XCEL Final Exam California Life
Insurance Questions with Complete
Answers
Reasonably necessary acts that an agent must perform for carrying out his/her
expressly authorized duties are covered by an agent's - ANSWER-Implied Authority
Which principle is accurately described with the statement "Insureds are entitled to
recover an amount NOT greater than the amount of their loss"? - ANSWER-
Indemnity
Which statement is CORRECT when describing a contract of adhesion? - ANSWER-
Contract may be accepted or rejected by the insured
Express power given to an agent in an agency agreement is - ANSWER-The
authority to represent the insurer
What is the price of insurance for each exposure unit? - ANSWER-Rate
A creditor would be allowed rights to life insurance policy proceeds if which of the
following beneficiaries is chosen? - ANSWER-The Insured's Estate
A spendthrift clause in a life insurance policy - ANSWER-Restricts the ability of the
beneficiary to assign benefits
Which of the following is NOT an insurer policy expense? - ANSWER-Premiums
Pam is the primary beneficiary of a life insurance policy and wants to let the death
benefit accumulate and receive only the monthly investment proceeds. Which
settlement option should she choose? - ANSWER-Interest Option
Premiums are best described as - ANSWER-The amount an insured pays per unit of
coverage
How are death benefits that are received by a beneficiary normally treated for tax
purposes? - ANSWER-Exempt from federal income taxes
When calculating life insurance premium rates, which component is affected by an
insured's age and gender? - ANSWER-Mortality
Which of the following is NOT a component of determining policy premiums? -
ANSWER-Dividends
What does the guaranteed insurability option allow an insured to do? - ANSWER-
Purchase additional coverage with no evidence of insurability required
, Which of the following is NOT a common life insurance policy rider? - ANSWER-
Extended Term
Jerry is an insured who understated his age on his life insurance application, paying
$12 per $1,000 of insurance instead of $15 per $1,000. If he dies, how will the
adjusted death benefit be calculated? - ANSWER-12/15th of the policy's face amount
An insurer can be protected from adverse selection with which policy provision? -
ANSWER-Suicide Clause
When an accidental death benefit is added to a whole life policy, how does this affect
the policy's cash value? - ANSWER-Policy's cash value is not affected
When a life insurance is surrendered, how does the cost recovery rule apply? -
ANSWER-The policy's cost basis is exempt from taxation
If an insured dies because of an accident, which type of life insurance rider will
provide additional coverage? - ANSWER-Accidental Death Rider
How is a life insurance policy dividend legally defined? - ANSWER-A return of
excess premium and not taxable
Mike and Ike are 30 year old identical twins. Both are in excellent health. Each
brother purchases a life policy that has a $750 annual premium. Mike buys a 10-year
renewable term policy. Ike purchases a whole life policy. All of the following
statements are true EXCEPT - ANSWER-Mike has the option of using his cash value
to purchase a reduced amount of paid-up whole life insurance
What does the grace period allow a life insurance policyowner to do? - ANSWER-
Make a premium payment after the due date without any loss of coverage
After a policy has lapsed, which provision allows the insured to continue coverage? -
ANSWER-Reinstatement Provision
What time period allows an insured's life insurance policy to remain in force even if
the premium was not paid on the due date? - ANSWER-Grace Period
How are acts of war and aviation treated under a group life insurance policy? -
ANSWER-Policy Exclusion
In a life insurance policy, the entire amount consists of - ANSWER-Policy And
Attached Application
Which of the following does a policyowner NOT have a right to change? - ANSWER-
Dividend Schedule
Which of the following types of life insurance combines a savings element along with
a flexible premium option? - ANSWER-Universal Life
Insurance Questions with Complete
Answers
Reasonably necessary acts that an agent must perform for carrying out his/her
expressly authorized duties are covered by an agent's - ANSWER-Implied Authority
Which principle is accurately described with the statement "Insureds are entitled to
recover an amount NOT greater than the amount of their loss"? - ANSWER-
Indemnity
Which statement is CORRECT when describing a contract of adhesion? - ANSWER-
Contract may be accepted or rejected by the insured
Express power given to an agent in an agency agreement is - ANSWER-The
authority to represent the insurer
What is the price of insurance for each exposure unit? - ANSWER-Rate
A creditor would be allowed rights to life insurance policy proceeds if which of the
following beneficiaries is chosen? - ANSWER-The Insured's Estate
A spendthrift clause in a life insurance policy - ANSWER-Restricts the ability of the
beneficiary to assign benefits
Which of the following is NOT an insurer policy expense? - ANSWER-Premiums
Pam is the primary beneficiary of a life insurance policy and wants to let the death
benefit accumulate and receive only the monthly investment proceeds. Which
settlement option should she choose? - ANSWER-Interest Option
Premiums are best described as - ANSWER-The amount an insured pays per unit of
coverage
How are death benefits that are received by a beneficiary normally treated for tax
purposes? - ANSWER-Exempt from federal income taxes
When calculating life insurance premium rates, which component is affected by an
insured's age and gender? - ANSWER-Mortality
Which of the following is NOT a component of determining policy premiums? -
ANSWER-Dividends
What does the guaranteed insurability option allow an insured to do? - ANSWER-
Purchase additional coverage with no evidence of insurability required
, Which of the following is NOT a common life insurance policy rider? - ANSWER-
Extended Term
Jerry is an insured who understated his age on his life insurance application, paying
$12 per $1,000 of insurance instead of $15 per $1,000. If he dies, how will the
adjusted death benefit be calculated? - ANSWER-12/15th of the policy's face amount
An insurer can be protected from adverse selection with which policy provision? -
ANSWER-Suicide Clause
When an accidental death benefit is added to a whole life policy, how does this affect
the policy's cash value? - ANSWER-Policy's cash value is not affected
When a life insurance is surrendered, how does the cost recovery rule apply? -
ANSWER-The policy's cost basis is exempt from taxation
If an insured dies because of an accident, which type of life insurance rider will
provide additional coverage? - ANSWER-Accidental Death Rider
How is a life insurance policy dividend legally defined? - ANSWER-A return of
excess premium and not taxable
Mike and Ike are 30 year old identical twins. Both are in excellent health. Each
brother purchases a life policy that has a $750 annual premium. Mike buys a 10-year
renewable term policy. Ike purchases a whole life policy. All of the following
statements are true EXCEPT - ANSWER-Mike has the option of using his cash value
to purchase a reduced amount of paid-up whole life insurance
What does the grace period allow a life insurance policyowner to do? - ANSWER-
Make a premium payment after the due date without any loss of coverage
After a policy has lapsed, which provision allows the insured to continue coverage? -
ANSWER-Reinstatement Provision
What time period allows an insured's life insurance policy to remain in force even if
the premium was not paid on the due date? - ANSWER-Grace Period
How are acts of war and aviation treated under a group life insurance policy? -
ANSWER-Policy Exclusion
In a life insurance policy, the entire amount consists of - ANSWER-Policy And
Attached Application
Which of the following does a policyowner NOT have a right to change? - ANSWER-
Dividend Schedule
Which of the following types of life insurance combines a savings element along with
a flexible premium option? - ANSWER-Universal Life
