Life & Health Insurance Practice Exam 2025 – Your All-in-One Guide to Exam Success!

An insurer that has not been authorized by a state’s insurance department is referred to as an unauthorized insurer. This designation indicates that the insurer does not possess a license to operate within that state, meaning it hasn't met the regulatory requirements set forth by the state’s insurance authority. This can impact consumers because policies issued by unauthorized insurers may not offer the same level of protection or recourse in case of disputes compared to those provided by authorized or admitted insurers.

On the other hand, admitted insurers are those that have received the necessary approvals and licenses from a state’s insurance department, allowing them to conduct business legally in that state. A foreign insurer is one that is incorporated in another state but has received authorization to operate in the state in question. Captive insurers are typically subsidiaries created to insure the risks of their parent company, and they may be authorized or unauthorized depending on their compliance with local regulations.