XCEL Chapters 1-4 Solutions

XCEL Chapters 1-4 Solutions a nonparticipating company is sometimes called a - stock insurer Fraternal Benefit Society has each other the following characteristics except - exist for profit The Fair Credit and Reporting Act's main purpose is to - protect consumers with guidelines regarding credit reporting and distribution A life insurance company has transferred some of its risk to another insurer. The insurer assuming the risk is called the - reinsurer What kind of life insurance policy issued by a mutual insurer provides a return of divisible surplus? - participating life insurance policy What is considered to be the primary reason for buying life insurance? - provide death benefits An insurer's ability to make unpredictable payouts to policyowners is called - liquidity The Do Not Call Registry offers exemptions for calls placed from all of the following except - insurance sales calls Why are dividends from a mutual insurer not subject to taxation? - Because dividends are considered to be a return of premium An insurer's claim settlement practices are regulated by the - State Insurance Departments All of the following are examples of pure risk EXCEPT - losing money at a casino Which of the following is considered to be an event or condition that increases the probability of an insured's loss? - Hazard An individual who removes the risk of losing money in the stock market by never purchasing stocks is said to be engaging in - Risk avoidance The cause of a loss is referred to as - peril Insurance represents the process of risk - transference What is known as the immediate specific event causing loss and giving rise to risk - Peril An example of risk sharing would be - Doctors pooling their money to cover malpractice exposures Insurance companies determine risk exposure by which of the following? - Law of large numbers and risk pooling How do insurers predict the increase of individual risks? - law of large numbers People with higher loss exposure have the tendency to purchase insurance more often than those at average risk. This is called - Adverse selection Who is responsible for assembling the policy forms for insureds? - Insurance carriers The authority granted to a licensed producer is provided via the - Law of Agency What makes an insurance policy a unilateral contract? - Only the insurer is legally bound All of the following are elements of an insurance policy EXCEPT - claim forms Insurable interest does NOT occur in which of the following relationships? - business owner and business client A professional liability for which producers can be sued for mistakes of putting a policy into effect is called - Errors and omissions