LOMA 290 STUDY MATERIAL PDF

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Sign in. Don't have an account? We weren't able to detect the audio language on your flashcards. Please select the correct language below. Add to folder [? Find out how you can intelligently organize your Flashcards. You have created 2 folders. Please upgrade to Cram Premium to create hundreds of folders! Requires an employer to design jobs so that job tasks do not place an employee in a position to conceal errors or irregularities in the normal course of his employment.

Financial Accounting: Process of reporting a company's financial accounting informaiton to meet the needs of the company's external stakeholders. Management Accounting: process of identifying, measuring, analyzing, and communicating financial information to a company's internal and external stakeholders, particularly company managers, so they cna decide how best to use the company's resources.

One example is payroll accounting. Type of general accounting: The objectives of disbursement accounting are to 1 provide a permanent record of all cash disbursed or paid out, 2 confrm that all cash disbursements are properly authorized, and 3 ensure that all disbursements are charged to the proper account. The underlying premise of GAAP is the going-concern concept, which means that accounting records are based on the assumption that a company will continue to operate indefnitely.

Focus on solvency. Single, basic set of written standards among the states. States can elect to use the codification or maintain its own unique sets. Statutory accounting practices prescribe specifc rules for asset valuation—the process of calculating the monetary values for assets. Typical admitted assets include cash and other high-quality assets such as investment-grade securities and amounts due to the insurer within 90 days. Partially admitted assets include invested assets that are decreased by any amount that exceeds the statutory investment limitations.

Can also be thought of as profit plan, because acheiving the goals in the master budget should result in a profit. Controls for authorization, check security and accounting records for cash disbursements are maintained. Recall that short-term investments are often the responsibility of treasury operations. Likewise, all other factors remaining equal, the lower the risk associated with an investment, the lower the expected return.

The total mix of the asset portfolio remains fairly constant. Theoretically, the entire mix of assets in the portfolio can be changed at any time. When the security represents an obligation of indebtedness, it is called a debt security.

Debt securiity in which an investor lends money to a corporation or government that borrows the funds for a defned period of time at a fxed interest rate. Must be registered with government agencies like the SEC. Although private placements are subject to regulatory oversight, they do not have to be registered with government agencies. Bonds are the largest investment holding in general accounts because they are relatively safe and have predictable cash flows.

The bond issuer is legally obligated to pay the bondholder the par value of the bond on the maturity date. Not the same as par value necessarily, because based on the price the bond can be traded on the open market. Changes as market interest rates change. As interest rates rise, bond prices fall and visa verse.

To find a buyer, you would have to reduce the price below or sell at a discount. You could demand a price above or sell at a premium. Most important factor to determining risk: Bonds with long terms to maturity are more suceptible to interest rate risk because interest rate changes are more likely over long periods of time.

Long term bonds generally have higher coupon rates. May be forced to sell at a bad time. Lower risk because increases the ways to generate a return on investment because can share in a company's good fortune. Generally lower coupon rates because lower risk. Bonds may be either secured or unsecured, depending on whether the bond is backed by collateral—an asset that is pledged as security for a loan until the debt is paid.

Corporate bonds may be secured or unsecured, and many are callable. These bonds are backed by the credit and taxing authority of the federal government. Federal government bonds, such as U. Treasury bonds, typically have maturities of 10 to 20 years and are regarded as low-risk, low—coupon-rate investments. Most investors believe that the U. State, county, and local governments issue municipal bonds to fnance projects such as school and road construction and other large programs. An important characteristic of most municipal bonds is that the interest paid to bondholders is exempt from federal income taxation.

Subject to risk that the debtor will default like bonds but unlike bonds, they are not rated by a bond rating agency difficult to evaluate.

Dividends may be paid in cash—cash dividends—or in additional shares of stock—stock dividends. Cash flow for stocks varies more than bonds and Dividend can change over time bonds are contractually fixed in amount and timing. The individual or organization that leases the building from the insurer is known as the lessee and is responsible for the maintenance and operation of the building.

The insurer, as lessor, is freed from maintenance and other property administration responsibilities. Insurers that distribute their products primarily through producers may separate those operations into an area commonly known as agency operations.

Corporate Marketing oversees: company wide marketing campaigns directed primarily to external customers. Agency Marketing implements regional or local marketing plans directed toward producers and sometimes external customers. The marketing plan also describes the strategies the company will use, the ways it will put the plan into action, and how it will set controls to make sure goals are achieved. The price of an insurance product is based on a combination of fnancial features that are known as the fnancial design of the insurance product.

Insurance products are complex and can be diffcult to explain to customers in an advertisement, so product advertising is typically aimed at producers. Producers who either receive commissions or salaries from insurance companies sell products through oral and written presentations.

