XCEL Chapter 4 Exam Review (1)
UPDATED Exam Questions and
CORRECT Answers
Decreasing term policies - CORRECT ANSWER - EX. mortgages. Policy amount
decreases as the outstanding mortgage balance decreases each year
Term policies - CORRECT ANSWER - Renewable, convertible, or renewable AND
convertible
Nonforfeiture values - CORRECT ANSWER - Cash value
The MEC tends to be an investment vehicle - CORRECT ANSWER - Pre-death
distributions from a modified endowment contract (MEC) receive different tax treatment than
other life insurance policies because
Pre-death distributions will become taxable - CORRECT ANSWER - Under a Modified
Endowment Contract, what are the likely tax consequences?
Universal life - CORRECT ANSWER - Type of life insurance combines a savings element
along with a flexible premium option
Survivorship life policy - CORRECT ANSWER - Pays on the death of the last person
Single premium cash value policy - CORRECT ANSWER - A policy that is paid up after
only one payment
Will no longer provide insurance protection - CORRECT ANSWER - Shawn, Mike, and
Dave are brothers who have a $100,000 "first to die" joint life policy covering all three of their
lives. If Mike dies first, the policy proceeds
, Non-medical - CORRECT ANSWER - Which of the following is a life insurance policy
that does NOT require a physical exam?
A nonforfeiture option can be used to increase the death benefit - CORRECT ANSWER -
All of these are valid options for an Adjustable Life Policy EXCEPT
Pre-death distributions are typically taxable - CORRECT ANSWER - Which of these
describes the result of a modified endowment contract that failed to meet the seven-pay test?
Require a higher premium payable at each renewal - CORRECT ANSWER - In a
renewable term life insurance policy, the contract will usually
Whole life policy with premiums paid up after 20 years - CORRECT ANSWER - A whole
life insurance policy where the premiums are paid up after 20 years would be considered a
limited pay life insurance policy
Variable whole life - CORRECT ANSWER - Has cash values that vary according to the
investment performance of common stocks
Juvenile insurance - CORRECT ANSWER - A Payor Benefit rider waives the premium
ONLY in connection with juvenile insurance
Equity index whole life - CORRECT ANSWER - The type of policy where 80% to 90% of
the premium is invested in traditional fixed income securities and the remainder of the premium
is invested in contracts tied to a stipulated stock index is equity index whole life
Universal life - CORRECT ANSWER - Reggie purchased a life insurance policy with a
face amount of $500,000. After 15 years, the cash value has accumulated to $100,000 and the
policy's face amount has become $600,000. Which type of life insurance policy is this?
UPDATED Exam Questions and
CORRECT Answers
Decreasing term policies - CORRECT ANSWER - EX. mortgages. Policy amount
decreases as the outstanding mortgage balance decreases each year
Term policies - CORRECT ANSWER - Renewable, convertible, or renewable AND
convertible
Nonforfeiture values - CORRECT ANSWER - Cash value
The MEC tends to be an investment vehicle - CORRECT ANSWER - Pre-death
distributions from a modified endowment contract (MEC) receive different tax treatment than
other life insurance policies because
Pre-death distributions will become taxable - CORRECT ANSWER - Under a Modified
Endowment Contract, what are the likely tax consequences?
Universal life - CORRECT ANSWER - Type of life insurance combines a savings element
along with a flexible premium option
Survivorship life policy - CORRECT ANSWER - Pays on the death of the last person
Single premium cash value policy - CORRECT ANSWER - A policy that is paid up after
only one payment
Will no longer provide insurance protection - CORRECT ANSWER - Shawn, Mike, and
Dave are brothers who have a $100,000 "first to die" joint life policy covering all three of their
lives. If Mike dies first, the policy proceeds
, Non-medical - CORRECT ANSWER - Which of the following is a life insurance policy
that does NOT require a physical exam?
A nonforfeiture option can be used to increase the death benefit - CORRECT ANSWER -
All of these are valid options for an Adjustable Life Policy EXCEPT
Pre-death distributions are typically taxable - CORRECT ANSWER - Which of these
describes the result of a modified endowment contract that failed to meet the seven-pay test?
Require a higher premium payable at each renewal - CORRECT ANSWER - In a
renewable term life insurance policy, the contract will usually
Whole life policy with premiums paid up after 20 years - CORRECT ANSWER - A whole
life insurance policy where the premiums are paid up after 20 years would be considered a
limited pay life insurance policy
Variable whole life - CORRECT ANSWER - Has cash values that vary according to the
investment performance of common stocks
Juvenile insurance - CORRECT ANSWER - A Payor Benefit rider waives the premium
ONLY in connection with juvenile insurance
Equity index whole life - CORRECT ANSWER - The type of policy where 80% to 90% of
the premium is invested in traditional fixed income securities and the remainder of the premium
is invested in contracts tied to a stipulated stock index is equity index whole life
Universal life - CORRECT ANSWER - Reggie purchased a life insurance policy with a
face amount of $500,000. After 15 years, the cash value has accumulated to $100,000 and the
policy's face amount has become $600,000. Which type of life insurance policy is this?
