4
QuizMultiple Choice

Asset-backed Securities, Loan Sales, and Derivatives — Test

Question 4 • (AG Q4) Financial Literacy: 25-26 (JRush)

Insurance companies pay a premium tax which funds _____.

Answer
A
those who do not have insurance coverage
B
their state’s guarantee association
C
the Federal Emergency Management Agency
D
catastrophic malpractice insurance payouts

Explanation

Insurance companies pay premium taxes to their states, and part of this revenue supports the state’s insurance guarantee association. The association helps protect policyholders if an insurer becomes insolvent. Therefore, the correct choice is “their state’s guarantee association.”

AI-written and checked against the verified answer.

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