North Carolina XCEL Testing
North Carolina XCEL Testing Life & Health
Insurance Exam Study Questions with
Answers 2025
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
North Carolina XCEL Testing
, North Carolina XCEL Testing
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 contracts are known as ____ because certain future conditions or acts must
occur before any claims can be paid. -Correct Answer ✔conditional
When third-party ownership is involved, applicants who also happen to be the stated
primary beneficiary are required to have: -Correct 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: -Correct Answer ✔representations
If a contract of adhesion contains complicated language, to whom would the
interpretation be in favor of? -Correct Answer ✔Insured
At what point does an informal contract become binding? -Correct 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? -Correct
Answer ✔Inception of the contract
A life insurance policy would be considered a wagering contract WITHOUT: -Correct
Answer ✔insurable interest
North Carolina XCEL Testing
North Carolina XCEL Testing Life & Health
Insurance Exam Study Questions with
Answers 2025
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
North Carolina XCEL Testing
, North Carolina XCEL Testing
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 contracts are known as ____ because certain future conditions or acts must
occur before any claims can be paid. -Correct Answer ✔conditional
When third-party ownership is involved, applicants who also happen to be the stated
primary beneficiary are required to have: -Correct 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: -Correct Answer ✔representations
If a contract of adhesion contains complicated language, to whom would the
interpretation be in favor of? -Correct Answer ✔Insured
At what point does an informal contract become binding? -Correct 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? -Correct
Answer ✔Inception of the contract
A life insurance policy would be considered a wagering contract WITHOUT: -Correct
Answer ✔insurable interest
North Carolina XCEL Testing
