Montana State Life Insurance Practice Exam

What is the certificate that an administrator must hold?

1. Certificate of Compliance

2. Certificate of Registration

3. Certificate of Authority

4. Certificate of Insurance

The correct answer is: Certificate of Registration

The certificate that an administrator must hold is the Certificate of Authority. This certificate is essential because it indicates that the administrator has been granted permission by the state regulatory body to operate and provide insurance-related services. The issuance of a Certificate of Authority ensures that the administrator is compliant with the state's insurance laws and regulations, thereby safeguarding the interests of policyholders. The Certificate of Authority is specific to the licensing of individuals and entities that are involved in insurance, confirming their legitimacy to conduct business within the state. It serves as a verification that the administrator meets all requirements, including financial stability and adherence to professional standards, which is crucial for maintaining trust in the insurance industry. Certificates of Compliance, Registration, or Insurance do not pertain to the administrator's permission to operate in the insurance sector; instead, they serve different purposes related to compliance with regulations or certifying individual policies. Thus, the correct answer relates directly to the foundational requirement for an administrator's legitimacy in the insurance marketplace.