XCEL USES OF LIFE INSURANCE ACTUAL TEST QUESTIONS AND ANSWERS WITH DETAILED SOLUTION GUIDE

XCEL USES OF LIFE INSURANCE ACTUAL
TEST QUESTIONS AND ANSWERS WITH
DETAILED SOLUTION GUIDE

●● Which statement regarding third-party ownership of a life insurance
policy is true?
Beneficiary is required to be irrevocable
Policy cannot be assigned once issued
It is illegal in most states
It is used extensively in estate-planning as well as business
circumstances
Answer: It is used extensively in estate-planning as well as business
circumstances


●● A Key Employee policy is taken out by Company X on its vice
president. Ten years later, this employee leaves Company X and begins
working for Company Y. If this individual were to die and the policy is
still in force and unchanged, where would the death proceeds be
directed?
The employee's family
Company Y
Company X
The employee's estate

, Answer: Company x


●● C is a key employee at ABC Incorporated. If a Key Employee life
policy is purchased on her life, which of these statements would be true?
ABC is the policyowner, C is the insured, and her husband is the
beneficiary
ABC is the policyowner, C is the insured, and ABC is the beneficiary
C is the policyowner and the insured, and ABC is the beneficiary
C is the policyowner, the insured, and the beneficiary
Answer: ABC is the policyowner, C is the insured, and ABC is the
beneficiary


●● Which of these is NOT considered to be a cost connected with an
individual's death?
Funeral expense
Tax liability
Business expenses
Probate costs
Answer: Business expenses


●● Which statement regarding a Key Employee Life policy is NOT
true?
The application must be signed by the key employee