Life & Health Insurance Practice Exam

Who may or may not be policyholders in an insurance company?

1. Policyholders

2. Stockholders

3. Underwriters

4. Brokers

The correct answer is: Stockholders

The correct scenario involves understanding the relationship between stockholders and insurance policyholders. Stockholders are individuals or entities that own shares in a stock insurance company, which is a business organization that operates to earn profits for its shareholders. While stockholders may purchase insurance policies and become policyholders, they are not required to be policyholders simply by virtue of their ownership in the company. This means stockholders can choose whether or not to participate in the insurance offerings of the company they own shares in, thus they may or may not be policyholders. In contrast, underwriters are professionals who assess and evaluate risks for the insurance company and are not involved in policy ownership. Brokers act as intermediaries between insurance companies and clients, helping individuals or businesses to find suitable policies, but they do not own policies themselves. Therefore, their roles do not include being policyholders either. The distinction highlights the potential separation between ownership of a company and participation in its insurance products.