XCEL Chapter 4: Life Insurance Policies -
Provisions, Options and Riders UPDATED
Exam Questions and CORRECT
Answers
Which statement regarding whole life insurance is accurate? - CORRECT ANSWER -
Insurance coverage can continue for life
When a ten year renewable term life insurance policy issued at age 45 is renewed, the premium
rate will be the current rate for - CORRECT ANSWER - Ten year term insurance for a
person aged 55
When would evidence of insurability be required for a person already covered with a variable
universal life policy? - CORRECT ANSWER - When the death benefit is increased
Assets that back the non-guaranteed values of variable life insurance products are held in which
account? - CORRECT ANSWER - Separate account set up by the insurer
Which of these statements accurately portrays an adjustable life insurance policy? - CORRECT
ANSWER - Policy can alternate between forms of term and whole life insurance
John received a one-time distribution of $50,000 from his modified endowment contract (MEC).
Prior to that, the contact's cash value was $150,000, the contract investment amount was
$100,000, and the death benefit was $500,000. What percentage of the $50,000 distribution was
taxable as ordinary income? - CORRECT ANSWER - 100%
How long does protection normally extend to under a limited pay whole life policy? -
CORRECT ANSWER - Until age 100
, When can a life insurance policy be issued WITHOUT the insured's consent? - CORRECT
ANSWER - When a parent purchases a policy on the life of a minor child
Which of the following is a TRUE statement regarding universal life insurance? - CORRECT
ANSWER - Policy indicates how much of each premium is used toward company
expenses
All of these are considered feature of whole life insurance EXCEPT - CORRECT
ANSWER - Initial premium is lower than for an equivalent amount of term insurance
Which type of life insurance policy is best suited for paying off the outstanding balance of a 30-
year mortgage in the event of the insured's death? - CORRECT ANSWER - 30-year
decreasing term
Which of the following statements about universal life insurance is NOT true? - CORRECT
ANSWER - Universal life insurance normally has a minimum guaranteed cash value for
duration of the policy
Which statement regarding the cash value of a whole life insurance policy is correct? -
CORRECT ANSWER - Available to the policy owner when policy has been surrendered
Group credit life insurance is typically a form of - CORRECT ANSWER - Decreasing
term insurance
A "premature" distribution from a modified endowment contract (MEC) incurs a penalty tax of -
CORRECT ANSWER - 10%
The death proceeds of a credit life insurance policy are typically paid to the - CORRECT
ANSWER - Lender
Provisions, Options and Riders UPDATED
Exam Questions and CORRECT
Answers
Which statement regarding whole life insurance is accurate? - CORRECT ANSWER -
Insurance coverage can continue for life
When a ten year renewable term life insurance policy issued at age 45 is renewed, the premium
rate will be the current rate for - CORRECT ANSWER - Ten year term insurance for a
person aged 55
When would evidence of insurability be required for a person already covered with a variable
universal life policy? - CORRECT ANSWER - When the death benefit is increased
Assets that back the non-guaranteed values of variable life insurance products are held in which
account? - CORRECT ANSWER - Separate account set up by the insurer
Which of these statements accurately portrays an adjustable life insurance policy? - CORRECT
ANSWER - Policy can alternate between forms of term and whole life insurance
John received a one-time distribution of $50,000 from his modified endowment contract (MEC).
Prior to that, the contact's cash value was $150,000, the contract investment amount was
$100,000, and the death benefit was $500,000. What percentage of the $50,000 distribution was
taxable as ordinary income? - CORRECT ANSWER - 100%
How long does protection normally extend to under a limited pay whole life policy? -
CORRECT ANSWER - Until age 100
, When can a life insurance policy be issued WITHOUT the insured's consent? - CORRECT
ANSWER - When a parent purchases a policy on the life of a minor child
Which of the following is a TRUE statement regarding universal life insurance? - CORRECT
ANSWER - Policy indicates how much of each premium is used toward company
expenses
All of these are considered feature of whole life insurance EXCEPT - CORRECT
ANSWER - Initial premium is lower than for an equivalent amount of term insurance
Which type of life insurance policy is best suited for paying off the outstanding balance of a 30-
year mortgage in the event of the insured's death? - CORRECT ANSWER - 30-year
decreasing term
Which of the following statements about universal life insurance is NOT true? - CORRECT
ANSWER - Universal life insurance normally has a minimum guaranteed cash value for
duration of the policy
Which statement regarding the cash value of a whole life insurance policy is correct? -
CORRECT ANSWER - Available to the policy owner when policy has been surrendered
Group credit life insurance is typically a form of - CORRECT ANSWER - Decreasing
term insurance
A "premature" distribution from a modified endowment contract (MEC) incurs a penalty tax of -
CORRECT ANSWER - 10%
The death proceeds of a credit life insurance policy are typically paid to the - CORRECT
ANSWER - Lender
