North Carolina XCEL Testing Life & Health Insurance Exam 2023/2024

1. Which of the following requires insurers to disclose when an applicant's consumer or credit history is being investigated:: Ans- 1970 - Fair Credit Reporting Act 2. What type of reinsurance contract involves two companies automatically sharing their risk exposure?: Ans- Treaty 3. What is the name of the law that requires insurers to disclose information gathering practices and where the information was obtained?: Ans- Fair Credit Re- porting Act 4. Who elects the governing body of a mutual insurance company?: Ans- policyhold- ers 5. The stated amount or percent of liquid assets that an insurer must have on hand that will satisfy future obligations to its policyholders is called:: Ans- reserves 6. A group-owned insurance company that is formed to assume and spread the liability risks of its members is known as a:: Ans- risk retention group 7. What year was the McCarran-Ferguson Act enacted?: Ans- 1945 8. Which of these describe a participating life insurance policy?: Ans- Policyowners are entitled to receive dividends 1 / 9 9. At what point must a life insurance applicant be informed of their rights that fall under the Fair Credit Reporting Act?: Ans- Upon completion of the application 10. A nonprofit incorporated society that does not have capital stock and operates for the sole benefit of its members is known as:: a fraternal benefit society 11. An insurance applicant MUST be informed of an investigation regarding his/her reputation and character according to the:: Fair Credit Reporting Act 12. Which of the following consists of an offer, acceptance, and considera- tion?: Contract 13. Which of these is NOT a type of agent authority?: Principal 14. E and F are business partners. Each takes out a $500,000 life insurance policy on the other, naming himself as primary beneficiary. E and F eventually terminate their business, and four months later E dies. Although E was married with three children at the time of death, the primary beneficiary is still F. However, an insurable interest no longer exists. Where will the proceeds from E's life insurance policy be directed to?: F 15. All of the following are considered to be typical characteristics describing the nature of an insurance contract, EXCEPT:: Bilateral 16. The part of a life insurance policy guaranteed to be true is called a(n):: warranty 17. A life insurance arrangement which circumvents insurable interest statutes is called:: Investor-Originated Life Insurance 2 / 9 18. Taking receipt of premiums and holding them for the insurance company is an example of:: Fiduciary responsibility 19. Which of these arrangements allows one to bypass insurable interest laws?: Investor-Originated Life Insurance 20. Insurance contracts are known as because certain future conditions or acts must occur before any claims can be paid.: conditional 21. When third-party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have:: insurable interest in the proposed insured 22. Statements made on an insurance application that are believed to be true to the best of the applicant's knowledge are called:: representations 23. If a contract of adhesion contains complicated language, to whom would the interpretation be in favor of?: Insured 24. At what point does an informal contract become binding?: When one party makes an offer and the other party accepts that offer 25. When must insurable interest exist for a life insurance contract to be valid?: Inception of the contract 26. A life insurance policy would be considered a wagering contract WITH- OUT:: insurable interest 27. what is a warranty?: is a statement guaranteed to be true 28. Which of these is NOT considered to be an element of an insurance contract?: negotiating 29. Who makes the legally enforceable promises in a unilateral insurance policy?: Insurance company 30. In an insurance contract, the insurer is the only party who makes a legally enforceable promise. What kind of contract is this?: Unilateral 31. In regards to representations or warranties, which of these statements is TRUE?: If material to the risk, false representations will void a policy 32. A policy of adhesion can only be modified by whom?: The insurance com- pany 33. Insurance policies are considered aleatory contracts because: perfor- mance is conditioned upon a future occurrence 34. Insurance policies are offered on a "take it or leave it" basis, which make them:: Contracts of Adhesion 35. Stranger Originated Life Insurance (STOLI) has been found to be in violation of which of the following contractual elements?: Legal Purpose (Insurable Interest) 36. Q purchases a $500,000 life insurance policy and pays $900 in premiums over the first six months. Q dies suddenly and the beneficiary is paid $500,000. This exchange of unequal values reflects which of the following insurance contract features?: Aleatory 37. What is the consideration given by an insurer in the Consideration clause of a life policy?: Promise to pay a death benefit