XCEL Solutions Life Insurance Final Exam Questions and Verified Answers Graded A+
2026/27
What is the primary purpose of a rating service company such as A.M Best? - Determine
financial strength of an insurance company
What is considered to be the primary reason for buying life insurance? - Provide death
benefits
Which of the following is NOT considered advertising? - A rating from a rating service
company, such as A.M. Best
A plan in which an employer pays insurance benefits from a fund derived from the employer's
current revenues is called - A self-funded plan
What kind of life insurance policy issued by a mutual insurer provides a return of divisible
surplus? - Participating life insurance policy
Why are dividends from a mutual insurer not subject to taxation? - Because dividends are
considered to be a return of premium
A type of insurer that is owned by its policyowners is called - Mutual
A nonparticipating company is sometimes called a(n) - stock insurer
,The Fair Credit and Reporting Act's main purpose is to - protect consumers with
guidelines regarding credit reporting and distribution
The Do Not Call Registry offers exemptions for calls placed from all of the following EXCEPT -
Insurance sales calls
An insurer's ability to make unpredictable payouts to policyowners is called - Liquidity
A nonparticipating policy will - not pay dividends
Ken is a producer who has obtained Consumer Information Reports under false pretenses. Under
the Fair Credit Reporting Act, what is the maximum penalty that may be imposed on Ken? -
$5,000
A life insurance company has transferred some of its risk to another insurer. The insurer
assuming the risk is called the - reinsurer
Karen is a producer who has obtained personal information about a client without having a
legitimate reason to do so. Under the McCarran-Ferguson Act, what is the minimum penalty for
this? - $10,000
Which of these are considered to be events or conditions that increase the chances of an insured's
loss? - Hazards
,People with higher loss exposure have the tendency to purchase insurance more often than those
at average risk. This is called - adverse selection
An example of risk sharing would be - Doctors pooling their money to cover malpractice
exposures
Which of these techniques will remove the risk of losing money in the stock market by never
purchasing stocks? - Risk Avoidance
How do insurers predict the increase of individual risks? - The law of large numbers
Insurance companies determine risk exposure by which of the following? - Law of large
numbers and risk pooling
Because an insurance contract has been prepared by an insurance company with no negotiation,
it is considered - A contract of adhesion
A producer's powers stated in the agency contract are: - Express
What makes an insurance policy a unilateral contract? - Only the insurer is legally bound
Intentional withholding of material facts that would affect an insurance policy's validity is called
a(n) - Concealment
, Legal purpose is a term used in contract law meaning - there must be legal reasons for
entering into the contract
What are an applicant's statements concerning occupation, hobbies, and personal health history
regarded as? - representation
Which type of clause describes the following statement: "We have issued the policy in
consideration of the representations in your applications and payment of the first-term premium".
- consideration clause
When the principal gives the agent authority in writing, it's referred to as - Express
authority
The term which describes the fact that both parties of a contract may NOT receive the same
value is referred to as - Aleatory
Bob and Tom start a business. Since each partner contributes an important element to the success
of the business, they decide to take life insurance policies out on each other, and name each other
as beneficiaries. Eventually, they retire and dissolve the business. Bob dies 12 months later. The
policies continue in force with no change. Both partners are still married at the time of Bob's
death. In this situation, who will receive Bob's policy proceeds? - Tom
What is implied authority defined as? - Authority that is not specifically given to an agent
in the agency contract, but that an agent can reasonably assume to carry out his/her duties
2026/27
What is the primary purpose of a rating service company such as A.M Best? - Determine
financial strength of an insurance company
What is considered to be the primary reason for buying life insurance? - Provide death
benefits
Which of the following is NOT considered advertising? - A rating from a rating service
company, such as A.M. Best
A plan in which an employer pays insurance benefits from a fund derived from the employer's
current revenues is called - A self-funded plan
What kind of life insurance policy issued by a mutual insurer provides a return of divisible
surplus? - Participating life insurance policy
Why are dividends from a mutual insurer not subject to taxation? - Because dividends are
considered to be a return of premium
A type of insurer that is owned by its policyowners is called - Mutual
A nonparticipating company is sometimes called a(n) - stock insurer
,The Fair Credit and Reporting Act's main purpose is to - protect consumers with
guidelines regarding credit reporting and distribution
The Do Not Call Registry offers exemptions for calls placed from all of the following EXCEPT -
Insurance sales calls
An insurer's ability to make unpredictable payouts to policyowners is called - Liquidity
A nonparticipating policy will - not pay dividends
Ken is a producer who has obtained Consumer Information Reports under false pretenses. Under
the Fair Credit Reporting Act, what is the maximum penalty that may be imposed on Ken? -
$5,000
A life insurance company has transferred some of its risk to another insurer. The insurer
assuming the risk is called the - reinsurer
Karen is a producer who has obtained personal information about a client without having a
legitimate reason to do so. Under the McCarran-Ferguson Act, what is the minimum penalty for
this? - $10,000
Which of these are considered to be events or conditions that increase the chances of an insured's
loss? - Hazards
,People with higher loss exposure have the tendency to purchase insurance more often than those
at average risk. This is called - adverse selection
An example of risk sharing would be - Doctors pooling their money to cover malpractice
exposures
Which of these techniques will remove the risk of losing money in the stock market by never
purchasing stocks? - Risk Avoidance
How do insurers predict the increase of individual risks? - The law of large numbers
Insurance companies determine risk exposure by which of the following? - Law of large
numbers and risk pooling
Because an insurance contract has been prepared by an insurance company with no negotiation,
it is considered - A contract of adhesion
A producer's powers stated in the agency contract are: - Express
What makes an insurance policy a unilateral contract? - Only the insurer is legally bound
Intentional withholding of material facts that would affect an insurance policy's validity is called
a(n) - Concealment
, Legal purpose is a term used in contract law meaning - there must be legal reasons for
entering into the contract
What are an applicant's statements concerning occupation, hobbies, and personal health history
regarded as? - representation
Which type of clause describes the following statement: "We have issued the policy in
consideration of the representations in your applications and payment of the first-term premium".
- consideration clause
When the principal gives the agent authority in writing, it's referred to as - Express
authority
The term which describes the fact that both parties of a contract may NOT receive the same
value is referred to as - Aleatory
Bob and Tom start a business. Since each partner contributes an important element to the success
of the business, they decide to take life insurance policies out on each other, and name each other
as beneficiaries. Eventually, they retire and dissolve the business. Bob dies 12 months later. The
policies continue in force with no change. Both partners are still married at the time of Bob's
death. In this situation, who will receive Bob's policy proceeds? - Tom
What is implied authority defined as? - Authority that is not specifically given to an agent
in the agency contract, but that an agent can reasonably assume to carry out his/her duties
