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LOMA 308 Module 2 questions with complete solutions
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LOMA 308 Module 2 questions with complete solutions
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LOMA 308 Module 2 questionswith complete solutions
Suppose |that |you |want |to |start |your |own |insurance |company. |The |first |thing |you
|need |to |decide |is |what |kind |of |structure |your |company |will |have. |Which
|organizational |structures |do |you |think |you |can |choose |from?
a. |sole |proprietorship
b. |partnership
c. |corporation |- |correct |answers✔✔c. |- |Laws |in |most |jurisdictions |require |insurance
|companies |to |be |organized |as |corporations. |In |this |lesson, |you'll |learn |why |that
|structure |is |required. |You'll |also |learn |how |organizational |form |and |management
|affect |the |way |an |insurance |company |does |business.
Sole |Proprietorship |- |correct |answers✔✔is |created, |owned, |and |operated |by |one
|person.
he |owner |earns |all |company |profits |and |is |responsible |for |all |company |debts.
Company |operations |cease |if |the |owner |dies.
The |company |is |considered |a |privately |held |company |because |ownership |is
|restricted |to |a |specified |individual.
privately |held |company |- |correct |answers✔✔A |company |in |which |ownership |is
|restricted |to |specified |individuals. |Contrast |with |publicly |held |company.
partnership |- |correct |answers✔✔is |created, |owned, |and |operated |by |two |or |more
|partners.
Partners |earn |all |company |profits |and |are |responsible |for |all |company |debts.
A |two-owner |partnership |dissolves |if |a |partner |dies |or |withdraws; |a |partnership |with
|many |owners |will |continue |as |long |as |there |are |two |or |more |owners.
,The |company |is |considered |a |privately |held |company |because |ownership |is |limited
|to |specified |individuals.
Corporation |- |correct |answers✔✔is |a |legal |entity |created |by |government |authority.
It's |separate |from |its |owners, |so |owners |can't |be |held |responsible |for |company
|debts.
Operations |continue |even |if |one |or |more |owners |die |or |withdraw.
It |can |sue |or |be |sued, |enter |into |contracts, |and |own |property.
It |can |be |a |privately |held |company |or |a |publicly |held |company |that |sells |ownership
|shares |to |the |public.
publicly |held |company |- |correct |answers✔✔A |company |that |sells |ownership |shares
|to |the |public. |Contrast |with |privately |held |company.
requirements |for |incorporation |- |correct |answers✔✔In |the |U.S., |insurance
|companies |are |incorporated |at |the |state |level.
A |description |of |the |company, |including |its |name, |location, |plan |for |organizing
|operations, |and |the |type |of |business |it |intends |to |conduct
The |names |of |the |company's |original |directors
The |amount |of |initial |investment |being |made |by |company |owners
Licensing |- |correct |answers✔✔license |granting |the |insurer |the |legal |authority |to
|conduct |insurance |business |in |a |specific |jurisdiction. |An |insurer |that |intends |to |do
|business |in |more |than |one |jurisdiction |must |obtain |a |license |from |each
|jurisdiction. |In |the |U.S., |that |means |a |license |from |each |state |in |which |the |insurer
|will |operate.
The |purpose |of |licensing |is |to |ensure |that |an |insurance |company |is
Financially |sound |and |able |to |meet |its |obligation |to |policyowners
Directed |by |knowledgeable |and |capable |managers
,Which |of |the |following |are |characteristics |of |a |sole |proprietorship? |(Choose |all |that
|apply.)
A. |Owned |and |operated |by |one |person
B. |All |profits |on |sales |belong |to |company |owner(s)
C. |Privately |held |organization
D. |Operations |cease |if |only |one |owner |remains
E. |Owned |and |operated |by |two |or |more |people
F. |Created |by |government |authority
G. |Owner(s) |responsible |for |company |debts
H. |Publicly |held |organization
I. |Owner(s) |not |responsible |for |company |debts |- |correct |answers✔✔A, |B, |C, |& |G
Which |of |the |following |are |characteristics |of |a |partnership? |(Choose |all |that |apply.)
A. |Owned |and |operated |by |one |person
B. |All |profits |on |sales |belong |to |company |owner(s)
C. |Privately |held |organization
D. |Operations |cease |if |only |one |owner |remains
E. |Owned |and |operated |by |two |or |more |people
F. |Created |by |government |authority
G. |Owner(s) |responsible |for |company |debts
H. |Publicly |held |organization
I. |Owner(s) |not |responsible |for |company |debts |- |correct |answers✔✔B, |C, |D, |E |& |G
Which |of |the |following |are |characteristics |of |a |corporation? |(Choose |all |that |apply.)
A. |Owned |and |operated |by |one |person
B. |All |profits |on |sales |belong |to |company |owner(s)
C. |Privately |held |organization
D. |Operations |cease |if |only |one |owner |remains
E. |Owned |and |operated |by |two |or |more |people
F. |Created |by |government |authority
, G. |Owner(s) |responsible |for |company |debts
H. |Publicly |held |organization
I. |Owner(s) |not |responsible |for |company |debts |- |correct |answers✔✔C, |E, |F, |H |& |I
In |the |United |States, |an |insurance |company |must |be |incorporated |at
A. |The |state |level |only
B. |The |federal |level |only
C. |Either |the |state |level |or |the |federal |level
D. |Both |the |state |level |and |the |federal |level |- |correct |answers✔✔A.- |In |the |U.S.,
|insurance |companies |are |incorporated |at |the |state |level. |In |Canada, |insurers |can
|be |incorporated |at |the |provincial |or |federal |level. |In |India |and |many |other
|countries, |insurers |are |incorporated |at |the |federal |level.
In |the |United |States, |an |insurance |company |must |be |licensed |in
A. |The |state |in |which |it |is |incorporated
B. |The |state |in |which |its |home |office |is |located
C. |Each |state |in |which |it |does |business
D. |All |states |- |correct |answers✔✔C. |- |In |addition |to |fulfilling |incorporation
|requirements, |insurers |operating |in |the |U.S. |must |obtain |a |license |from |each
|jurisdiction |in |which |they |intend |to |conduct |business.
Which |of |these |organizational |forms |do |you |think |is |the |most |common?
A. |Stock |company
B. |Mutual |company
C. |Fraternal |benefit |society |- |correct |answers✔✔A. |- |Most |of |the |insurers |in |the |U.S.
|are |organized |as |stock |companies.
Which |of |these |organizational |forms |do |you |think |is |protected |against |takeover |or
|control |by |another |type |of |company?
A. |Stock |company
B. |Mutual |company |- |correct |answers✔✔B. |- |In |most |jurisdictions, |mutual
|insurance |companies |can |merge |with |or |acquire |other |mutual |companies |(with
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