North Carolina XCEL Testing Life & Health
Insurance UPDATED Exam Questions and
CORRECT Answers
Which of the following requires insurers to disclose when an applicant's consumer or credit
history is being investigated: - CORRECT ANSWER - 1970 - Fair Credit Reporting Act
What type of reinsurance contract involves two companies automatically sharing their risk
exposure? - CORRECT ANSWER - Treaty
What is the name of the law that requires insurers to disclose information gathering practices and
where the information was obtained? - CORRECT ANSWER - Fair Credit Reporting Act
Who elects the governing body of a mutual insurance company? - CORRECT 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: - CORRECT ANSWER - reserves
A group-owned insurance company that is formed to assume and spread the liability risks of its
members is known as a: - CORRECT ANSWER - risk retention group
What year was the McCarran-Ferguson Act enacted? - CORRECT ANSWER - 1945
Which of these describe a participating life insurance policy? - CORRECT 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? - CORRECT 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: - CORRECT ANSWER - a fraternal benefit society
An insurance applicant MUST be informed of an investigation regarding his/her reputation and
character according to the: - CORRECT ANSWER - Fair Credit Reporting Act
Which of the following consists of an offer, acceptance, and consideration? - CORRECT
ANSWER - Contract
Which of these is NOT a type of agent authority? - CORRECT 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? - CORRECT ANSWER -F
All of the following are considered to be typical characteristics describing the nature of an
insurance contract, EXCEPT: - CORRECT ANSWER - Bilateral
The part of a life insurance policy guaranteed to be true is called a(n): - CORRECT
ANSWER - warranty
A life insurance arrangement which circumvents insurable interest statutes is called: -
CORRECT ANSWER - Investor-Originated Life Insurance
Taking receipt of premiums and holding them for the insurance company is an example of: -
CORRECT ANSWER - Fiduciary responsibility
Which of these arrangements allows one to bypass insurable interest laws? - CORRECT
ANSWER - Investor-Originated Life Insurance
Insurance UPDATED Exam Questions and
CORRECT Answers
Which of the following requires insurers to disclose when an applicant's consumer or credit
history is being investigated: - CORRECT ANSWER - 1970 - Fair Credit Reporting Act
What type of reinsurance contract involves two companies automatically sharing their risk
exposure? - CORRECT ANSWER - Treaty
What is the name of the law that requires insurers to disclose information gathering practices and
where the information was obtained? - CORRECT ANSWER - Fair Credit Reporting Act
Who elects the governing body of a mutual insurance company? - CORRECT 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: - CORRECT ANSWER - reserves
A group-owned insurance company that is formed to assume and spread the liability risks of its
members is known as a: - CORRECT ANSWER - risk retention group
What year was the McCarran-Ferguson Act enacted? - CORRECT ANSWER - 1945
Which of these describe a participating life insurance policy? - CORRECT 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? - CORRECT 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: - CORRECT ANSWER - a fraternal benefit society
An insurance applicant MUST be informed of an investigation regarding his/her reputation and
character according to the: - CORRECT ANSWER - Fair Credit Reporting Act
Which of the following consists of an offer, acceptance, and consideration? - CORRECT
ANSWER - Contract
Which of these is NOT a type of agent authority? - CORRECT 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? - CORRECT ANSWER -F
All of the following are considered to be typical characteristics describing the nature of an
insurance contract, EXCEPT: - CORRECT ANSWER - Bilateral
The part of a life insurance policy guaranteed to be true is called a(n): - CORRECT
ANSWER - warranty
A life insurance arrangement which circumvents insurable interest statutes is called: -
CORRECT ANSWER - Investor-Originated Life Insurance
Taking receipt of premiums and holding them for the insurance company is an example of: -
CORRECT ANSWER - Fiduciary responsibility
Which of these arrangements allows one to bypass insurable interest laws? - CORRECT
ANSWER - Investor-Originated Life Insurance
