No, incorrect. You have to answer them every time you log in via an IP Address which the server hasn't seen before for your account.
So yes, basically you're whitelisting IP Addresses.
Yup. Every time the power goes out during a thunderstorm, or I need to reset the modem, I get new security prompts. Considering it is thunderstorm season where I live, and that the power just sometimes randomly goes out (hooray for small town infrastructure!), I find this very annoying.
So yes, basically you're whitelisting IP Addresses.