Arkansas Life and Health Insurance Practice Exam

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Prepare for the Arkansas Life and Health Insurance Exam with our comprehensive quiz featuring multiple-choice questions and detailed explanations. Gain the knowledge and confidence you need to succeed on your test!

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What type of insurance policy allows the policyholder to share in the insurer’s surplus?

  1. Participating Policy

  2. Non-participating Policy

  3. Term Life Policy

  4. Universal Life Policy

The correct answer is: Participating Policy

A participating policy allows the policyholder to share in the insurer's surplus through the payment of dividends. These dividends are not guaranteed and are distributed based on the insurer's financial performance. In contrast, non-participating policies do not provide the policyholder with the opportunity to receive dividends. Term life policies provide coverage for a specified period without any cash value or dividends, while universal life policies offer flexibility in premium payments and death benefits but do not typically involve the sharing of surplus with the policyholder.

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