Xcel Practice Chapter Exam UPDATED
Exam Questions and CORRECT
Answers
A whole life insurance policyownet foes not wish to continue making premium payments. Which
of the following enables the policyowner to call the policy for more than its cash value? -
CORRECT ANSWER - Life-Settlement Contract
P owns a 25,000 Life policy that pays the face amount to him if he lives to age 70, or to his
beneficiary if he dies before age 70. What kind of policy does P own? - CORRECT
ANSWER - Endowment at Age 70
Which type of life policy contains a monthly mortality charge as well as self-directed investment
choices? - CORRECT ANSWER - Variable Universal Life
A policy if adhesion can only be modified by whom? - CORRECT ANSWER - The
Insurance company
Which of the following consists of an offer, acceptance, and consideration? - CORRECT
ANSWER - Contract
What type of annuity has a cash value that is based upon the performance of it's underlying
investment funds? - CORRECT ANSWER - Variable
Which of the following statements is CORRECT regarding the tax treatment of a lump-sum
payment paid to a life insurance policy's primary beneficiary? - CORRECT ANSWER -
All proceeds are income tax free in the year they are recieved
A life insurance application may be rejected on the basis of all of these factors EXCEPT: -
CORRECT ANSWER - Gender
,Term Insurance has which of the following characteristics? - CORRECT ANSWER -
Expires at the end of the policy period
A student pilot can pay regular premium costs for her life insurance policy with the addition of
which of the following? - CORRECT ANSWER - Aviation Exclusion
In a life insurance policy, which provision states who may select policy options, designate and
name a beneficiary, and be the policy? - CORRECT ANSWER - Owner's Rights
The entity whose sole purpose is sharing medical data among its member companies is called the
- CORRECT ANSWER - Medical Information Bureau (MIB)
M completes an application for life insurance but does not pay the initial premium. All of these
actions must occur before M's policy goes into effect EXCEPT - CORRECT ANSWER -
Free-look period has expired
The cash value in a(n)_________________ Life policy may fluctuate to reflect changing
assumptions regarding mortality cost, interest, and expense factors. - CORRECT
ANSWER - A Universal Life policy
An employee with 25,000 group term life coverage was recently fired. This employee's group
coverage may be converted to a: - CORRECT ANSWER - 25,000 Individual Whole Life
policy
P is blinded in an industrial accident. Which provision of his life insurance policy will pay a
stated benefit amount? - CORRECT ANSWER - Accidental Death and Dismemberment
clause
Q is severely injured in an automobile accident and becomes totally disabled. How many months
must Q be disabled before being able to apply for Social Security disability benefits? -
CORRECT ANSWER -5
, Which statement regarding the Misstatement of Age provision is considered to be true? -
CORRECT ANSWER - Coverage will be adjusted to reflect the insured's true age if a
misstatement of age is discovered
Which of the following is an important wunderwriting principle of group life insurance. -
CORRECT ANSWER - Everyone must be covered in the group
An architecture firm would stand to lose a lot of money in the event of the death of its project
manager. Which type of policy should the firm purchase on its project manager? - CORRECT
ANSWER - Key Person Life Policy
S is covered by a whole life policy. Which insurance product can cover his children? -
CORRECT ANSWER - Child Term Rider
A 15-year mortgage is best protected by what kind of life policy? - CORRECT ANSWER -
15-year decreasing term
E and F are business partners. Each takes out a $500,000 life insurance policy on the other,
naming himself as primary beneficiary. E and F eventually terminate their business, and four
months later E dies. Although E was married with three children at the time of death, the primary
beneficiary is still F. However, an insurable interest no longer exists. Where will the proceeds
from E's life insurance policy be directed to? - CORRECT ANSWER -F
When a minor is designated as the sole primary beneficiary, - CORRECT ANSWER -a
guardian will be court-appointed in the event of a death claim
Which if the following best describes a warranty - CORRECT ANSWER - Statement
gaurenteed to be true
A company that has not been authorized to operate in Colorado is known as - CORRECT
