XCEL SOLUTIONS GEORGIA LIFE-
ONLY PRE-LICENSING EXAM
QUESTIONS WITH VERIFIED
ANSWERS
Stranger Originated Life Insurance (STOLI) has been found to be in violation of
which of the following contractual elements?
-Consideration
-Competent Parties
-Offer/Acceptance
-Legal Purpose (Insurable Interest) - ANSWER--Legal Purpose (Insurable Interest)
A STOLI arrangement is used to circumvent state insurable interest statutes.
The Consideration Clause of an insurance contract includes:
-the buyer's guide
-a summary of the coverage provided
-the named beneficiaries
-the schedule and amount of premium payments - ANSWER--the schedule and
amount of premium payments
The Consideration clause of a Life or Health policy includes the schedule and
amount of premium payments.
If a contract of adhesion contains complicated language, to whom would the
interpretation be in favor of?
-Insurer
-Beneficiary
-Reinsurer
-Insured - ANSWER--Insured
In a contract of adhesion, any confusing language would be interpreted in the favor
of the insured.
All of the following are considered to be typical characteristics describing the nature
of an insurance contract, EXCEPT:
-Bilateral
-Unilateral
-Aleatory
-Adhesion - ANSWER--Bilateral
The part of a life insurance policy guaranteed to be true is called a(n):
-representation
-exclusion
-warranty
-waiver - ANSWER--warranty
Warranties are statements that are considered literally true. A warranty that is not
literally true in every detail, even if made in error, is sufficient to render a policy void.
,Which of these require an offer, acceptance, and consideration?
-Warranty
-Estoppel
-Contract
-Representation - ANSWER--Contract
Offer, acceptance, and consideration are all elements of a contract.
Which of these is NOT considered to be an element of an insurance contract?
-the offer
-acceptance
-negotiating
-consideration - ANSWER--negotiating
The elements of an insurance contract do not include negotiating.
What kind of life policy either pays the face value upon the death of the insured or
when the insured reaches age 100?
-Term Life
-Whole Life
-Credit Life
-Universal Life - ANSWER--Whole Life
Whole life insurance is designed to mature at age 100.
A potential client, age 40, would like to purchase a Whole Life policy that will
accumulate cash value at a faster rate in the early years of the policy. Which of these
statements made by the producer would be correct?
-Straight life accumulates faster than Limited-pay Life
-20-Pay Life accumulates cash value faster than Straight Life
-Cash value accumulation of both 20-Pay Life and Straight Life depend on the
insurer's financial rating
-20-Pay Life and Straight Life accumulate cash value at the same rate - ANSWER--
20-Pay Life accumulates cash value faster than Straight Life
G purchased a Family Income policy at age 40, The policy has a 20-year rider
period. If G were to die at age 50, how long would G's family receive an income?
-5 years
-10 years
-15 years
-20 years - ANSWER--10 years
In this situation, the family would receive an income from the policy for 10 years.
Family income policies pay an income beginning at the insured's death and
continues for a period specified from the date of policy issue.
Term Life Policies that have the ability to be converted to permanent coverage may
do so during a specific time period. the conversion period
-may be altered by the policyowner
-is controlled by the NAIC
-is the same in all contracts
-varies according to the contract - ANSWER--varies according to the contract
The conversion period varies according to the contracts.
, J is issued a Life Insurance policy with a death benefit of $100,000. She pays $600
per year in premium for the first 5 years. The premium then increases to $900 per
year in the sixth year, and remains level thereafter. The policy's death benefit also
remains at $100,000. Which type of Life Insurance policy is this?
-Endowment
-Graded Premium Life
-Straight Life
-Modified Premium Life - ANSWER--Modified Premium Life
Modified whole life policies are distinguished by premiums that are lower than typical
whole life premiums during the first few years (usually five) and then higher than
typical thereafter.
Whole Life insurance is sometimes referred to as "Straight Life." What does the word
"Straight" indicate when using this phrase?
-The incontestable period
-The ability to borrow against the cash value
-The Grace Period
-The duration of premium payments - ANSWER--The duration of premium payments
The word "straight" denotes the duration of premium payments, usually for the rest of
the owner's life.
Which statement about a whole life policy is true?
-Beneficiary may be changed only with the consent of the premium payor
-Death benefit can usually be adjusted
-Cash value may be borrowed against
-Premiums are flexible - ANSWER--Cash value may be borrowed against
One feature of whole life policies is that the policyowner may borrow against the
cash value.
Which of the following Life insurance policies combine term insurance with an
investment element?
-Increasing Term Life
-Decreasing Term Life
-Universal Life
-Graded Life - ANSWER--Universal Life
A Universal life policy combines term insurance and an investment element.
What kind of life insurance product covers children under their parent's policy?
-Family Maintenance rider
-Term rider
-Family Income rider
-Payor benefit - ANSWER--Term rider
Family plan policies usually cover the family head with permanent insurance and the
coverage on the spouse and children is term insurance in the form of a rider.
Which is true concerning a Variable Universal Life policy?
