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Exam 5: Types of Insurers and Marketing Systems

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Question 1

Multiple Choice

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Which of the following statements about managing general agents is (are) true? I.Managing general agents have become more important in insurance distribution over the past 20 years. II.Managing general agents are vested with underwriting authority from an insurer.

A) I only
B) II only
C) both I and II
D) neither I nor II

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Question 2

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Advantages of the direct response system for marketing life insurance include which of the following? I.Advertising can be specifically directed to selected markets. II.Complex products can be easily sold.

A) I only
B) II only
C) both I and II
D) neither I nor II

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Question 3

Multiple Choice

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ABC Insurance has always used the exclusive agency system to market coverages.ABC,however,cannot afford full-time agents in sparsely-populated areas.To reach customers in these areas,ABC enters into agreements with local independent agents.Using more than one marketing system is called employing a

Jim would like to start a business raising thoroughbred racehorses.Obtaining insurance on the horses is a key concern,and he was dismayed to learn that none of the insurers authorized to operate in his state offer this specialty insurance.What is the name of the intermediary that Jim can use to place this coverage with an insurer not admitted to his state?

Which of the following statements is true regarding independent insurance agents in property and liability insurance?

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

Which of the following statements about reciprocal exchanges is (are) true? I.Reciprocal exchanges usually specialize in health insurance. II.Reciprocal exchanges are unincorporated mutual insurance companies.

Which of the following statements about stock insurers is true?

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

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

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

As an alternative to demutualizing,Big Mutual Insurance Company reorganized itself into a corporate form that can directly or indirectly own a stock insurance company.This form of organization is called a(n)

A specialized type of "wholesale" producer that unlike "retail" producers,is vested with underwriting authority from an insurer is a(n)

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)

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

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)

David is a successful independent insurance agent.Recently,one of the life insurance companies with whom he places business offered him a special financial arrangement.If David meets sales targets,he will receive large bonuses.He will also be able to recruit and train sub-agents and receive an over-riding commission based on the amount of life insurance the sub-agents sell.Based on this description,David is a(n)

Which of the following statements is true with regard to career life insurance agents?

Neil needs insurance that is unavailable in the state where he lives.To obtain insurance from a nonadmitted insurer,Neil should contact a

Which of the following statements about Blue Cross and Blue Shield plans is (are) true? I.Blue Cross and Blue Shield plans can be organized on a nonprofit basis or on a for-profit basis. II.Blue Cross provides coverage for hospital services;Blue Shield provides coverage for physicians' and surgeons' fees.