XCEL LIFE INSURANCE EXAM QUESTIONS AND
CORRECT ANSWERS (VRIFIED ANSWERS) Q&A
2026/2027 |INSTANT DOWNLOAD PDF
1. What is the primary purpose of life insurance?
A. To create investment income only
B. To provide financial protection against loss of income due to
death
C. To eliminate all personal debts
D. To guarantee retirement income
Correct Answer: B. To provide financial protection against loss
of income due to death
Rationale: Life insurance provides a death benefit to
beneficiaries to help replace lost income and cover financial
obligations after the insured’s death.
2. The person whose life is covered under a life insurance
policy is called the:
A. Beneficiary
B. Policyowner
C. Insured
D. Producer
Correct Answer: C. Insured
,Rationale: The insured is the individual whose death triggers
payment of the policy benefit.
3. The person who receives the death benefit from a life
insurance policy is the:
A. Insurer
B. Beneficiary
C. Agent
D. Underwriter
Correct Answer: B. Beneficiary
Rationale: A beneficiary is the person or entity designated to
receive policy proceeds after the insured dies.
4. Which party has ownership rights in a life insurance policy?
A. Beneficiary
B. Insurer
C. Policyowner
D. Physician
Correct Answer: C. Policyowner
Rationale: The policyowner controls policy rights, including
changing beneficiaries, borrowing cash value, and surrendering
the policy.
,5. A contract that requires an exchange of unequal values is
known as a(n):
A. Aleatory contract
B. Personal contract
C. Bilateral contract
D. Executory contract
Correct Answer: A. Aleatory contract
Rationale: Insurance contracts are aleatory because the
amount paid may differ greatly from the premiums paid.
6. Life insurance contracts are considered contracts of
adhesion because:
A. Both parties negotiate all terms
B. The insured writes the contract
C. The insurer prepares the contract and the applicant accepts
it as written
D. They are only valid verbally
Correct Answer: C. The insurer prepares the contract and the
applicant accepts it as written
Rationale: A contract of adhesion means one party creates the
contract and the other accepts or rejects it.
7. The principle requiring applicants to provide complete and
truthful information is called:
, A. Indemnity
B. Utmost good faith
C. Subrogation
D. Insurable interest
Correct Answer: B. Utmost good faith
Rationale: Insurance relies on honesty and full disclosure
between the applicant and insurer.
8. An insurance company’s evaluation of an applicant’s risk is
called:
A. Claim adjustment
B. Underwriting
C. Settlement
D. Marketing
Correct Answer: B. Underwriting
Rationale: Underwriting determines whether an applicant is
accepted and what premium rate applies.
9. A person must have a legitimate financial interest in
another person’s life to purchase insurance on them. This is
called:
A. Risk transfer
B. Insurable interest
CORRECT ANSWERS (VRIFIED ANSWERS) Q&A
2026/2027 |INSTANT DOWNLOAD PDF
1. What is the primary purpose of life insurance?
A. To create investment income only
B. To provide financial protection against loss of income due to
death
C. To eliminate all personal debts
D. To guarantee retirement income
Correct Answer: B. To provide financial protection against loss
of income due to death
Rationale: Life insurance provides a death benefit to
beneficiaries to help replace lost income and cover financial
obligations after the insured’s death.
2. The person whose life is covered under a life insurance
policy is called the:
A. Beneficiary
B. Policyowner
C. Insured
D. Producer
Correct Answer: C. Insured
,Rationale: The insured is the individual whose death triggers
payment of the policy benefit.
3. The person who receives the death benefit from a life
insurance policy is the:
A. Insurer
B. Beneficiary
C. Agent
D. Underwriter
Correct Answer: B. Beneficiary
Rationale: A beneficiary is the person or entity designated to
receive policy proceeds after the insured dies.
4. Which party has ownership rights in a life insurance policy?
A. Beneficiary
B. Insurer
C. Policyowner
D. Physician
Correct Answer: C. Policyowner
Rationale: The policyowner controls policy rights, including
changing beneficiaries, borrowing cash value, and surrendering
the policy.
,5. A contract that requires an exchange of unequal values is
known as a(n):
A. Aleatory contract
B. Personal contract
C. Bilateral contract
D. Executory contract
Correct Answer: A. Aleatory contract
Rationale: Insurance contracts are aleatory because the
amount paid may differ greatly from the premiums paid.
6. Life insurance contracts are considered contracts of
adhesion because:
A. Both parties negotiate all terms
B. The insured writes the contract
C. The insurer prepares the contract and the applicant accepts
it as written
D. They are only valid verbally
Correct Answer: C. The insurer prepares the contract and the
applicant accepts it as written
Rationale: A contract of adhesion means one party creates the
contract and the other accepts or rejects it.
7. The principle requiring applicants to provide complete and
truthful information is called:
, A. Indemnity
B. Utmost good faith
C. Subrogation
D. Insurable interest
Correct Answer: B. Utmost good faith
Rationale: Insurance relies on honesty and full disclosure
between the applicant and insurer.
8. An insurance company’s evaluation of an applicant’s risk is
called:
A. Claim adjustment
B. Underwriting
C. Settlement
D. Marketing
Correct Answer: B. Underwriting
Rationale: Underwriting determines whether an applicant is
accepted and what premium rate applies.
9. A person must have a legitimate financial interest in
another person’s life to purchase insurance on them. This is
called:
A. Risk transfer
B. Insurable interest
