XCEL Chapter 1 Exam Review Questions and Answers
Graded A
A non-participating company is also called - of its risk to another insurer. The insurer
-Stock insurer assuming the risk is called the - -Reinsurer
Contract that involves one party which One important function of an insurance company
indemnifies another when a loss arises from an is to identify and sell to potential customers.
unknown event - -Insurance policy Which of these BEST describes this function? -
-Marketing
A type of insurer that is owned by its policy
owners is called - -Mutual John owns an insurance policy that gives him the
right to share in the insurer's surplus. What kind
of policy is this? - -Participating policy
Why are dividends from a mutual insurer not
subject to taxation? - -Because dividends
are considered to be a return of premium Does not participate in paying dividends - -
Non-participating policy
Life insurance policy issued by a mutual insurer
provides a return of divisible surplus - - Contract that allows the policy owner to receive a
Participating life insurance policy share of surplus in the form of policy dividends -
-Participating life insurance policy
Fraternal Benefit Society does NOT - -
Exist for profit Minimum penalty under the McCarran-Ferguson
Act - -$10,000 or up to 1 year in jail
Type of insurance where an insurer transfers
loss exposures from policies written for its When a mutual insurer becomes a stock
insurers - -Reinsurance company - -Demutualization
What is a true statement regarding a life A plan in which an employer pays insurance
insurance policy dividend? - -It is the benefits from a fund derived from the employer's
distribution of excess of funds accumulated by current revenues - -Self-funded plan
the insurer on participating policies
Regulates insurer's claim settlement practices -
Insurer owned by its policyholders - - -State insurance departments
Mutual Insurer
Maximum penalty under the Fair Credit and
A life insurance company has transferred some Reporting Act - -$5,000 and 1 year
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Graded A
A non-participating company is also called - of its risk to another insurer. The insurer
-Stock insurer assuming the risk is called the - -Reinsurer
Contract that involves one party which One important function of an insurance company
indemnifies another when a loss arises from an is to identify and sell to potential customers.
unknown event - -Insurance policy Which of these BEST describes this function? -
-Marketing
A type of insurer that is owned by its policy
owners is called - -Mutual John owns an insurance policy that gives him the
right to share in the insurer's surplus. What kind
of policy is this? - -Participating policy
Why are dividends from a mutual insurer not
subject to taxation? - -Because dividends
are considered to be a return of premium Does not participate in paying dividends - -
Non-participating policy
Life insurance policy issued by a mutual insurer
provides a return of divisible surplus - - Contract that allows the policy owner to receive a
Participating life insurance policy share of surplus in the form of policy dividends -
-Participating life insurance policy
Fraternal Benefit Society does NOT - -
Exist for profit Minimum penalty under the McCarran-Ferguson
Act - -$10,000 or up to 1 year in jail
Type of insurance where an insurer transfers
loss exposures from policies written for its When a mutual insurer becomes a stock
insurers - -Reinsurance company - -Demutualization
What is a true statement regarding a life A plan in which an employer pays insurance
insurance policy dividend? - -It is the benefits from a fund derived from the employer's
distribution of excess of funds accumulated by current revenues - -Self-funded plan
the insurer on participating policies
Regulates insurer's claim settlement practices -
Insurer owned by its policyholders - - -State insurance departments
Mutual Insurer
Maximum penalty under the Fair Credit and
A life insurance company has transferred some Reporting Act - -$5,000 and 1 year
1/2