ANSWER - a nonadmitted insurer
Exam Questions and CORRECT
Answers
A whole life insurance policyownet foes not wish to continue making premium payments. Which
of the following enables the policyowner to call the policy for more than its cash value? -
CORRECT ANSWER - Life-Settlement Contract
P owns a 25,000 Life policy that pays the face amount to him if he lives to age 70, or to his
beneficiary if he dies before age 70. What kind of policy does P own? - CORRECT
ANSWER - Endowment at Age 70
Which type of life policy contains a monthly mortality charge as well as self-directed investment
choices? - CORRECT ANSWER - Variable Universal Life
A policy if adhesion can only be modified by whom? - CORRECT ANSWER - The
Insurance company
Which of the following consists of an offer, acceptance, and consideration? - CORRECT
ANSWER - Contract
What type of annuity has a cash value that is based upon the performance of it's underlying
investment funds? - CORRECT ANSWER - Variable
Which of the following statements is CORRECT regarding the tax treatment of a lump-sum
payment paid to a life insurance policy's primary beneficiary? - CORRECT ANSWER -
All proceeds are income tax free in the year they are recieved
A life insurance application may be rejected on the basis of all of these factors EXCEPT: -
CORRECT ANSWER - Gender
,Term Insurance has which of the following characteristics? - CORRECT ANSWER -
Expires at the end of the policy period
A student pilot can pay regular premium costs for her life insurance policy with the addition of
which of the following? - CORRECT ANSWER - Aviation Exclusion
In a life insurance policy, which provision states who may select policy options, designate and
name a beneficiary, and be the policy? - CORRECT ANSWER - Owner's Rights
The entity whose sole purpose is sharing medical data among its member companies is called the
- CORRECT ANSWER - Medical Information Bureau (MIB)
M completes an application for life insurance but does not pay the initial premium. All of these
actions must occur before M's policy goes into effect EXCEPT - CORRECT ANSWER -
Free-look period has expired
The cash value in a(n)_________________ Life policy may fluctuate to reflect changing
assumptions regarding mortality cost, interest, and expense factors. - CORRECT
ANSWER - A Universal Life policy
An employee with 25,000 group term life coverage was recently fired. This employee's group
coverage may be converted to a: - CORRECT ANSWER - 25,000 Individual Whole Life
policy
P is blinded in an industrial accident. Which provision of his life insurance policy will pay a
stated benefit amount? - CORRECT ANSWER - Accidental Death and Dismemberment
clause
Q is severely injured in an automobile accident and becomes totally disabled. How many months
must Q be disabled before being able to apply for Social Security disability benefits? -
CORRECT ANSWER -5
, Which statement regarding the Misstatement of Age provision is considered to be true? -
CORRECT ANSWER - Coverage will be adjusted to reflect the insured's true age if a
misstatement of age is discovered
Which of the following is an important wunderwriting principle of group life insurance. -
CORRECT ANSWER - Everyone must be covered in the group
An architecture firm would stand to lose a lot of money in the event of the death of its project
manager. Which type of policy should the firm purchase on its project manager? - CORRECT
ANSWER - Key Person Life Policy
S is covered by a whole life policy. Which insurance product can cover his children? -
CORRECT ANSWER - Child Term Rider
A 15-year mortgage is best protected by what kind of life policy? - CORRECT ANSWER -
15-year decreasing term
E and F are business partners. Each takes out a $500,000 life insurance policy on the other,
naming himself as primary beneficiary. E and F eventually terminate their business, and four
months later E dies. Although E was married with three children at the time of death, the primary
beneficiary is still F. However, an insurable interest no longer exists. Where will the proceeds
from E's life insurance policy be directed to? - CORRECT ANSWER -F
When a minor is designated as the sole primary beneficiary, - CORRECT ANSWER -a
guardian will be court-appointed in the event of a death claim
Which if the following best describes a warranty - CORRECT ANSWER - Statement
gaurenteed to be true
A company that has not been authorized to operate in Colorado is known as - CORRECT
ANSWER - a nonadmitted insurer
