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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 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.

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Question 2

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Sarah owns a property and liability insurance agency. She is authorized to represent several insurance companies and she is compensated by commissions. Sarah's agency owns the expiration rights to the business she sells. Sarah is a(n)

A) independent agent.
B) exclusive agent.
C) direct writer.
D) insurance broker.

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Question 3

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

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

Which of the following statements about the sale of property and liability insurance through the direct response system is (are) true? I.Selling expenses are higher because market segmentation tends to be less precise than with other marketing methods. II.It is the most appropriate system for selling complex products.

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

Scott works in property and liability insurance marketing. He legally represents insurance purchasers, rather than insurance companies. Scott is paid a commission on the insurance placed with insurers. Scott is a(n)

Peggy is an independent insurance agent who places substantial amounts of business with XYZ Insurance Company. XYZ pays Peggy a bonus when she meets a sales goal. XYZ also allows Peggy to recruit and train sub-agents. She receives additional commissions based on the sales generated by the sub-agents. Based on this description, we can conclude that Peggy is a

RST Insurance Company does not have any agents. Instead, the company sells insurance through radio ads, telemarketers, and newspaper and magazine inserts. This distribution method is called

Which of the following statements is (are) true about savings bank life insurance (SBLI) ? I.Each depositor at the savings bank receives life insurance equal to his or her savings account balance. II.The goal of SBLI is to provide low-cost life insurance to consumers.

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

Which of the following statements about personal producing general agents is (are) true? I.They often have the option of recruiting and training sub-agents. II.They are independent agents who produce substantial amounts of life insurance with one insurer.

A plan for selling individually underwritten property and liability insurance to members of a group is called

Which of the following statements about mutual insurers is true?

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.

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

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

Which of the following statements about life insurance marketing systems is true?

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

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