Xcel Testing Solutions | Questions
and correct answers | Latest
version 2024/2025
What is a participating life insurance policy/ - ANSWER -Contract that allows the policyowner to
receive a share of surplus in the form of policy dividends
An insurer owned by its policyholders is called a - ANSWER -Mutual insurer
An insurer enters into a contract with a third party to insure itself against losses from insurance
policies it issues. What is this agreement called? - ANSWER -reinsurance
which type of insurance is it where the insurer transfers loss exposures from policies written for its
insureds - ANSWER -reinsurance
which is not a characteristic of reinsurance? - ANSWER -increases the unearned premium reserve
a participating company is also referred to as which type of insurer? - ANSWER -mutual insurer
when a mutual insurer becomes a stock company, the process is called... - ANSWER -Demutualization
which is a contract that involves one party which indemnifies another when a loss arises from an
unknown event? - ANSWER -insurance policy
one important function of an insurance company is to identify and sell to potential customers. Best
description...? - ANSWER -marketing
john owns an insurance policy that gives him the right to share in the insurer's surplus. What kind of
policy is this? - ANSWER -participating
a hazard can be best described as - ANSWER -a condition that may increase the likelihood of a loss
occurring
Which of the following would NOT be accomplished with the purchase of an insurance policy? -
ANSWER -Risk is eliminated
What refers to the condition that may increase the chance of a loss? - ANSWER -Hazard
which best describes the statement "The more time an event is repeated, the more predictable the
outcome becomes". - ANSWER -The law of large numbers
WHich describes the increase in the probability of a loss due to an insured's dishonest tendencies? -
ANSWER -MORAL hazard
What is NOT an element of an insurable risk? - ANSWER -loss must be catastrophic
which statement correctly describes risk? - ANSWER -pure risk is the only insurable risk
Moral hazard is described as the - ANSWER -increased chance of a loss because of an insured's
dishonest tendencies
, Restoring an insured to the same condition as before a loss is known as - ANSWER -principle of
indemnity
what situation would have the possibility of either a loss or gain? - ANSWER -speculative risk
What is considered NOT a definition of the term 'Loss'? - ANSWER -probability that an event will
occur
what kind of risk is gambling? - ANSWER -speculative risk
An insurer having a large number of similar exposure units is considered important because -
ANSWER -the greater the number insured, the more accurately the insurer can predict losses and set
appropriate premiums.
what is any situation that presents the possibility of a loss? - ANSWER -Loss exposure
which is considered to be any situation that has the potential for loss? - ANSWER -loss exposure
Reasonably necessary acts that an agent must perform for carrying out his/her expressly authorized
duties are covered by an agent's - ANSWER -implied authority
If a material warranty violation on the part of the insured is found, what recourse does an insurer
have? - ANSWER -rescind the policy
which statement is CORRECT when describing a contract of adhesion? - ANSWER -Contract may be
accepted or rejected by insured
Express power given to an agent in an agency agreement is - ANSWER -the authority to represent the
insurer
which principle is accurately described with the statement "Insureds are entitled to recover an
amount NOT greater than the amount of their loss" - ANSWER -Indemnity
Which is NOT a requirement of a contract? - ANSWER -equal consideration is required between the
involved parties
a unilateral contract is one in which - ANSWER -only one party (the insurer) makes any kind of legally
enforceable promise
which statement about aleatory contracts is NOT true? - ANSWER -The insured and the insurer
contribute equally to the contract
which is NOT required in the content of a policy? - ANSWER -Probability of loss
what does the term 'indemnity' refer to? - ANSWER -make whole
the importance of representation is demonstrated in which rule? - ANSWER -materiality of
concealment
when handling premiums for an insured, an agent is acting in which capacity? - ANSWER -fiduciary
(involving trust between both parties)
a contract requires - ANSWER -an offer and acceptance of the contract terms
which of the following statements correctly describes a contract of indemnity? - ANSWER -one party
is restored to the same financial position the party was in before the loss occurred.
