NJ Health Insurance Exam (XCEL Solutions) Exam Questions with Correct Answers 100%
Verified by Experts| 2025/2026 Latest Update
Why are dividends from a mutual insurer not subject to taxation? because dividends are
considered to be a return of premium
ABC insurance company transfers part of their risk to XYZ insurance company. This situation is
called reinsurance
A nonparticipating company is sometimes called a(n) stock insurer
What is considered to be the primary reason for buying life insurance? provide death
benefits
A(n) _____ company is owned by its shareholders stock
A plan in which an employer pays insurance benefits from a fund derived from the employer's
current revenues is called a self-funded plan
What is the primary purpose of a rating service company such as A.M. Best? determine
financial strength of an insurance company
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? $10,000
A nonparticipating policy will not pay dividends
A life insurance company has transferred some of its risk to another insurer. The insurer
assuming the risk is called the reinsurer
,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? $5,000
A type of insurer that is owned by its policyowners is called mutual
Fraternal Benefit Society has each of the following characteristics EXCEPT
incorporated
without capital stock
exists for profit
exists for the benefit of its members exists for profit
The Do Not Call Registry offers exemptions for calls placed from all of the following EXCEPT
charities
political organizations
insurance sales calls
surveys insurance sales calls
What kind of life insurance policy issues by a mutual insurer provides a return of divisible
surplus? participating life insurance policy
An insurer's ability to make unpredictable payouts to policyowners is called liquidity
An insurer's claim settlement practices are regulated by the state insurance departments
Which of the following is NOT considered advertising?
a rating from a rating service company, such as A.M. Best
,an illustration
a sales presentation
direct mailing from an agency a rating from a rating service company, such as A.M. Best
The Fair Credit and Reporting Act's main purpose is to protect consumers with guidelines
regarding credit reporting and distribution
When the principle gives the agent authority in writing, it's referred to as express authority
What are an applicant's statements concerning occupation, hobbies, and personal health
history regarded as? representations
In an insurance contract, the element that shows each party is giving something of value is
called consideration
Which of the following is an example of the insured's consideration? a paid premium
Intentional withholding of material facts that would affect an insurance policy's validity is called
a(n) concealment
The term which describes the fact that both parties of a contract may NOT receive the same
value is referred to as aleatory
In an insurance contract, the insurer is the only party who makes a legally enforceable promise.
What kind of contract is this? unilateral
All of the following are elements of an insurance policy EXCEPT
definitions
other insurance
, claim forms
conditions claim forms
The authority granted to a licensed producer is provided via the law of agency
Insurable interest does not occur in which of the following relationships?
sister and brother
parent and children
business partners
business owner and business client business owner and business client
Which of the following best describes a conditional insurance contract? a contract that
requires certain conditions or acts by the insured individual
_____ is not an element of a valid contract countersignature
Ambiguities in an insurance policy are always resolved in favor of the insured
The power given to the individual producer that is not specifically addressed in his/her contract
is considered what type of authority? implied
In order for a contract to be valid, it must contain an offer and acceptance
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? Tom
Verified by Experts| 2025/2026 Latest Update
Why are dividends from a mutual insurer not subject to taxation? because dividends are
considered to be a return of premium
ABC insurance company transfers part of their risk to XYZ insurance company. This situation is
called reinsurance
A nonparticipating company is sometimes called a(n) stock insurer
What is considered to be the primary reason for buying life insurance? provide death
benefits
A(n) _____ company is owned by its shareholders stock
A plan in which an employer pays insurance benefits from a fund derived from the employer's
current revenues is called a self-funded plan
What is the primary purpose of a rating service company such as A.M. Best? determine
financial strength of an insurance company
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? $10,000
A nonparticipating policy will not pay dividends
A life insurance company has transferred some of its risk to another insurer. The insurer
assuming the risk is called the reinsurer
,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? $5,000
A type of insurer that is owned by its policyowners is called mutual
Fraternal Benefit Society has each of the following characteristics EXCEPT
incorporated
without capital stock
exists for profit
exists for the benefit of its members exists for profit
The Do Not Call Registry offers exemptions for calls placed from all of the following EXCEPT
charities
political organizations
insurance sales calls
surveys insurance sales calls
What kind of life insurance policy issues by a mutual insurer provides a return of divisible
surplus? participating life insurance policy
An insurer's ability to make unpredictable payouts to policyowners is called liquidity
An insurer's claim settlement practices are regulated by the state insurance departments
Which of the following is NOT considered advertising?
a rating from a rating service company, such as A.M. Best
,an illustration
a sales presentation
direct mailing from an agency a rating from a rating service company, such as A.M. Best
The Fair Credit and Reporting Act's main purpose is to protect consumers with guidelines
regarding credit reporting and distribution
When the principle gives the agent authority in writing, it's referred to as express authority
What are an applicant's statements concerning occupation, hobbies, and personal health
history regarded as? representations
In an insurance contract, the element that shows each party is giving something of value is
called consideration
Which of the following is an example of the insured's consideration? a paid premium
Intentional withholding of material facts that would affect an insurance policy's validity is called
a(n) concealment
The term which describes the fact that both parties of a contract may NOT receive the same
value is referred to as aleatory
In an insurance contract, the insurer is the only party who makes a legally enforceable promise.
What kind of contract is this? unilateral
All of the following are elements of an insurance policy EXCEPT
definitions
other insurance
, claim forms
conditions claim forms
The authority granted to a licensed producer is provided via the law of agency
Insurable interest does not occur in which of the following relationships?
sister and brother
parent and children
business partners
business owner and business client business owner and business client
Which of the following best describes a conditional insurance contract? a contract that
requires certain conditions or acts by the insured individual
_____ is not an element of a valid contract countersignature
Ambiguities in an insurance policy are always resolved in favor of the insured
The power given to the individual producer that is not specifically addressed in his/her contract
is considered what type of authority? implied
In order for a contract to be valid, it must contain an offer and acceptance
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? Tom
