XCEL PRACTICE EXAMS QUESTIONS
WITH COMPLETE ANSWERS
At what time must a policyowner have insurable interest on the insured in order for
the life policy to be valid? - ANSWER-At the time of application
What would the Medical Information Bureau (MIB) identify? - ANSWER-Testing
positive for marijuana use from a previous screening
What is the purpose of the U.S.A. Patriot Act? - ANSWER-detect and deter terrorism
An applicant's medical information received from the Medical Information Bureau
(MIB) may be furnished to the: - ANSWER-applicant's physician
P is a producer who notices 5 questions on a life application were not answered.
What actions should P take? - ANSWER-Set up a meeting with the applicant to
answer the remaining questions
Group life insurance policies are generally written as: - ANSWER-annually
renewable term
What type of group insurance plan involves employees sharing the cost? -
ANSWER-contributory plan
Which of the following statements about noncontributory employee group life
insurance is FALSE? - ANSWER-A minimum number of employees is required to
participate
Which requirement must be met for an association to be eligible for a group life plan?
- ANSWER-Group was formed for a purpose other than acquiring insurance
Under a trustee group life policy, who would be eligible for a certificate of coverage?
- ANSWER-employee
S, while in the process of converting her group life insurance to an individual policy,
dies. What happens to the claim her beneficiary submits? - ANSWER-Full benefits
are payable under the Master contract
An employee with $25,000 group term life coverage was recently fired. This
employee's group coverage may be converted to a: - ANSWER-$25,000 individual
whole life policy
When an employee is terminated, which statement about a group term life
conversion is true? - ANSWER-Policy proceeds will be paid if the employee dies
during the conversion period
If its employees share in the cost of insurance, what type of group life insurance plan
would a corporation have? - ANSWER-Contributory
,Which provision is NOT a requirement in a group life policy? - ANSWER-accidental
What is considered to be a characteristic of an immediate annuity? - ANSWER-
Benefit payments start within one payment period of purchase
P is a forty year old woman and would like to purchase an annuity that will provide a
lifetime income stream beginning at age sixty. Which of the following did she NOT
buy? - ANSWER-An immediate annuity
W is a 39-year old female who just purchased an annuity to provide income for life
starting at age 60. All of these would be acceptable annuity choices, EXCEPT a -
ANSWER-Immediate annuity
N, age 50, recently bought an annuity that will pay a guaranteed $2,000/month at
age 70 for life. What type of annuity did N purchase? - ANSWER-Fixed Deferred
What type of annuity has a cash value that is based upon the performance of it's
underlying investment funds? - ANSWER-variable
P, age 50, purchased an annuity that P will fund with $500/ month for 15 years. The
annuity will then pay P retirement payments after the 15 years. Which type of annuity
did P purchase? - ANSWER-deferred
T has an annuity that guarantees an income payment for the rest of his life. The
contract also guarantees that if T dies before receiving payments for 20 years, the
remaining payments will be paid to his son for the balance of the 20 years. What
type of annuity is this? - ANSWER-Life Annuity with Period Certain
Which of the following annuities pays benefits based on units rather than specific
dollar amounts? - ANSWER-Variable annuity
Which of the following is NOT included in an annuity contract? - ANSWER-AD&D
rider
The type of annuity that can be purchased with one monetary deposit is called a(n): -
ANSWER-immediate annuity
Which of the following does Social Security NOT provide benefits for? - ANSWER-
dismemberment
All of these are considered to be a benefit under Social Security, EXCEPT for: -
ANSWER-unemployment
Q is severely injured in an automobile accident and becomes totally disabled. How
many months must Q be disabled before being able to apply for Social Security
disability benefits? - ANSWER-5 months
, Which of the following factors affects the amount of monthly disability benefits
payable under Social Security? - ANSWER-The amount of the benefits available
from other sources
What is Old Age and Survivors Health Insurance (OASDHI) also known as? -
ANSWER-social security
An individual working part-time has an annual income of $25,000. If this individual
has an IRA, what is the maximum deductible IRA contribution allowable? -
ANSWER-$2,500
All of the following statements about traditional individual retirement accounts are
false EXCEPT - ANSWER-10% penalty is applied to withdrawals before age 59 1/2
In a qualified retirement plan, the yearly contributions to an employee's account: -
ANSWER-are restricted to maximum levels set by the IRS
Post-tax dollar contributions are found in: - ANSWER-Roth IRA investments
An individual participant personally received eligible rollover funds from a profit-
sharing plan. What is the income tax withholding requirements for this transaction? -
ANSWER-20% is withheld for income taxes
Which tax would an IRA participant be subjected to on distributions received prior to
age 59 1/2? - ANSWER-Ordinary income tax and a 10% tax penalty for early
withdrawal
What type of employee welfare plans are not subject to ERISA regulations? -
ANSWER-Church plans
Which of the following is TRUE about a qualified retirement that is "top heavy"? -
ANSWER-More than 60% of plan assets are in key employee accounts
At the age of 45, an individual withdraws $50,000 from his Qualified Profit-Sharing
Plan and then deposits this amount into a personal savings account. This action
would result in: - ANSWER-Income tax and a 10% penalty assessed upon funds
withdrawn from the Qualified Plan
A qualified profit-sharing plan is designed to: - ANSWER-allow employees to
participate in the profits of the company
In life insurance, the needs approach is used mostly to establish: - ANSWER-how
much life insurance a client should apply for
In a Key Employee life insurance policy, the third-party owner can be all of the
following, EXCEPT: - ANSWER-insured
Which statement regarding a Key Employee Life policy is NOT true? - ANSWER-The
beneficiary is named by the key employee
WITH COMPLETE ANSWERS
At what time must a policyowner have insurable interest on the insured in order for
the life policy to be valid? - ANSWER-At the time of application
What would the Medical Information Bureau (MIB) identify? - ANSWER-Testing
positive for marijuana use from a previous screening
What is the purpose of the U.S.A. Patriot Act? - ANSWER-detect and deter terrorism
An applicant's medical information received from the Medical Information Bureau
(MIB) may be furnished to the: - ANSWER-applicant's physician
P is a producer who notices 5 questions on a life application were not answered.
