XCEL Chapter 1 Exam Review
Reinsurer
A life insurance company has transferred some of its risk to another insurer. The insurer assuming the risk is called the
Stock insurer
A non-participating company is also called
Self-funded plan
A plan in which an employer pays insurance benefits from a fund derived from the employer's current revenues
Mutual
A type of insurer that is owned by its policy owners is called
Mutual Insurer
AKA Re-insurer
Reinsurance
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?
Participating life insurance policy
Contract that allows the policy owner to receive a share of surplus in the form of policy dividends
Insurance policy
Contract that involves one party which indemnifies another when a loss arises from an unknown event
Non-participating policy
Does not participate in paying dividends
Exist for profit
Fraternal Benefit Society does NOT
Captive Insurer
Insurer established by a parent company for the purpose of insuring the parent company's loss exposures
Mutual Insurer
Insurer owned by its policyholders
Participating policy
John owns an insurance policy that gives him the right to share in the insurer's surplus. What kind of policy is this?
Participating life insurance policy
Life insurance policy issued by a mutual insurer provides a return of divisible surplus
$5,000 and 1 year imprisonment
Maximum penalty under the Fair Credit and Reporting Act
$10,000 or up to 1 year in jail
Minimum penalty under the McCarran-Ferguson Act
Marketing
One important function of an insurance company is to identify and sell to potential customers. Which of these BEST describes this function?
Reinsurance
Type of insurance where an insurer transfers loss exposures from policies written for its insurers
It is the distribution of excess of funds accumulated by the insurer on participating policies
What is a true statement regarding a life insurance policy dividend?
Demutualization
When a mutual insurer becomes a stock company
Because dividends are considered to be a return of premium
Why are dividends from a mutual insurer not subject to taxation?
State insurance departments
Regulates insurer's claim settlement practices
Death benefits
Primary reason for purchasing life insurance
The Fair Credit and Reporting Act
Protects consumers with guidelines regarding credit reporting and distribution