XCEL Chapter 1 Exam Review Questions and Answers Already Passed

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