XCEL Life Only Final Exam CO (2022/2023) Rated A+

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XCEL Life Only Final Exam CO (2022/2023) Rated A+ What type of insurance company sells insurance for a profit? ✔✔Commercial Insurers (Private Insurance Companies) What type of insurance compan ... y sells more than one line of insurance? ✔✔Multi-line insurer What type of companies are organized and incorporated under state laws for the purpose of making a profit for its stockholders? (shareholders) ✔✔Stock Companies What type of companies are owned by their policyholders? ✔✔Mutual Companies (Mutual insurers, Participating Insurers) a sum of money paid regularly (typically quarterly) by a company to its shareholders out of its profits (or reserves). ✔✔Dividend Why are dividends from a mutual insurer not subject to taxation? ✔✔Because this type of dividend is considered to be a return of premium. If a company operates as both a participating and nonparticipating insurer, they known as a _________. ✔✔Mixed Insurer What is a mutual company that operates based on loss-sharing by group members where no premium is payable in advance? ✔✔Pure Assessment Mutual Company What is a mutual company that charges a premium at the beginning of the policy period? ✔✔Advance Premium Assessment Mutual What is a mutual company that is a "special type"? (nonprofit religious, ethnic or charitable organizations that provide insurance solely to their members). ✔✔Fraternal Benefit Societies What is a mutual company formed by a group of people in the same industry or profession? ✔✔Risk Retention Groups What type of insurers are unincorporated groups of individual members that provide insurance for other members through indemnity contracts? (Members providing insurance for other members) ✔✔Reciprocal Insurers What type of insurers make arrangements with other insurance companies to transfer a portion of their risk to the reinsurer ? ✔✔Reinsurer (the reinsurer is the company taking the risk, the ceding company is the company giving the risk.) What type of insurer is established and owned by the parent company to insure the parent company's loss exposure? ✔✔Captive insurer What type of insurer sells industrial insurance? ✔✔Home Service Insurer What types of insurance are Social Security (OASDI), Medicare, Medicaid, SGLI/VGLI, and Tri-Care? ✔✔Government Insurance How is insurance sold? ✔✔Through distribution systems. What is the system in which career agents are hired to work at a specific location to sell insurance? ✔✔Career Agency System What is the system in which agents work for an independent agency selling policies from several insurance companies? ✔✔Personal Producing General Agency System What is the system in which independent agents represent a number of insurance companies under separate contractual agreements? ✔✔Independent Agency System (American Agency System) What is the system in which branch offices are established in several locations instead of a general agent? ✔✔Managerial System What is the method of selling policies through advertisements? ✔✔Mass Marketing What is the organization composed of insurance comissioners from all 50 states? ✔✔The National Association of Insurance Commissioners (NAIC) Who is responsible for assisting in the administration of in state insurance laws and regulations, encouraging uniformity in state insurance laws and regulations, protecting the interest of policyowners and consumers, and preserving state regulation of the insurance business? ✔✔The NAIC What code specifies certain words and phrases that are NOT to be used in advertising because they are misleading? ✔✔Advertising Code What Act gives chief financial officers the power to investigate insurance companies and producers and impose penalties? ✔✔Unfair Trade Practices Act Who created the Code of Ethics detailing the expectations of agents in their duties towards clients? ✔✔NAIFA (National Association of Insurance and Financial Advisors) and NAHU (National Association of Health Underwriters). What are some of the standards and ethics to sell insurance? ✔✔Selling to needs, suitability of recommended products, full and accurate disclosure, documentation, client services, buyer's guide, policy summary. What are funds that are set aside by an insurance company and designated for the payment of future claims? ✔✔Reserves What is the term for an insurer's ability to make unpredictable payouts to policyowners? ✔✔Liquidity What protects insureds in the event of an insurer insolvency, or inability to pay claims up to a certain limit? ✔✔Guaranty Associations What agencies rate or "grade" the financial strength and stability of insurers? ✔✔Independent Rating Services/Agencies What is a contractual arrangement that transfers exposure from one insurer to another insurer? ✔✔Reinsurance What is the method of determining the financial value of a person's life based on the value of their future earnings? ✔✔Human Life Value Approach What is the method of determining a person's financial value based on the amount of money needed for current and future expenses? ✔✔Needs Based Value Approach What are the four elements of an insurance contract? ✔✔Consideration, Legal Purpose, Offer and Acceptance, Competent Parties What is special about a contract of adhesion? ✔✔It is written only by the insurance company with no negotiation. What is a contract wherein there is an unequal exchange? ✔✔Aleatory Contract What is a once sided agreement where only the insurer is legally bound? ✔✔Unilateral Contract What type of insurance contract pays a stated amount? ✔✔Valued Contract What type of insurance contract only reimburses the actual cost of a loss? ✔✔Indemnity Contract Statements made by the applicant guaranteed to be true (name, DOB) ✔✔Warranties Statements made by the applicant believed to be true (height, weight) ✔✔Representations When a consumer purchases a life insurance policy with the agreement that a third-party agent/broker or investor will purchase the consumer's policy, this is called a: ✔✔StrangerOriginated Life Insurance Policy (STOLI) The legal process of preventing one party from reclaiming a right that was wavied. ✔✔Estoppel What rule disallows changing the meaning of a written contract by introducing verbal or written evidence made prior to the formation of the contract? ✔✔Parol Evidence Rule The right for an insurer to pursue a third party that caused an insurance loss. ✔✔Subrogation What Life policy type issues very small death benefits (1k-2k). Designed for burial coverage. ✔✔Industrial Life What Life policy type is written for members of a group? ✔✔Group Life What Life policy gives you the greatest amount of coverage for a limited period of time? ✔✔Term Life What Life policy has a level death benefit and level premiums? ✔✔Level Term What Life policy provides an annually decreasing death benefit (face value) with level premiums? ✔✔Decreasing Term What Life policy provides an annually increasing death benefit (face value) over time based on specific amounts of a percentage of the original amount? ✔✔Increasing Term What Life policy allows policyowners to convert their term insurance into permanent policies without showing proof of insurability? ✔✔Convertible Term What Life policy guarantees the insured the right to continue term coverage after the expiration of the initial policy period without having to prove insurability? ✔✔Renewable Term What life insurance product covers children under their parent's policy? ✔✔Term Riders What Life policy provides death benefits for the entire life of the insured? ✔✔Whole Life A policy that covers two or more people where the age of the insureds are averaged and a single premium is charged. ✔✔Joint Life Policy A policy that covers two or more people where the age of the insureds are averaged and a single premium is charged, and the second to die receives the benefit. ✔✔Joint and Survivor Policy Life insurance that is written on the lives of a minor. ✔✔Juvenile Insurance What type of provision is typically attached to juvenile policies? ✔✔Payor Provision Insurance designed to cover the life of a debtor where if they die before the loan is repaid, the loan is paid with the policy. ✔✔Credit Life Insurance What Life policy allows the policyowner to determine the amount and frequency of premium payments which will adjust the policy face amount? ✔✔Universal Life The process used by an insurance company to determine whether or not an applicant is insurable. ✔✔Underwriting [Show More]

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