Explanation: A: Fair Credit Reporting Act. This law governs the collection and use of consumer information by third parties. The McCarran-Ferguson Act (B) preserves state regulation of insurance, the Nonadmitted and Reinsurance Reform Act (C) regulates surplus lines, and the Unfair Insurance Practices Act (D) prevents deceptive practices but does not specifically address third-party reports.

Explanation: C: people and time. Mortality is fundamentally a statistical measure derived from the observation of large groups of people over time. Insurers rely on the Law of Large Numbers, which states that the larger the pool of people being considered, the more predictable mortality patterns become. Income and time (A) is incorrect because mortality isn’t directly measured by income, though income may affect access to healthcare. Geographic area and time (B) is incomplete because mortality tables are designed to capture overall population risk, not only geographic differences. Family history and hobbies (D) may impact individual underwriting, but mortality as a principle depends on aggregating broad groups over time, not these smaller factors. Hence, the essential elements for mortality calculations are large groups of people and the passage of time.

Explanation: B: substandard risk. In insurance, a substandard risk refers to an applicant who does not qualify for standard rates due to factors such as poor health, dangerous occupations, or risky habits like smoking. Preferred risk (A) is incorrect because these applicants are healthier than average and therefore get lower premiums, not higher. Rating risk (C) is not a recognized classification term in insurance underwriting; instead, the insurer may assign a “rating” to reflect the extra risk, but the category is still called substandard. Standard risk (D) means an applicant with average risk characteristics who qualifies for regular rates. Thus, the key difference is that substandard risks represent above-average mortality or morbidity risks, leading insurers either to charge higher premiums, impose exclusions, or sometimes decline coverage altogether.

Explanation: D: failure to pay property tax. Insurance producers must maintain compliance with regulatory bodies to retain their licenses. This includes reporting significant changes such as a change of address (B), since regulators need accurate contact information, and failure to comply with child support obligations (C), as this is specifically tied to licensing requirements in most states. Failure to pay state income tax (A) also has legal and regulatory implications that can impact licensing. However, failure to pay property tax (D) is a personal financial matter not directly regulated under insurance producer reporting obligations. While it may reflect poorly on the individual’s finances, it is not considered a licensing-related violation. Therefore, among the options listed, only property tax delinquency does not require reporting to the insurance department.

Explanation: A: equivalent to returning a premium. Life insurance dividends are treated as a return of excess premium paid by the policyholder rather than taxable income. Since the IRS views them as a refund, they are not taxed unless they exceed the total premiums paid. Choice B, cash value reductions of policy death benefit proceeds, is inaccurate because dividends are not directly tied to death benefit payouts; they are distributions of surplus. Choice C, guaranteed policy benefit, is wrong because dividends are not guaranteed; they depend on insurer performance. Choice D, considered prepaid policyowner equity, misstates the legal and tax treatment of dividends. Therefore, the key reason dividends are not taxable is that they represent a return of overpayment, not income.