What actions should P take? - ANSWER-Set up a meeting with the applicant to
answer the remaining questions
Group life insurance policies are generally written as: - ANSWER-annually
renewable term
What type of group insurance plan involves employees sharing the cost? -
ANSWER-contributory plan
Which of the following statements about noncontributory employee group life
insurance is FALSE? - ANSWER-A minimum number of employees is required to
participate
Which requirement must be met for an association to be eligible for a group life plan?
- ANSWER-Group was formed for a purpose other than acquiring insurance
Under a trustee group life policy, who would be eligible for a certificate of coverage?
- ANSWER-employee
S, while in the process of converting her group life insurance to an individual policy,
dies. What happens to the claim her beneficiary submits? - ANSWER-Full benefits
are payable under the Master contract
An employee with $25,000 group term life coverage was recently fired. This
employee's group coverage may be converted to a: - ANSWER-$25,000 individual
whole life policy
When an employee is terminated, which statement about a group term life
conversion is true? - ANSWER-Policy proceeds will be paid if the employee dies
during the conversion period
If its employees share in the cost of insurance, what type of group life insurance plan
would a corporation have? - ANSWER-Contributory
,Which provision is NOT a requirement in a group life policy? - ANSWER-accidental
What is considered to be a characteristic of an immediate annuity? - ANSWER-
Benefit payments start within one payment period of purchase
P is a forty year old woman and would like to purchase an annuity that will provide a
lifetime income stream beginning at age sixty. Which of the following did she NOT
buy? - ANSWER-An immediate annuity
W is a 39-year old female who just purchased an annuity to provide income for life
starting at age 60. All of these would be acceptable annuity choices, EXCEPT a -
ANSWER-Immediate annuity
N, age 50, recently bought an annuity that will pay a guaranteed $2,000/month at
age 70 for life. What type of annuity did N purchase? - ANSWER-Fixed Deferred
What type of annuity has a cash value that is based upon the performance of it's
underlying investment funds? - ANSWER-variable
P, age 50, purchased an annuity that P will fund with $500/ month for 15 years. The
annuity will then pay P retirement payments after the 15 years. Which type of annuity
did P purchase? - ANSWER-deferred
T has an annuity that guarantees an income payment for the rest of his life. The
contract also guarantees that if T dies before receiving payments for 20 years, the
remaining payments will be paid to his son for the balance of the 20 years. What
type of annuity is this? - ANSWER-Life Annuity with Period Certain
Which of the following annuities pays benefits based on units rather than specific
dollar amounts? - ANSWER-Variable annuity
Which of the following is NOT included in an annuity contract? - ANSWER-AD&D
rider
The type of annuity that can be purchased with one monetary deposit is called a(n): -
ANSWER-immediate annuity
Which of the following does Social Security NOT provide benefits for? - ANSWER-
dismemberment
All of these are considered to be a benefit under Social Security, EXCEPT for: -
ANSWER-unemployment
Q is severely injured in an automobile accident and becomes totally disabled. How
many months must Q be disabled before being able to apply for Social Security
disability benefits? - ANSWER-5 months
, Which of the following factors affects the amount of monthly disability benefits
payable under Social Security? - ANSWER-The amount of the benefits available
from other sources
What is Old Age and Survivors Health Insurance (OASDHI) also known as? -
ANSWER-social security
An individual working part-time has an annual income of $25,000. If this individual
has an IRA, what is the maximum deductible IRA contribution allowable? -
ANSWER-$2,500
All of the following statements about traditional individual retirement accounts are
false EXCEPT - ANSWER-10% penalty is applied to withdrawals before age 59 1/2
In a qualified retirement plan, the yearly contributions to an employee's account: -
ANSWER-are restricted to maximum levels set by the IRS
Post-tax dollar contributions are found in: - ANSWER-Roth IRA investments
An individual participant personally received eligible rollover funds from a profit-
sharing plan. What is the income tax withholding requirements for this transaction? -
ANSWER-20% is withheld for income taxes
Which tax would an IRA participant be subjected to on distributions received prior to
age 59 1/2? - ANSWER-Ordinary income tax and a 10% tax penalty for early
withdrawal
What type of employee welfare plans are not subject to ERISA regulations? -
ANSWER-Church plans
Which of the following is TRUE about a qualified retirement that is "top heavy"? -
ANSWER-More than 60% of plan assets are in key employee accounts
At the age of 45, an individual withdraws $50,000 from his Qualified Profit-Sharing
Plan and then deposits this amount into a personal savings account. This action
would result in: - ANSWER-Income tax and a 10% penalty assessed upon funds
withdrawn from the Qualified Plan
A qualified profit-sharing plan is designed to: - ANSWER-allow employees to
participate in the profits of the company
In life insurance, the needs approach is used mostly to establish: - ANSWER-how
much life insurance a client should apply for
In a Key Employee life insurance policy, the third-party owner can be all of the
following, EXCEPT: - ANSWER-insured
Which statement regarding a Key Employee Life policy is NOT true? - ANSWER-The
beneficiary is named by the key employee
