XCEL Life Only Final Exam CO Complete Answers

XCEL Life Only Final Exam CO Complete Answers What type of insurance company sells insurance for a profit? Commercial Insurers (Private Insurance Companies) What type of insurance company sells more than one line of insurance? Multi-line insurer What type of companies are organized and incorporated under state laws for the purpose of making a profit for its stockholders? (shareholders) Stock Companies What type of companies are owned by their policyholders? Mutual Companies (Mutual insurers, Participating Insurers) a sum of money paid regularly (typically quarterly) by a company to its shareholders out of its profits (or reserves). Dividend Why are dividends from a mutual insurer not subject to taxation? Because this type of dividend is considered to be a return of premium. If a company operates as both a participating and nonparticipating insurer, they known as a _________. Mixed Insurer What is a mutual company that operates based on loss-sharing by group members where no premium is payable in advance? Pure Assessment Mutual Company What is a mutual company that charges a premium at the beginning of the policy period? Advance Premium Assessment Mutual What is a mutual company that is a "special type"? (nonprofit religious, ethnic or charitable organizations that provide insurance solely to their members). Fraternal Benefit Societies What is a mutual company formed by a group of people in the same industry or profession? Risk Retention Groups What type of insurers are unincorporated groups of individual members that provide insurance for other members through indemnity contracts? (Members providing insurance for other members) Reciprocal Insurers What type of insurers make arrangements with other insurance companies to transfer a portion of their risk to the reinsurer ? Reinsurer (the reinsurer is the company taking the risk, the ceding company is the company giving the risk.) What type of insurer is established and owned by the parent company to insure the parent company's loss exposure? Captive insurer What type of insurer sells industrial insurance? Home Service Insurer What types of insurance are Social Security (OASDI), Medicare, Medicaid, SGLI/VGLI, and Tri-Care? Government Insurance How is insurance sold? Through distribution systems. What is the system in which career agents are hired to work at a specific location to sell insurance? Career Agency System What is the system in which agents work for an independent agency selling policies from several insurance companies? Personal Producing General Agency System What is the system in which independent agents represent a number of insurance companies under separate contractual agreements? Independent Agency System (American Agency System) What is the system in which branch offices are established in several locations instead of a general agent? Managerial System What is the method of selling policies through advertisements? Mass Marketing What is the organization composed of insurance comissioners from all 50 states? The National Association of Insurance Commissioners (NAIC) Who is responsible for assisting in the administration of in state insurance laws and regulations, encouraging uniformity in state insurance laws and regulations, protecting the interest of policyowners and consumers, and preserving state regulation of the insurance business? The NAIC What code specifies certain words and phrases that are NOT to be used in advertising because they are misleading? Advertising Code What Act gives chief financial officers the power to investigate insurance companies and producers and impose penalties? Unfair Trade Practices Act Who created the Code of Ethics detailing the expectations of agents in their duties towards clients? NAIFA (National Association of Insurance and Financial Advisors) and NAHU (National Association of Health Underwriters). What are some of the standards and ethics to sell insurance? Selling to needs, suitability of recommended products, full and accurate disclosure, documentation, client services, buyer's guide, policy summary. What are funds that are set aside by an insurance company and designated for the payment of future claims? Reserves What is the term for an insurer's ability to make unpredictable payouts to policyowners? Liquidity What protects insureds in the event of an insurer insolvency, or inability to pay claims up to a certain limit? Guaranty Associations What agencies rate or "grade" the financial strength and stability of insurers? Independent Rating Services/Agencies What is a contractual arrangement that transfers exposure from one insurer to another insurer? Reinsurance What is the method of determining the financial value of a person's life based on the value of their