XCEL Chapter 1 - Basic Principles

A life insurance company has transferred some of its risk to another insurer. The insurer assuming the risk is called the

reinsurer; make transfer arrangements to another insurer.

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

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

Which of the following is NOT considered advertising?

A rating from a rating service company, such as A.M. Best

A plan in which an employer pays insurance benefits from a fund derived(borrowed) from the employer's current revenues(pay) is called

A self-funded plan

Why are dividends from a mutual insurer not subject to taxation?

Because dividends are considered to be a return of premium

What is the primary purpose of a rating service company such as A.M Best?

Determine financial strength of an insurance company

Fraternal Benefit Society has each of the following characteristics EXCEPT

Exist For profit

A type of insurer that is owned by its policyowners is called

Mutual

What is considered to be the primary reason for buying life insurance?

Provide death benefits

An insurer's claim settlement practices are regulated by the

State insurance departments

The Do Not Call Registry offers exemptions for calls placed from all of the following EXCEPT

insurance sales calls because Insurance calls are not exempt from the no not call registry

An insurer's ability to make unpredictable payouts to policyowners is called

liquidity

A nonparticipating policy will

not pay dividends because policyholders do not participate in receiving dividends

What kind of life insurance policy issued by a mutual insurer provides a return of divisible surplus?

participating life insurance policy

The Fair Credit and Reporting Act's main purpose is to

protect consumers with guidelines regarding credit reporting and distribution

A nonparticipating company is sometimes called a(n)

stock insurer