Xcel Solutions Final Exam;
California Life, Accident, and
Health Insurance. | Questions and
correct answers | Latest version
2024/2025
Which of the following requires insurers to disclose when an applicant's consumer or credit history is
being investigated: - ANSWER -1970 - Fair Credit Reporting Act
What type of reinsurance contract involves two companies automatically sharing their risk exposure?
- ANSWER -Treaty
What is the name of the law that requires insurers to disclose information gathering practices and
where the information was obtained? - ANSWER -Fair Credit Reporting Act
Who elects the governing body of a mutual insurance company? - ANSWER -policyholders
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: - ANSWER -reserves
A group-owned insurance company that is formed to assume and spread the liability risks of its
members is known as a: - ANSWER -risk retention group
What year was the McCarran-Ferguson Act enacted? - ANSWER -1945
Which of these describe a participating life insurance policy? - ANSWER -Policyowners are entitled to
receive dividends
At what point must a life insurance applicant be informed of their rights that fall under the Fair Credit
Reporting Act? - ANSWER -Upon completion of the application
A nonprofit incorporated society that does not have capital stock and operates for the sole benefit of
its members is known as: - ANSWER -a fraternal benefit society
An insurance applicant MUST be informed of an investigation regarding his/her reputation and
character according to the: - ANSWER -Fair Credit Reporting Act
Which of the following consists of an offer, acceptance, and consideration? - ANSWER -Contract
Which of these is NOT a type of agent authority? - ANSWER -Principal
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? - ANSWER -F
, All of the following are considered to be typical characteristics describing the nature of an insurance
contract, EXCEPT: - ANSWER -Bilateral
The part of a life insurance policy guaranteed to be true is called a(n): - ANSWER -warranty
A life insurance arrangement which circumvents insurable interest statutes is called: - ANSWER -
Investor-Originated Life Insurance
Taking receipt of premiums and holding them for the insurance company is an example of: - ANSWER
-Fiduciary responsibility
Which of these arrangements allows one to bypass insurable interest laws? - ANSWER -Investor-
Originated Life Insurance
Insurance contracts are known as ____ because certain future conditions or acts must occur before
any claims can be paid. - ANSWER -conditional
When third-party ownership is involved, applicants who also happen to be the stated primary
beneficiary are required to have: - ANSWER -insurable interest in the proposed insured
Statements made on an insurance application that are believed to be true to the best of the
applicant's knowledge are called: - ANSWER -representations
If a contract of adhesion contains complicated language, to whom would the interpretation be in
favor of? - ANSWER -Insured
At what point does an informal contract become binding? - ANSWER -When one party makes an offer
and the other party accepts that offer
When must insurable interest exist for a life insurance contract to be valid? - ANSWER -Inception of
the contract
A life insurance policy would be considered a wagering contract WITHOUT: - ANSWER -insurable
interest
what is a warranty? - ANSWER -is a statement guaranteed to be true
Which of these is NOT considered to be an element of an insurance contract? - ANSWER -negotiating
Who makes the legally enforceable promises in a unilateral insurance policy? - ANSWER -Insurance
company
In an insurance contract, the insurer is the only party who makes a legally enforceable promise. What
kind of contract is this? - ANSWER -Unilateral
In regards to representations or warranties, which of these statements is TRUE? - ANSWER -If
material to the risk, false representations will void a policy
A policy of adhesion can only be modified by whom? - ANSWER -The insurance company
Insurance policies are considered aleatory contracts because - ANSWER -performance is conditioned
upon a future occurrence
Insurance policies are offered on a "take it or leave it" basis, which make them: - ANSWER -Contracts
of Adhesion
California Life, Accident, and
Health Insurance. | Questions and
correct answers | Latest version
2024/2025
Which of the following requires insurers to disclose when an applicant's consumer or credit history is
being investigated: - ANSWER -1970 - Fair Credit Reporting Act
What type of reinsurance contract involves two companies automatically sharing their risk exposure?
- ANSWER -Treaty
What is the name of the law that requires insurers to disclose information gathering practices and
where the information was obtained? - ANSWER -Fair Credit Reporting Act
Who elects the governing body of a mutual insurance company? - ANSWER -policyholders
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: - ANSWER -reserves
A group-owned insurance company that is formed to assume and spread the liability risks of its
members is known as a: - ANSWER -risk retention group
What year was the McCarran-Ferguson Act enacted? - ANSWER -1945
Which of these describe a participating life insurance policy? - ANSWER -Policyowners are entitled to
receive dividends
At what point must a life insurance applicant be informed of their rights that fall under the Fair Credit
Reporting Act? - ANSWER -Upon completion of the application
A nonprofit incorporated society that does not have capital stock and operates for the sole benefit of
its members is known as: - ANSWER -a fraternal benefit society
An insurance applicant MUST be informed of an investigation regarding his/her reputation and
character according to the: - ANSWER -Fair Credit Reporting Act
Which of the following consists of an offer, acceptance, and consideration? - ANSWER -Contract
Which of these is NOT a type of agent authority? - ANSWER -Principal
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? - ANSWER -F
, All of the following are considered to be typical characteristics describing the nature of an insurance
contract, EXCEPT: - ANSWER -Bilateral
The part of a life insurance policy guaranteed to be true is called a(n): - ANSWER -warranty
A life insurance arrangement which circumvents insurable interest statutes is called: - ANSWER -
Investor-Originated Life Insurance
Taking receipt of premiums and holding them for the insurance company is an example of: - ANSWER
-Fiduciary responsibility
Which of these arrangements allows one to bypass insurable interest laws? - ANSWER -Investor-
Originated Life Insurance
Insurance contracts are known as ____ because certain future conditions or acts must occur before
any claims can be paid. - ANSWER -conditional
When third-party ownership is involved, applicants who also happen to be the stated primary
beneficiary are required to have: - ANSWER -insurable interest in the proposed insured
Statements made on an insurance application that are believed to be true to the best of the
applicant's knowledge are called: - ANSWER -representations
If a contract of adhesion contains complicated language, to whom would the interpretation be in
favor of? - ANSWER -Insured
At what point does an informal contract become binding? - ANSWER -When one party makes an offer
and the other party accepts that offer
When must insurable interest exist for a life insurance contract to be valid? - ANSWER -Inception of
the contract
A life insurance policy would be considered a wagering contract WITHOUT: - ANSWER -insurable
interest
what is a warranty? - ANSWER -is a statement guaranteed to be true
Which of these is NOT considered to be an element of an insurance contract? - ANSWER -negotiating
Who makes the legally enforceable promises in a unilateral insurance policy? - ANSWER -Insurance
company
In an insurance contract, the insurer is the only party who makes a legally enforceable promise. What
kind of contract is this? - ANSWER -Unilateral
In regards to representations or warranties, which of these statements is TRUE? - ANSWER -If
material to the risk, false representations will void a policy
A policy of adhesion can only be modified by whom? - ANSWER -The insurance company
Insurance policies are considered aleatory contracts because - ANSWER -performance is conditioned
upon a future occurrence
Insurance policies are offered on a "take it or leave it" basis, which make them: - ANSWER -Contracts
of Adhesion