and correct answers | Latest
version 2024/2025
What is a participating life insurance policy/ - ANSWER -Contract that allows the policyowner to
receive a share of surplus in the form of policy dividends
An insurer owned by its policyholders is called a - ANSWER -Mutual insurer
An insurer enters into a contract with a third party to insure itself against losses from insurance
policies it issues. What is this agreement called? - ANSWER -reinsurance
which type of insurance is it where the insurer transfers loss exposures from policies written for its
insureds - ANSWER -reinsurance
which is not a characteristic of reinsurance? - ANSWER -increases the unearned premium reserve
a participating company is also referred to as which type of insurer? - ANSWER -mutual insurer
when a mutual insurer becomes a stock company, the process is called... - ANSWER -Demutualization
which is a contract that involves one party which indemnifies another when a loss arises from an
unknown event? - ANSWER -insurance policy
one important function of an insurance company is to identify and sell to potential customers. Best
description...? - ANSWER -marketing
john owns an insurance policy that gives him the right to share in the insurer's surplus. What kind of
policy is this? - ANSWER -participating
a hazard can be best described as - ANSWER -a condition that may increase the likelihood of a loss
occurring
Which of the following would NOT be accomplished with the purchase of an insurance policy? -
ANSWER -Risk is eliminated
What refers to the condition that may increase the chance of a loss? - ANSWER -Hazard
which best describes the statement "The more time an event is repeated, the more predictable the
outcome becomes". - ANSWER -The law of large numbers
WHich describes the increase in the probability of a loss due to an insured's dishonest tendencies? -
ANSWER -MORAL hazard
What is NOT an element of an insurable risk? - ANSWER -loss must be catastrophic
which statement correctly describes risk? - ANSWER -pure risk is the only insurable risk
Moral hazard is described as the - ANSWER -increased chance of a loss because of an insured's
dishonest tendencies
, Restoring an insured to the same condition as before a loss is known as - ANSWER -principle of
indemnity
what situation would have the possibility of either a loss or gain? - ANSWER -speculative risk
What is considered NOT a definition of the term 'Loss'? - ANSWER -probability that an event will
occur
what kind of risk is gambling? - ANSWER -speculative risk
An insurer having a large number of similar exposure units is considered important because -
ANSWER -the greater the number insured, the more accurately the insurer can predict losses and set
appropriate premiums.
what is any situation that presents the possibility of a loss? - ANSWER -Loss exposure
which is considered to be any situation that has the potential for loss? - ANSWER -loss exposure
Reasonably necessary acts that an agent must perform for carrying out his/her expressly authorized
duties are covered by an agent's - ANSWER -implied authority
If a material warranty violation on the part of the insured is found, what recourse does an insurer
have? - ANSWER -rescind the policy
which statement is CORRECT when describing a contract of adhesion? - ANSWER -Contract may be
accepted or rejected by insured
Express power given to an agent in an agency agreement is - ANSWER -the authority to represent the
insurer
which principle is accurately described with the statement "Insureds are entitled to recover an
amount NOT greater than the amount of their loss" - ANSWER -Indemnity
Which is NOT a requirement of a contract? - ANSWER -equal consideration is required between the
involved parties
a unilateral contract is one in which - ANSWER -only one party (the insurer) makes any kind of legally
enforceable promise
which statement about aleatory contracts is NOT true? - ANSWER -The insured and the insurer
contribute equally to the contract
which is NOT required in the content of a policy? - ANSWER -Probability of loss
what does the term 'indemnity' refer to? - ANSWER -make whole
the importance of representation is demonstrated in which rule? - ANSWER -materiality of
concealment
when handling premiums for an insured, an agent is acting in which capacity? - ANSWER -fiduciary
(involving trust between both parties)
a contract requires - ANSWER -an offer and acceptance of the contract terms
which of the following statements correctly describes a contract of indemnity? - ANSWER -one party
is restored to the same financial position the party was in before the loss occurred.
