XCEL SOLUTIONS CHAPTER 1 EXAM
QUESTIONS AND ANSWERS
A nonprofit incorporated society that does not have capital stock and operates for the
sole benefit of its members is known as: - ANSWER-a fraternal benefit society
What's the difference between a captive/career agent vs a independent agent? -
ANSWER-a captive/career agent works for one company and sells only their
insurance policies, an independent agent works for himself and sells insurance
products of many companies
John obtains a customers information reports under false pretenses. What is the
maximum penalty John faces? - ANSWER-a fee of 5,000 and 1 year imprisonment
What is speculative risk? - ANSWER-involve the chance of both loss and gain. not
insurable.
What is pure risk? - ANSWER-Involve only the chance of loss, never a possibility of
gain or profit. Are insurable.
What are the 4 basic options to treat risk? - ANSWER-Reduce, Retain, Avoid,
Transfer
Commercial insurers - ANSWER-Private insurance companies. Sell insurance for
profit
Multi-line insurer - ANSWER-an insurance company selling more than one line of
insurance
Stock companies - ANSWER-incorporated under state laws, making a profit for its
stockholders (shareholders), stock insurers are nonparticipating insurers
Mutual companies - ANSWER-participating insurers, dividends are paid to the
policyholders. Dividends are not subject to taxation
Mix insurer - ANSWER-participating and nonparticipating
How are strong assessment mutual companies classified? - ANSWER-by the way
they charge premium
Pure Assessment Mutual Company - ANSWER-Operates on the basis of loss-
sharing by group members. No premium is payable in advance. Instead, each
member is assessed an individual portion of losses that actually occur.
Advanced Premium assessment mutual - ANSWER-charges a premium at the
beginning of the policy period. If the original premiums exceed the operating
expenses and losses, the surplus is returned to the policyholders as dividends.
QUESTIONS AND ANSWERS
A nonprofit incorporated society that does not have capital stock and operates for the
sole benefit of its members is known as: - ANSWER-a fraternal benefit society
What's the difference between a captive/career agent vs a independent agent? -
ANSWER-a captive/career agent works for one company and sells only their
insurance policies, an independent agent works for himself and sells insurance
products of many companies
John obtains a customers information reports under false pretenses. What is the
maximum penalty John faces? - ANSWER-a fee of 5,000 and 1 year imprisonment
What is speculative risk? - ANSWER-involve the chance of both loss and gain. not
insurable.
What is pure risk? - ANSWER-Involve only the chance of loss, never a possibility of
gain or profit. Are insurable.
What are the 4 basic options to treat risk? - ANSWER-Reduce, Retain, Avoid,
Transfer
Commercial insurers - ANSWER-Private insurance companies. Sell insurance for
profit
Multi-line insurer - ANSWER-an insurance company selling more than one line of
insurance
Stock companies - ANSWER-incorporated under state laws, making a profit for its
stockholders (shareholders), stock insurers are nonparticipating insurers
Mutual companies - ANSWER-participating insurers, dividends are paid to the
policyholders. Dividends are not subject to taxation
Mix insurer - ANSWER-participating and nonparticipating
How are strong assessment mutual companies classified? - ANSWER-by the way
they charge premium
Pure Assessment Mutual Company - ANSWER-Operates on the basis of loss-
sharing by group members. No premium is payable in advance. Instead, each
member is assessed an individual portion of losses that actually occur.
Advanced Premium assessment mutual - ANSWER-charges a premium at the
beginning of the policy period. If the original premiums exceed the operating
expenses and losses, the surplus is returned to the policyholders as dividends.