to a named beneficiary 38. The Consideration clause of an insurance contract includes:: the schedule and amount of premium payments 39. When must insurable interest be present in order for a life insurance policy to be valid?: When the application is made 40. Life and health insurance policies are:: Unilateral contracts 41. All of these are characteristics of an Adjustable Life policy, EXCEPT:: ace amount can be adjusted using policy dividends 42. No insurer shall refuse to insure an individual because of: race 43. Which type of plan normally includes hospice benefits?: Managed care plans 44. An insurance company may NOT reject a prospective insured's life appli- cation on the basis of which of the following factors?: Gender 45. Which statement is TRUE regarding a Variable Whole Life policy?: A mini- mum guaranteed Death benefit is provided 46. Under the North Carolina insurance code, an insurance company must pay death benefits for suicide if the policy has been in force for a MINIMUM of: two years 47. All of these statements concerning Settlement Options are true, EXCEPT:- : Only the beneficiary may select 48. Defamation is BEST described as publishing or circulating which of the following types of information?: Brochures falsely criticizing the financial condi- tion of an insurance company 49. A policyowner is able to choose the frequency of premium payments through what policy feature?: Premium Mode 50. N is covered under an individual Disability policy with a 30-day Elimination period and a monthly benefit of $500. N is totally disabled for 3 1/2 months. N's total benefit received on this claim is:: $1,250 ........ After the 30-day Elim- ination period has been satisfied, the total benefit paid on this claim is $1,250 ($500+$500+$250) 51. Which of these factors does NOT influence an applicant's need for life insurance?: Self-maintenance expenses 52. All of the following statements are true regarding a policy's Grace period, EXCEPT:: Past due premiums are waived 53. All of the following actions are considered rebating EXCEPT: sharing com- missions with other licensed and appointed agents 54. According to the Affordable Care Act (ACA), a dependent child's eligibility status is determined by:: age 55. In life insurance, the needs approach is used mostly to establish:: how much life insurance a client should apply for 56. A person is required to be AT LEAST how old before he or she is licensed as an agent in North Carolina?: 18 57. Which of these actions is taken when a policyowner uses a Life Insurance policy as collateral for a bank loan?: Collateral assignment 58. The policyholder has how many days to return an Accident/Health Insur- ance Policy and receive a full refund on premiums?: 10 59. The Legal Actions provision of an insurance contract is designed to do all of the following, EXCEPT:: protect the producer 60. A Limited-Pay Life policy has:: premium payments limited to a specified num- ber of years 61. An individual working part-time has an annual income of $25,000. If this individual has an IRA, what is the maximum deductible IRA contribution allowable?: $25,000 62. An insurance company MUST clearly specify questions designed to obtain information solely for marketing research: in any insurance transaction 63. A vacancy that occurs during the North Carolina Commissioner of Insur- ance's term of office MUST be filled by the: Governor 64. Every Group Health Policy providing benefits for chemical dependency treatments must include, for the life of the contract, a: minimum benefit of $16,000 65. An example of rebating would be: offering a client something of value not stated in the contract in exchange for their business 66. If after satisfactory proof of loss, an insurer fails or refuses to pay death proceeds, the insurer must pay interest on the proceeds after how many days?: 30 67. A written agreement to provide a Life Insurance Policy holder immediate cash in exchange for the sale and transfer of a Life Insurance Policy is a: Viatical Settlement 68. When L applies for a Health Insurance Policy, L unintentionally fails to list a previous visit to a cardiologist. If the insurance company contests the policy, it MUST do so within 2 years: from the date of issue 69. When an employee is terminated, which statement about a group term life conversion is true?: Policy proceeds will be paid if the employee dies during the conversion period 70. Which of these actions should a producer take when submitting an insur- ance application to an insurer?: Inform insurer of relevant information not included on the application 71. A prepaid application for individual Disability Income insurance was re- cently submitted to an insurer. When the insurer received the Medical Infor- mation Bureau (MIB) report, the report showed that the applicant had suffered a stroke 18 months ago, something that was not disclosed on the application. Which of the following actions would the insurance company NOT take?: Send a notice to the MIB that the applicant was declined