Arkansas Life and Health Insurance Practice Exam 2025 - Free Life and Health Insurance Practice Questions and Study Guide

Question: 1 / 400

What is the primary purpose of the Arkansas Life and Health Insurance Guaranty Association?

To regulate unfair trade practices in insurance

The correct answer is C. The primary purpose of the Arkansas Life and Health Insurance Guaranty Association is to ensure compensation for clients of insolvent insurers. This association provides a safety net for policyholders in case their insurance company becomes insolvent and is unable to fulfill its financial obligations. This helps to protect consumers and maintain confidence in the insurance industry.

Option A is incorrect because the regulation of unfair trade practices in insurance is typically the responsibility of insurance regulatory authorities, not the guaranty association. Option B is incorrect as the guaranty association is focused on providing compensation to policyholders rather than providing funding and resources to state insurance departments. Option D is also incorrect as the guaranty association's role is not to set premium rates for insurers, but rather to protect policyholders in the event of insurer insolvency.

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To provide funding and resources to state insurance departments

To ensure compensation for clients of insolvent insurers

To set premium rates for insurers

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