Exam (elaborations)
Xcel Insurance Licensing exam COMPLETE 200 QUESTIONS AND CORRECT DETAILED ANSWERS
- Course
- Institution
Xcel Insurance Licensing exam COMPLETE 200 QUESTIONS AND CORRECT DETAILED ANSWERS
[Show more]
Content preview
Xcel Insurance Licensing examCOMPLETE 200 QUESTIONS AND CORRECT
DETAILED ANSWERS
Which of the following is a type of insurance where an insurer transfers loss exposures
from policies written for its insureds?
A) Treaty insurance
B) Reinsurance
C) Mutual insurance
D) Captive insurance - ANSWERB) Reinsurance
Reinsurance is an arrangement by which an
insurance company transfers a portion of a risk it has assumed to another insurer.
One important function of an insurance company is to identify and sell to potential
customers. Which of these BEST describes this function?
A) Underwriting
B) Marketing
C) Reinsurance
D) Regulation - ANSWERB) Marketing
Marketing can be best defined as identifying and selling to potential customers.
Which of the following is NOT a characteristic of reinsurance?
A) Increases the unearned premium reserve
B) Protects against a very large claim
C) Enables insurer to meet certain objectives
D) A specialized branch of the insurance industry - ANSWERA) All of these are
reinsurance features except
"Increase the unaccredited Premium reserve".
AAA Insurance Company has transferred a portion of its loss exposure to
BBB Insurance Company. In this reinsurance transaction, what is AAA
Insurance Company called?
A) Captive insurer
B) Tertiary insurer
C) Primary insurer
,D) Secondary insurer - ANSWERC) Primary insurer
In a reinsurance agreement, the insurance company that transfers its loss exposure to
another insurer is called the primary insurer.
An insurer owned by its policyholders is called a
A) stock insurer
B) reinsurer
C) mutual insurer
D) multi-line insurer - ANSWERC) Mutual insurer
The correct answer is "mutual insurer". A mutual insurer is owned by its policyholders.
A participating company is also referred to as which type of insurer?
A) Re-insurer
B) Mutual insurer
C) Domestic insurer
D) Reciprocal insurer - ANSWERB) Mutual insurer
A mutual insurer is also referred to as a participating company
Which of the following is NOT a benefit of insurance?
A) Losses due to fraud are eliminated
B) Reduces the uncertainty of loss exposures
C) Makes a loss whole again
D) Source of investment funds - ANSWERA) 'Losses due to fraud are eliminated" is
NOT a benefit of insurance
When a mutual insurer becomes a stock company, the process is called
A) Mutualization
B) Demutualization
C) Reinsurance
D) Reorganization - ANSWERB) Demutualization
Which of the following statements regarding a life insurance policy dividend is TRUE?
A) It represents a refund of overcharged premium in a non-participating whole life policy
B) It represents the build-up of cash value in a permanent insurance policy
C) It is the distribution of excess of funds accumulated by the insurer on participating
policies - ANSWERC) It is the distribution of excess of funds accumulated by the insurer
on participating policies
,Dividends paid to policyowners of participating contracts represent a refund of excess
premiums charged. Remember, since the premiums were initially paid with after-tax
dollars, there is no income tax consequence to the policyowner.
John owns an insurance policy that gives him the right to share in the insurer's surplus.
What kind of policy is this?
A) Nonparticipating
B) Participating
C) Contributory
D) Surplus - ANSWERB) Participating
Which of the following refers to a condition that may increase the chance of a loss?
A) Adverse selection
B) Hazard
C) Risk
D) Peril - ANSWERB) Hazard
Which of the following is any situation that presents the possibility of a loss?
A) Adverse selection
B) Risk pooling
C) Loss exposure
D) Insured loss - ANSWERC) Loss exposure
Moral hazard is described as the
A) increased chance of loss because of an insured's recklessness
B) increased ability to predict loss because of a higher exposure to loss
C) increased risk of adverse selection
D) increased chance of a loss because of an insured's
dishonest tendencies - ANSWERD) increased chance of a loss because of an insured's
dishonest tendencies
Which of the following is a situation where there is a possibility of either a loss or a
gain?
A) Hazard
B) Pure risk
C) Speculative risk
D) Peril - ANSWERC) Speculative risk
A hazard can be best described as
A) the potential for loss
, B) the tendency for poorer than average risks to seek out insurance
C) a condition that may increase the likelihood of a loss occuring
D) a risk that has the potential for both loss and gain - ANSWERC) a condition that may
increase the likelihood of a loss occurring
Which of the following is NOT considered to be a definition of the term "loss"?
A) Probability that an event will occur
B) An insurable event that takes place which results in a payment made by the
insurance company
C) Unintentional decrease in the value of an asset due to a peril
D) The amount an insurance company must pay because of an insurable event -
ANSWERA) Probability that an event will occur
Which of the following describes the increase in the probability of a loss due to an
insured's dishonest tendencies?
A) Morale hazard
B) Physical hazard
C) Moral hazard
D) Speculative hazard - ANSWERC) Moral hazard
Restoring an insured to the same condition as before a loss is known as
A) Law of large numbers
B) Fiduciary retention
C) Adverse selection
D) Principle of indemnity - ANSWERD) Principle of indemnity
An insurer having a large number of similar exposure units is considered important
because
A) the insurer can decrease its reserves
B) the greater the number insured, the more accurately the insurer can predict losses
and set appropriate premiums
C) its financial rating will improve
D) the greater the number insured, the more premiums it collects - ANSWERB) The
greater the number insured, the more accurately the insurer can predict losses and set
appropriate premiums.
Which of the following is NOT considered a definition of risk?
A) The potential for loss
B) The cause of a loss
C) Exposure to danger
D) Uncertainty - ANSWERB) The cause of a loss
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller Americannursingaassociation. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $17.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
81531 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now