Banks or other fnancial institutions sell insurance products to their own customers but do not issue the insurance products. Insurers initiate or conduct the sales process by communicating directly with customers through direct mail, telemarketing, or the Internet.

Consumer Market: consists of individuals who buy products or services for personal or family use. Organizational Market: people, groups, or formal organizations that purchase products and services for business purposes. Compares the sales an activity generates with the expenses incurred to make those sales to determine proftability. Any change that lies between a rate change and a new product, such as adding a rider to an existing policy. Readability requirements typically limit word length, sentence length, and the amount of technical and legal language in the contract.

A policy summary provides the customer with information specifc to the policy being purchased, including premium and beneft data for the frst fve policy years. If an agent establishes and fnances a feld offce, this agent is often referred to as a general agent.

Renewal commissions are paid to the producer who sold the policy. Renewal commission rates are lower than the frstyear commission rate—usually 2 to 5 percent of premiums received—and they are paid only on policies that remain in force.

Sometimes independent agents—who are not affliated agents, but who place a substantial amount of business with one insurance company—may enter into a special arrangement with that company. The agent, known as a personalproducing general agent PPGA , is an independent agent who receives special consideration for satisfying minimum sales production requirements.

A PPGA receives additional commissions, called overriding commissions, on the new or renewal business that these subagents sell.

Some independent agents, brokers, and PPGAs have created producer groups—organizations of producers that negotiate compensation, product, and service agreements with insurance companies. Many jurisdictions require that, before an insurance producer begins to solicit insurance product sales on behalf of an insurer, the insurer must appoint, or offcially notify, regulators that it is authorizing that person to sell insurance on its behalf.

Rebating is legal in a few jurisdictions under certain circumstances. In the personal selling distribution system, agents often meet individually with one potential customer, who is referred to as the prospect. A location-selling system is designed to generate customer-initiated sales at an offce or information kiosk in a store, shopping mall, or other noninsurance business establishment. The distribution of insurance products to bank customers through a bank-affliated insurer is commonly referred to as bancassurance outside the United States.

A fnancial consultant is a full-time bank employee whose primary function is to sell investment products to bank customers. Financial consultants are licensed to sell securities as well as life insurance and annuities. Platform employees usually sell simple life insurance products such as term life and refer customers with more complex fnancial needs to fnancial consultants.

An insurance company can act as a distribution channel by selling nonproprietary products, which are products developed by another insurance company. Do this becauuse they can offer a new product without spending money to develop a product, enter a new market quickly, decrease risk,.

Pure STP would result in a paperless environment in which all forms and records are maintained electronically and the computer system makes the majority of underwriting decisions.

All applications that are not issued for immediate coverage are sent from the jet unit to other underwriting staff. The table of underwriting requirements specifes the kinds of information needed to assess the insurability of a proposed insured.

Financial underwriting is an assessment to determine whether 1 the proposed insured needs the coverage applied for, 2 a reasonable relationship exists between the need for the coverage and the amount of coverage applied for, and 3 the applicant can afford the coverage. The numerical rating system uses debits and credits. Automated workfow systems that route documents automatically to staff members for underwriting provide an important control feature in that they create an audit log, which is a record of work completed.

A document that details the specifcations of a group insurance plan proposed by an insurer for a group prospect. An application for group insurance that contains the specifc provisions of the requested plan of insurance and is signed by an authorized offcer of the proposed policyholde. Only the insurer and the group policyholder, and not the group insureds, are parties to the master group insurance contract.

The U. A consumer reporting agency is a private business that assembles or evaluates information on consumers and furnishes consumer reports to other people and organizations in exchange for a fee. Claim fraud occurs when the claimant intentionally uses false information in an unfair or unlawful attempt to collect benefts under an insurance policy.

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LOMA FLMI Courses

Designation Programs. Certificate Programs. Certificate, Customer Experience Essentials. Certificate, Regulatory Compliance Essential. Certificate in Underwriting.

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Loma 290 - Insurance Company Operations

The course includes information on the features of individual and group life insurance, health insurance, and annuity products. LOMA may be substituted for this course. LOMA Meeting Customer Needs with Insurance and Annuities is an online course that uses a variety of media to teach principles of insurance, insurance products, and the policy owners contractual rights. The course describes the features of individual and group life insurance, health insurance, and annuity products and emphasizes how insurance companies serve customers and meet customer needs through the products they provide. LOMA Insurance Company Operations describes how life insurance companies operate in todays global environment: how they are organized, how they are managed, and the roles of functional and support units in developing, distributing, issuing, and administering life insurance and annuity products. Learners who take this course will better understand how an individual job fits into the entire scope of the company, as well as the importance of each employees contribution to overall organizational success.

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