Life License Qualification Program (LLQP) Practice Exam

An insurance company incorporated under the laws of the state in which it operates is known as a(n) ____ company.

1. Domestic

2. Alien

3. Foreign

4. Authorized

The correct answer is: Domestic

A company that is incorporated under the laws of the state in which it operates is referred to as a domestic company. This designation reflects the company's legal status and regulatory compliance within its home state, which is critical for both regulatory purposes and customer trust. Domestic companies are subject to the state's insurance regulations and oversight, which ensures that they adhere to local laws and standards. In contrast, an alien company is one that is incorporated outside the country but is operating within it, while a foreign company typically refers to an insurer that is incorporated in a different state than the one it is currently operating in. An unauthorized company is one that has not received the required approvals or licenses to operate in a given jurisdiction. Understanding these distinctions is important for anyone studying for the LLQP as it forms the basis for comprehending how insurance companies are categorized and regulated.