Xcel Exam UPDATED Exam Questions and
CORRECT Answers
How are contributions made to a Roth IRA handled for tax purposes? - CORRECT
ANSWER - Not tax deductible
Simon has purchased a fixed immediate annuity. His payment amount will be dependent upon
principal, interest, and the contract's - CORRECT ANSWER - income period
An error was made on Mary's life insurance application. Which of the following areas are errors
commonly made on applications for which the incontestable clause does NOT apply? -
CORRECT ANSWER - Age
Which of these is NOT considered to be a nonforfeiture option in a whole life insurance policy? -
CORRECT ANSWER - Interest Only
People with higher loss exposure have the tendency to purchase insurance more often than those
at average risk. This called - CORRECT ANSWER - Adverse selection
What would be an expense factor in an insurance program? - CORRECT ANSWER -
Mortality costs
Joe has a life insurance policy that has a face amount of $300,000. After a number of years, the
policy's cash value accumulates to $50,000 and the face amount becomes $350,000. What kind
of policy is this? - CORRECT ANSWER - Universal life policy
A producer does NOT have a fiduciary responsibility - CORRECT ANSWER - the
Pennsylvania Guaranty Association
Who assumes the investment risk in a fixed annuity insurance contract? - CORRECT
ANSWER - The insurer
,What is the primary reason for buying an annuity? - CORRECT ANSWER - Provide
future economic security
A life insurance policy becomes incontestable after it has been in force for - CORRECT
ANSWER - 2 years
Within how many days must a traditional IRA be rolled over to another IRA in order to avoid tax
consequences? - CORRECT ANSWER - 60
A provision that allows a policy owner to temporarily give up ownership rights to secure a loan
is called - CORRECT ANSWER - Collateral assignment
All of these are considered sources of information that can assist an underwriter in determining
whether or not to accept a risk EXCEPT - CORRECT ANSWER - National association of
insurance underwriters
A plan in which an employer pays insurance benefits from a fund derived from the employer's
current revenues is called - CORRECT ANSWER - self funded plan
A whole life insurance policy accumulates cash value that becomes - CORRECT
ANSWER - the policy loan value which the insured may borrow against
The automatic premium loan provision authorizes an insurer to withdraw from a policy's cash
value the amount of - CORRECT ANSWER - Past due premiums that have not been paid
by the end of the grace period
Pre-death distributions from a modified endowment contract (MEC) receive different tax
treatment than other life insurance policies because - CORRECT ANSWER - the MEC
tends to be an investment vehicle
, All of these are considered a form of advertising EXCEPT - CORRECT ANSWER - an
insurer's AM best rating
A securities license is required for a life insurance producer to sell - CORRECT
ANSWER - variable life insurance
Which of these factors help determine an insured's life insurance premium? - CORRECT
ANSWER - avocation (hobby)
Replacement regulation is designed to protect interests of - CORRECT ANSWER -
Policyowners
What is known as the immediate specific event causing loss and giving rise to risk? - CORRECT
ANSWER - Peril
Agreements made by terminally ill persons to sell their life insurance policies at a discount in
order to pay medical expenses are called - CORRECT ANSWER - Viatical settlements
The suicide clause of a life insurance policy states that if an insured commits suicide within a
stated period from the policy's inception, the insurer will only be liable for a return of premiums
paid - CORRECT ANSWER - minus indebtedness and without interest
All of the following are examples of a Business Continuation Plan - CORRECT
ANSWER - deferred compensation
Life insurance policies will normally pay for losses arising from - CORRECT ANSWER -
commercial aviation
What is the primary purpose of a rating service company such as A.M Best - CORRECT
ANSWER - Determine financial strength of an insurance company
CORRECT Answers
How are contributions made to a Roth IRA handled for tax purposes? - CORRECT
ANSWER - Not tax deductible
Simon has purchased a fixed immediate annuity. His payment amount will be dependent upon
principal, interest, and the contract's - CORRECT ANSWER - income period
An error was made on Mary's life insurance application. Which of the following areas are errors
commonly made on applications for which the incontestable clause does NOT apply? -
CORRECT ANSWER - Age
Which of these is NOT considered to be a nonforfeiture option in a whole life insurance policy? -
CORRECT ANSWER - Interest Only
People with higher loss exposure have the tendency to purchase insurance more often than those
at average risk. This called - CORRECT ANSWER - Adverse selection
What would be an expense factor in an insurance program? - CORRECT ANSWER -
Mortality costs
Joe has a life insurance policy that has a face amount of $300,000. After a number of years, the
policy's cash value accumulates to $50,000 and the face amount becomes $350,000. What kind
of policy is this? - CORRECT ANSWER - Universal life policy
A producer does NOT have a fiduciary responsibility - CORRECT ANSWER - the
Pennsylvania Guaranty Association
Who assumes the investment risk in a fixed annuity insurance contract? - CORRECT
ANSWER - The insurer
,What is the primary reason for buying an annuity? - CORRECT ANSWER - Provide
future economic security
A life insurance policy becomes incontestable after it has been in force for - CORRECT
ANSWER - 2 years
Within how many days must a traditional IRA be rolled over to another IRA in order to avoid tax
consequences? - CORRECT ANSWER - 60
A provision that allows a policy owner to temporarily give up ownership rights to secure a loan
is called - CORRECT ANSWER - Collateral assignment
All of these are considered sources of information that can assist an underwriter in determining
whether or not to accept a risk EXCEPT - CORRECT ANSWER - National association of
insurance underwriters
A plan in which an employer pays insurance benefits from a fund derived from the employer's
current revenues is called - CORRECT ANSWER - self funded plan
A whole life insurance policy accumulates cash value that becomes - CORRECT
ANSWER - the policy loan value which the insured may borrow against
The automatic premium loan provision authorizes an insurer to withdraw from a policy's cash
value the amount of - CORRECT ANSWER - Past due premiums that have not been paid
by the end of the grace period
Pre-death distributions from a modified endowment contract (MEC) receive different tax
treatment than other life insurance policies because - CORRECT ANSWER - the MEC
tends to be an investment vehicle
, All of these are considered a form of advertising EXCEPT - CORRECT ANSWER - an
insurer's AM best rating
A securities license is required for a life insurance producer to sell - CORRECT
ANSWER - variable life insurance
Which of these factors help determine an insured's life insurance premium? - CORRECT
ANSWER - avocation (hobby)
Replacement regulation is designed to protect interests of - CORRECT ANSWER -
Policyowners
What is known as the immediate specific event causing loss and giving rise to risk? - CORRECT
ANSWER - Peril
Agreements made by terminally ill persons to sell their life insurance policies at a discount in
order to pay medical expenses are called - CORRECT ANSWER - Viatical settlements
The suicide clause of a life insurance policy states that if an insured commits suicide within a
stated period from the policy's inception, the insurer will only be liable for a return of premiums
paid - CORRECT ANSWER - minus indebtedness and without interest
All of the following are examples of a Business Continuation Plan - CORRECT
ANSWER - deferred compensation
Life insurance policies will normally pay for losses arising from - CORRECT ANSWER -
commercial aviation
What is the primary purpose of a rating service company such as A.M Best - CORRECT
ANSWER - Determine financial strength of an insurance company
