North Carolina XCEL Testing Life & Health
Insurance Exam Study Questions with Detailed
Verified Answers
Which of the following requires insurers to disclose when an applicant's consumer or
credit history is being investigated: Ans: 1970 - Fair Credit Reporting Act
What type of reinsurance contract involves two companies automatically sharing their
risk exposure? Ans: Treaty
What is the name of the law that requires insurers to disclose information gathering
practices and where the information was obtained? Ans: Fair Credit Reporting Act
Who elects the governing body of a mutual insurance company? Ans: 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: Ans: reserves
A group-owned insurance company that is formed to assume and spread the liability
risks of its members is known as a: Ans: risk retention group
What year was the McCarran-Ferguson Act enacted? Ans: 1945
Which of these describe a participating life insurance policy? Ans: 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? Ans: 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: Ans: a fraternal benefit society
, An insurance applicant MUST be informed of an investigation regarding his/her
reputation and character according to the: Ans: Fair Credit Reporting Act
Which of the following consists of an offer, acceptance, and consideration? Ans:
Contract
Which of these is NOT a type of agent authority? Ans: 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?
Ans: F
All of the following are considered to be typical characteristics describing the nature of
an insurance contract, EXCEPT: Ans: Bilateral
The part of a life insurance policy guaranteed to be true is called a(n): Ans: warranty
A life insurance arrangement which circumvents insurable interest statutes is called:
Ans: Investor-Originated Life Insurance
Taking receipt of premiums and holding them for the insurance company is an example
of: Ans: Fiduciary responsibility
Which of these arrangements allows one to bypass insurable interest laws? Ans:
Investor-Originated Life Insurance
Insurance contracts are known as ____ because certain future conditions or acts must
occur before any claims can be paid. Ans: conditional
© Get it right 2025 Getaway - Stuvia US All rights reserved
Insurance Exam Study Questions with Detailed
Verified Answers
Which of the following requires insurers to disclose when an applicant's consumer or
credit history is being investigated: Ans: 1970 - Fair Credit Reporting Act
What type of reinsurance contract involves two companies automatically sharing their
risk exposure? Ans: Treaty
What is the name of the law that requires insurers to disclose information gathering
practices and where the information was obtained? Ans: Fair Credit Reporting Act
Who elects the governing body of a mutual insurance company? Ans: 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: Ans: reserves
A group-owned insurance company that is formed to assume and spread the liability
risks of its members is known as a: Ans: risk retention group
What year was the McCarran-Ferguson Act enacted? Ans: 1945
Which of these describe a participating life insurance policy? Ans: 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? Ans: 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: Ans: a fraternal benefit society
, An insurance applicant MUST be informed of an investigation regarding his/her
reputation and character according to the: Ans: Fair Credit Reporting Act
Which of the following consists of an offer, acceptance, and consideration? Ans:
Contract
Which of these is NOT a type of agent authority? Ans: 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?
Ans: F
All of the following are considered to be typical characteristics describing the nature of
an insurance contract, EXCEPT: Ans: Bilateral
The part of a life insurance policy guaranteed to be true is called a(n): Ans: warranty
A life insurance arrangement which circumvents insurable interest statutes is called:
Ans: Investor-Originated Life Insurance
Taking receipt of premiums and holding them for the insurance company is an example
of: Ans: Fiduciary responsibility
Which of these arrangements allows one to bypass insurable interest laws? Ans:
Investor-Originated Life Insurance
Insurance contracts are known as ____ because certain future conditions or acts must
occur before any claims can be paid. Ans: conditional
© Get it right 2025 Getaway - Stuvia US All rights reserved
