Xcel Life and Health Insurance Exam Questions and Answers Latest Update 2025 Already Passed
What is the primary purpose of a rating service company such as A.M Best? - Answers Determine
financial strength of an insurance company
What is considered to be the primary reason for buying life insurance? - Answers Provide death benefits
Which of the following is NOT considered advertising? - Answers 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 - Answers A self-funded plan
What kind of life insurance policy issued by a mutual insurer provides a return of divisible surplus? -
Answers Participating life insurance policy
Why are dividends from a mutual insurer not subject to taxation? - Answers Because dividends are
considered to be a return of premium
A type of insurer that is owned by its policyowners is called - Answers Mutual
A nonparticipating company is sometimes called a(n) - Answers stock insurer
The Fair Credit and Reporting Act's main purpose is to - Answers 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 - Answers
Insurance sales calls
An insurer's ability to make unpredictable payouts to policyowners is called - Answers Liquidity
A nonparticipating policy will - Answers 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? - Answers $5,000
A life insurance company has transferred some of its risk to another insurer. The insurer assuming the
risk is called the - Answers 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? - Answers
$10,000
Which of these are considered to be events or conditions that increase the chances of an insured's loss?
- Answers Hazards
People with higher loss exposure have the tendency to purchase insurance more often than those at
average risk. This is called - Answers adverse selection
, An example of risk sharing would be - Answers 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? - Answers Risk Avoidance
How do insurers predict the increase of individual risks? - Answers The law of large numbers
Insurance companies determine risk exposure by which of the following? - Answers Law of large
numbers and risk pooling
Because an insurance contract has been prepared by an insurance company with no negotiation, it is
considered - Answers A contract of adhesion
A producer's powers stated in the agency contract are: - Answers Express
What makes an insurance policy a unilateral contract? - Answers Only the insurer is legally bound
Intentional withholding of material facts that would affect an insurance policy's validity is called a(n) -
Answers Concealment
Legal purpose is a term used in contract law meaning - Answers 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? - Answers 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". - Answers
consideration clause
When the principal gives the agent authority in writing, it's referred to as - Answers Express authority
The term which describes the fact that both parties of a contract may NOT receive the same value is
referred to as - Answers 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? - Answers Tom
What is implied authority defined as? - Answers 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
In an insurance contract, the element that shows each party is giving something of value is called -
Answers Consideration
What is the primary purpose of a rating service company such as A.M Best? - Answers Determine
financial strength of an insurance company
What is considered to be the primary reason for buying life insurance? - Answers Provide death benefits
Which of the following is NOT considered advertising? - Answers 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 - Answers A self-funded plan
What kind of life insurance policy issued by a mutual insurer provides a return of divisible surplus? -
Answers Participating life insurance policy
Why are dividends from a mutual insurer not subject to taxation? - Answers Because dividends are
considered to be a return of premium
A type of insurer that is owned by its policyowners is called - Answers Mutual
A nonparticipating company is sometimes called a(n) - Answers stock insurer
The Fair Credit and Reporting Act's main purpose is to - Answers 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 - Answers
Insurance sales calls
An insurer's ability to make unpredictable payouts to policyowners is called - Answers Liquidity
A nonparticipating policy will - Answers 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? - Answers $5,000
A life insurance company has transferred some of its risk to another insurer. The insurer assuming the
risk is called the - Answers 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? - Answers
$10,000
Which of these are considered to be events or conditions that increase the chances of an insured's loss?
- Answers Hazards
People with higher loss exposure have the tendency to purchase insurance more often than those at
average risk. This is called - Answers adverse selection
, An example of risk sharing would be - Answers 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? - Answers Risk Avoidance
How do insurers predict the increase of individual risks? - Answers The law of large numbers
Insurance companies determine risk exposure by which of the following? - Answers Law of large
numbers and risk pooling
Because an insurance contract has been prepared by an insurance company with no negotiation, it is
considered - Answers A contract of adhesion
A producer's powers stated in the agency contract are: - Answers Express
What makes an insurance policy a unilateral contract? - Answers Only the insurer is legally bound
Intentional withholding of material facts that would affect an insurance policy's validity is called a(n) -
Answers Concealment
Legal purpose is a term used in contract law meaning - Answers 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? - Answers 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". - Answers
consideration clause
When the principal gives the agent authority in writing, it's referred to as - Answers Express authority
The term which describes the fact that both parties of a contract may NOT receive the same value is
referred to as - Answers 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? - Answers Tom
What is implied authority defined as? - Answers 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
In an insurance contract, the element that shows each party is giving something of value is called -
Answers Consideration
