XCEL LIFE, HEALTH, & ACCIDENT
INSURANCE CH1 EXAM QUESTIONS
AND ANSWERS
Annuities - ANSWER-A contract which protects against the risk or living longer than
expected. Annuities provide a guaranteed life income to protect against the risk of
depleting retirement funds.
Private Insurance - ANSWER-Insurance which offers coverage to people through the
individual market.
Funded through premiums to sell insurance
Commercial Insurer - ANSWER-selling insurance for a profit.
Two main groups:
**stock insurers*
**mutual insurers (Multi-line insurers)*
Independent Rating Services - ANSWER-**A. M. Best*
**Moody's*
**Standard and Poor's*
**Fitch Ratings*
Each rating service has its own rating system, but most use an A to F letter grading
scheme.
Role of Insurance - ANSWER-To transfer the risk of financial loss from an individual
or business to an insurance company
Life Insurance - ANSWER-It is designed to protect against the risk of premature
death.
Health Insurance - ANSWER-It is designed to protect against the severity of financial
loss due to illness, disease, short- or long-term disability, wages lost while ill or
disabled, and medical expenses.
Stock Companies - Nonparticipating - ANSWER-organized and incorporated under
state laws for purpose of making a profit for its stock holders and is not ran by
policyholders (no $).
Mutual Companies - Participating - ANSWER-organized and incorporated under
state laws and policyholders receive dividends ($), but they have no stockholders.
Anyone purchasing insurance is both a customer and an owner & has the right to
vote for members of the board of directors.
INSURANCE CH1 EXAM QUESTIONS
AND ANSWERS
Annuities - ANSWER-A contract which protects against the risk or living longer than
expected. Annuities provide a guaranteed life income to protect against the risk of
depleting retirement funds.
Private Insurance - ANSWER-Insurance which offers coverage to people through the
individual market.
Funded through premiums to sell insurance
Commercial Insurer - ANSWER-selling insurance for a profit.
Two main groups:
**stock insurers*
**mutual insurers (Multi-line insurers)*
Independent Rating Services - ANSWER-**A. M. Best*
**Moody's*
**Standard and Poor's*
**Fitch Ratings*
Each rating service has its own rating system, but most use an A to F letter grading
scheme.
Role of Insurance - ANSWER-To transfer the risk of financial loss from an individual
or business to an insurance company
Life Insurance - ANSWER-It is designed to protect against the risk of premature
death.
Health Insurance - ANSWER-It is designed to protect against the severity of financial
loss due to illness, disease, short- or long-term disability, wages lost while ill or
disabled, and medical expenses.
Stock Companies - Nonparticipating - ANSWER-organized and incorporated under
state laws for purpose of making a profit for its stock holders and is not ran by
policyholders (no $).
Mutual Companies - Participating - ANSWER-organized and incorporated under
state laws and policyholders receive dividends ($), but they have no stockholders.
Anyone purchasing insurance is both a customer and an owner & has the right to
vote for members of the board of directors.