-Policyowner controls where the investment will go and selects the amount of the
premium payment
-Policyowner has no say where the investment will go but can choose the premium
mode
ONLY PRE-LICENSING EXAM
QUESTIONS WITH VERIFIED
ANSWERS
Stranger Originated Life Insurance (STOLI) has been found to be in violation of
which of the following contractual elements?
-Consideration
-Competent Parties
-Offer/Acceptance
-Legal Purpose (Insurable Interest) - ANSWER--Legal Purpose (Insurable Interest)
A STOLI arrangement is used to circumvent state insurable interest statutes.
The Consideration Clause of an insurance contract includes:
-the buyer's guide
-a summary of the coverage provided
-the named beneficiaries
-the schedule and amount of premium payments - ANSWER--the schedule and
amount of premium payments
The Consideration clause of a Life or Health policy includes the schedule and
amount of premium payments.
If a contract of adhesion contains complicated language, to whom would the
interpretation be in favor of?
-Insurer
-Beneficiary
-Reinsurer
-Insured - ANSWER--Insured
In a contract of adhesion, any confusing language would be interpreted in the favor
of the insured.
All of the following are considered to be typical characteristics describing the nature
of an insurance contract, EXCEPT:
-Bilateral
-Unilateral
-Aleatory
-Adhesion - ANSWER--Bilateral
The part of a life insurance policy guaranteed to be true is called a(n):
-representation
-exclusion
-warranty
-waiver - ANSWER--warranty
Warranties are statements that are considered literally true. A warranty that is not
literally true in every detail, even if made in error, is sufficient to render a policy void.
,Which of these require an offer, acceptance, and consideration?
-Warranty
-Estoppel
-Contract
-Representation - ANSWER--Contract
Offer, acceptance, and consideration are all elements of a contract.
Which of these is NOT considered to be an element of an insurance contract?
-the offer
-acceptance
-negotiating
-consideration - ANSWER--negotiating
The elements of an insurance contract do not include negotiating.
What kind of life policy either pays the face value upon the death of the insured or
when the insured reaches age 100?
-Term Life
-Whole Life
-Credit Life
-Universal Life - ANSWER--Whole Life
Whole life insurance is designed to mature at age 100.
A potential client, age 40, would like to purchase a Whole Life policy that will
accumulate cash value at a faster rate in the early years of the policy. Which of these
statements made by the producer would be correct?
-Straight life accumulates faster than Limited-pay Life
-20-Pay Life accumulates cash value faster than Straight Life
-Cash value accumulation of both 20-Pay Life and Straight Life depend on the
insurer's financial rating
-20-Pay Life and Straight Life accumulate cash value at the same rate - ANSWER--
20-Pay Life accumulates cash value faster than Straight Life
G purchased a Family Income policy at age 40, The policy has a 20-year rider
period. If G were to die at age 50, how long would G's family receive an income?
-5 years
-10 years
-15 years
-20 years - ANSWER--10 years
In this situation, the family would receive an income from the policy for 10 years.
Family income policies pay an income beginning at the insured's death and
continues for a period specified from the date of policy issue.
Term Life Policies that have the ability to be converted to permanent coverage may
do so during a specific time period. the conversion period
-may be altered by the policyowner
-is controlled by the NAIC
-is the same in all contracts
-varies according to the contract - ANSWER--varies according to the contract
The conversion period varies according to the contracts.
, J is issued a Life Insurance policy with a death benefit of $100,000. She pays $600
per year in premium for the first 5 years. The premium then increases to $900 per
year in the sixth year, and remains level thereafter. The policy's death benefit also
remains at $100,000. Which type of Life Insurance policy is this?
-Endowment
-Graded Premium Life
-Straight Life
-Modified Premium Life - ANSWER--Modified Premium Life
Modified whole life policies are distinguished by premiums that are lower than typical
whole life premiums during the first few years (usually five) and then higher than
typical thereafter.
Whole Life insurance is sometimes referred to as "Straight Life." What does the word
"Straight" indicate when using this phrase?
-The incontestable period
-The ability to borrow against the cash value
-The Grace Period
-The duration of premium payments - ANSWER--The duration of premium payments
The word "straight" denotes the duration of premium payments, usually for the rest of
the owner's life.
Which statement about a whole life policy is true?
-Beneficiary may be changed only with the consent of the premium payor
-Death benefit can usually be adjusted
-Cash value may be borrowed against
-Premiums are flexible - ANSWER--Cash value may be borrowed against
One feature of whole life policies is that the policyowner may borrow against the
cash value.
Which of the following Life insurance policies combine term insurance with an
investment element?
-Increasing Term Life
-Decreasing Term Life
-Universal Life
-Graded Life - ANSWER--Universal Life
A Universal life policy combines term insurance and an investment element.
What kind of life insurance product covers children under their parent's policy?
-Family Maintenance rider
-Term rider
-Family Income rider
-Payor benefit - ANSWER--Term rider
Family plan policies usually cover the family head with permanent insurance and the
coverage on the spouse and children is term insurance in the form of a rider.
Which is true concerning a Variable Universal Life policy?
-Policyowner controls where the investment will go and selects the amount of the
premium payment
-Policyowner has no say where the investment will go but can choose the premium
mode
