XCEL Solutions Life Insurance Final Exam Questions and Verified Answers Graded A+
2026/27
Section 529 Plans - - state provided
- can be funded by after tax dollars
- can pay prepaid tuition
- All earnings exempt from federal taxes
- If withdrawn for unqualified withdrawl, 10% penalty
Roth IRA - private retirement plan that taxes income before it is saved, but which does not
tax interest on that income when funds are used upon retirement
Distributions don't have to start before 70.5
401(k) plan - Elective deferral plan that allows employee to reduce compensation by a
stated percentage on a tax deductible/ tax differed basis; often the employer matches the
employee contributions
Simplified Employee Pension (SEP) - A qualified plan in which a smaller employer
contributes specified amounts directly into IRA accounts on behalf of eligible employees
403(b) plan - An elective deferral plan for employees of organizations such as school
systems, churches, and hospitals
Keogh Plan - Retirement plan for self-employed individual and their qualified employees
,Rollover - Tax free withdrawal of cash or other assets from one retirement program and its
reinvestment in another program. It is not considered income and it is not taxable until a later
withdrawal. Has to be completed in 60 days
Transfer - When amounts of a qualified plan are transferred to another qualified plan
Employee Retirement Income Security Act (ERISA) - Federal law that increased the
responsibility of pension plan trustees to protect retirees, established certain rights related to
vesting and portability, and created the Pension Benefit Guarantee Corporation
profit-sharing plan - a benefit whereby employees may share in the profits of the business
Catch-up Contributions - -for those aged 50 or older
-additional $1,000 annually
**Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) - established the
catch up provisions**
Rollover time frame - 60 days
Keogh Plan - A federally-approved, tax-deferred savings program for self-employed
people, allowing them to set money aside for their retirement.
,Annuity Period - the payout period of an annuity
Flexible Premium Annuity - allows the owner to vary the premium payments
Deferred Annuity - An annuity that starts sometime in the future.
Variable Annuity - Annuity that has a varying rate of return based on the mutual funds in
which one has invested
Gramm-Leach-Bliley Act - requires financial institutions to ensure the security and
confidentiality of customer data
Certificate of Insurance (COI) - proof that the insured has insurance
Market conduct - refers to the marketing practices of insurers and agents that involve
interaction with insureds, claimants, or consumers
expense loading - the amount needed to pay all expenses, including commissions, general
administrative expenses, state premium taxes, acquisition expenses, and an allowance for
contingencies and profit
Straight Life Annuity - The payout option that will guarantee an annuity payment for the
remainder of an individual's life. This option typically provides the largest monthly payment.
, Refund Life Annuity - Provides annuity payments for the annuitant's lifetime with the
guarantee that in no event will total income be less than the purchase price of the contract. If the
annuitant dies before receiving this amount, the difference is paid to a named beneficiary either
as a cash refund or in installments.
convertible term policy -
Aleatory Contract - a contract where the values exchanged may not be equal but depend
on an uncertain event
Insurance Dividends - Considered to be a return of overpaid premiums and is not taxable.
You can get the dividend in the form of CRAPPO
- Cash
- reduction of premium
- allow the dividends to accumulate at interest (the money earned on the returned dividend is
taxable as ordinary income
- Paid up permament addition - you can purchase additional whole life policy and the price will
change depending on dividend and age
-paid up option - pay up policy earlier than expected
- one year term - use dividends to purchase additional term insurance for 1 year (after 1 year, the
term expires)
insurance benefit - Advantage, privilege, right, or financial reimbursement
2026/27
Section 529 Plans - - state provided
- can be funded by after tax dollars
- can pay prepaid tuition
- All earnings exempt from federal taxes
- If withdrawn for unqualified withdrawl, 10% penalty
Roth IRA - private retirement plan that taxes income before it is saved, but which does not
tax interest on that income when funds are used upon retirement
Distributions don't have to start before 70.5
401(k) plan - Elective deferral plan that allows employee to reduce compensation by a
stated percentage on a tax deductible/ tax differed basis; often the employer matches the
employee contributions
Simplified Employee Pension (SEP) - A qualified plan in which a smaller employer
contributes specified amounts directly into IRA accounts on behalf of eligible employees
403(b) plan - An elective deferral plan for employees of organizations such as school
systems, churches, and hospitals
Keogh Plan - Retirement plan for self-employed individual and their qualified employees
,Rollover - Tax free withdrawal of cash or other assets from one retirement program and its
reinvestment in another program. It is not considered income and it is not taxable until a later
withdrawal. Has to be completed in 60 days
Transfer - When amounts of a qualified plan are transferred to another qualified plan
Employee Retirement Income Security Act (ERISA) - Federal law that increased the
responsibility of pension plan trustees to protect retirees, established certain rights related to
vesting and portability, and created the Pension Benefit Guarantee Corporation
profit-sharing plan - a benefit whereby employees may share in the profits of the business
Catch-up Contributions - -for those aged 50 or older
-additional $1,000 annually
**Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) - established the
catch up provisions**
Rollover time frame - 60 days
Keogh Plan - A federally-approved, tax-deferred savings program for self-employed
people, allowing them to set money aside for their retirement.
,Annuity Period - the payout period of an annuity
Flexible Premium Annuity - allows the owner to vary the premium payments
Deferred Annuity - An annuity that starts sometime in the future.
Variable Annuity - Annuity that has a varying rate of return based on the mutual funds in
which one has invested
Gramm-Leach-Bliley Act - requires financial institutions to ensure the security and
confidentiality of customer data
Certificate of Insurance (COI) - proof that the insured has insurance
Market conduct - refers to the marketing practices of insurers and agents that involve
interaction with insureds, claimants, or consumers
expense loading - the amount needed to pay all expenses, including commissions, general
administrative expenses, state premium taxes, acquisition expenses, and an allowance for
contingencies and profit
Straight Life Annuity - The payout option that will guarantee an annuity payment for the
remainder of an individual's life. This option typically provides the largest monthly payment.
, Refund Life Annuity - Provides annuity payments for the annuitant's lifetime with the
guarantee that in no event will total income be less than the purchase price of the contract. If the
annuitant dies before receiving this amount, the difference is paid to a named beneficiary either
as a cash refund or in installments.
convertible term policy -
Aleatory Contract - a contract where the values exchanged may not be equal but depend
on an uncertain event
Insurance Dividends - Considered to be a return of overpaid premiums and is not taxable.
You can get the dividend in the form of CRAPPO
- Cash
- reduction of premium
- allow the dividends to accumulate at interest (the money earned on the returned dividend is
taxable as ordinary income
- Paid up permament addition - you can purchase additional whole life policy and the price will
change depending on dividend and age
-paid up option - pay up policy earlier than expected
- one year term - use dividends to purchase additional term insurance for 1 year (after 1 year, the
term expires)
insurance benefit - Advantage, privilege, right, or financial reimbursement
