the future we should observe

RST Insurance is an interesting company.It doesn't have any agents.Instead,the company sells insurance through radio ads,telemarketers,and newspaper and magazine inserts.This distribution method is called

Temporary evidence of insurance until a policy is actually issued is provided by a(n)

ABC Term Life Insurance Company uses an interesting marketing system-it has no agents.Instead,the company markets its coverages through television and radio ads,newspaper inserts,and the Internet.The type of marketing system that ABC Term Life Insurance Company uses is called the

All of the following statements about the independent agency system are true EXCEPT

The leaders of a religious group decided to start a life insurance organization to insure members of the religious group.The insurer will operate as a nonprofit organization,thus receiving favorable tax treatment.The insurer formed will be a

Which of the following statements is (are) true regarding insurance agents and insurance brokers? I.A property and liability insurance agent has the authority to bind the insurer for certain types of coverage. II.A licensed broker who is not a licensed agent has the legal authority to bind an insurer.

Brian buys and sells investment securities for his clients.Brian also decided to become a licensed life insurance agent to better serve his customers.While Brian's primary focus is buying and selling financial securities for his clients in exchange for commissions,he also earns commissions on his life insurance sales.Brian is a(n)

Marcy advises her clients on investments,taxes,wealth management,estate issues,budgeting,and insurance.Marcy is also a licensed life insurance agent.When Marcy sells life insurance to a client,the distribution channel used is a(n)

Which of the following statements about brokers is (are) true? I.They legally represent the insured rather than the insurance company. II.They are prohibited from being licensed as agents.

Which of the following statements is (are) true with respect to the financial services industry? I.The number of life insurers operating in the industry continues to increase at a rapid rate. II.The Financial Modernization Act of 1999 permits financial institutions to compete in other financial markets outside their core business area.

A property and casualty insurer in which the salesperson is an employee of the insurer,not an independent contractor,is called a

Which of the following is characteristic of a typical mass merchandising plan?

Which of the following statements about stock insurers is true?

A personal lines insurance company initiating banking and investment services for its policyowners demonstrates which financial services industry trend?

Big Life Insurance Company purchased Regional Bank.Regional Bank has 27 branches in four states.Big Life Insurance Company required one employee at each bank branch to become a licensed life insurance agent and to sell Big Life Insurance Company annuities and life insurance products.This distribution channel is an example of the

Under one life insurance marketing system,individual producers conduct sales interviews at the workplace with the approval of the management of the business.There are few direct costs to the employer,and this marketing system is especially appropriate for the low-income and middle-income workers.This life insurance marketing system is called the

Which of the following statements about a reciprocal exchange is (are) true? I.It usually specializes in health insurance. II.It is an unincorporated mutual insurance company.