XCEL SOLUTIONS - LIFE INSURANCE
PREP REVIEW QUESTIONS
COMPLETE ANSWERS
In what part of an insurance policy are policy benefits found? - ANSWER-
Declarations
(quick guide to the insurance policy, providing all of the basic information the
policyholder needs to know)
A guaranteed issue insurance policy has no - ANSWER-medical underwriting
An endorsement found in an insurance plan which modifies the provisions of the
policy is called a(n) - ANSWER-rider
The suicide clause of a life insurance policy states that if an insured commits suicide
within a stated period from the policy's inception, the insurer will only be liable for a
return of premiums paid - ANSWER-minus indebtedness and with interest
Joanne has a $100,000 whole life policy with an accumulated $25,000 of cash value.
She would like to borrow $15,000 against the cash value. Which of the following
statements is TRUE? - ANSWER-Net death benefit will be reduced if the loan is not
repaid
Kurt is an active duty serviceman who was recently killed in an accident while home
on leave. Which military service exclusion clause would pay upon his death? -
ANSWER-Results
(insurer is excused from paying the amount only if the death is a result of war)
Which of these is NOT a characteristic of the Accelerated Death Benefit option? -
ANSWER-The benefit can be offered as a rider at a specific extra cost or may be at
no cost
Mike inherited his father's traditional IRA. As beneficiary, he will pay ________ taxes
on any money withdrawn. - ANSWER-income
Which of the following employers is required to follow ERISA regulations? -
ANSWER-A local electrical supply company with 12 employees
An insurer's claim settlement practices are regulated by the - ANSWER-State
insurance departments
Karen is a producer who has obtained personal information about a client without
having a legitimate reason to do so. Under the McCarran-Ferguson Act, what is the
minimum penalty for this? - ANSWER-$10,000
, (or up to 1 year in jail)
An insurer's ability to make unpredictable payouts to policyowners is called -
ANSWER-liquidity
A nonparticipating company is sometimes called a(n) - ANSWER-stock insurer
(policyholders do not participate in dividends resulting from stock ownership)
The Do Not Call Registry offers exemptions for calls placed from all of the following
except - ANSWER-insurance sales calls
The authority granted to a licensed producer is provided via the - ANSWER-Law of
Agency
(makes principal responsible for the acts of the agent)
Who is responsible for assembling the policy forms for insureds? - ANSWER-
Insurance carriers
All of the following are elements of an insurance policy EXCEPT - ANSWER-claim
forms
Which contract element is insurable interest a component of? - ANSWER-Legal
purpose
According to the principle of Utmost Good Faith, the insured will answer questions
on the application to the best of their knowledge and pay the required premium,
while the insurer will deal fairly with the insured and it's - ANSWER-promises made
In an insurance contract, the applicant's "consideration" is the - ANSWER-
statements made in the application and the premiums
Pre-death distributions from a modified endowment contract (MEC) receive different
tax treatment than other life insurance policies because - ANSWER-the MEC tends
to be an investment vehicle
Which of these is NOT subject to income taxation under a Modified Endowment
Contract (MEC)? - ANSWER-Death benefit
What happens to the coverage under a children's term rider when that child receives
a certain specified age? - ANSWER-Coverage is eliminated
A business will typically use which type of life insurance to cover their employees? -
ANSWER-Group policy
Which of the following are the premium payments for a Universal life policy NOT
used for? - ANSWER-Separate account investments
PREP REVIEW QUESTIONS
COMPLETE ANSWERS
In what part of an insurance policy are policy benefits found? - ANSWER-
Declarations
(quick guide to the insurance policy, providing all of the basic information the
policyholder needs to know)
A guaranteed issue insurance policy has no - ANSWER-medical underwriting
An endorsement found in an insurance plan which modifies the provisions of the
policy is called a(n) - ANSWER-rider
The suicide clause of a life insurance policy states that if an insured commits suicide
within a stated period from the policy's inception, the insurer will only be liable for a
return of premiums paid - ANSWER-minus indebtedness and with interest
Joanne has a $100,000 whole life policy with an accumulated $25,000 of cash value.
She would like to borrow $15,000 against the cash value. Which of the following
statements is TRUE? - ANSWER-Net death benefit will be reduced if the loan is not
repaid
Kurt is an active duty serviceman who was recently killed in an accident while home
on leave. Which military service exclusion clause would pay upon his death? -
ANSWER-Results
(insurer is excused from paying the amount only if the death is a result of war)
Which of these is NOT a characteristic of the Accelerated Death Benefit option? -
ANSWER-The benefit can be offered as a rider at a specific extra cost or may be at
no cost
Mike inherited his father's traditional IRA. As beneficiary, he will pay ________ taxes
on any money withdrawn. - ANSWER-income
Which of the following employers is required to follow ERISA regulations? -
ANSWER-A local electrical supply company with 12 employees
An insurer's claim settlement practices are regulated by the - ANSWER-State
insurance departments
Karen is a producer who has obtained personal information about a client without
having a legitimate reason to do so. Under the McCarran-Ferguson Act, what is the
minimum penalty for this? - ANSWER-$10,000
, (or up to 1 year in jail)
An insurer's ability to make unpredictable payouts to policyowners is called -
ANSWER-liquidity
A nonparticipating company is sometimes called a(n) - ANSWER-stock insurer
(policyholders do not participate in dividends resulting from stock ownership)
The Do Not Call Registry offers exemptions for calls placed from all of the following
except - ANSWER-insurance sales calls
The authority granted to a licensed producer is provided via the - ANSWER-Law of
Agency
(makes principal responsible for the acts of the agent)
Who is responsible for assembling the policy forms for insureds? - ANSWER-
Insurance carriers
All of the following are elements of an insurance policy EXCEPT - ANSWER-claim
forms
Which contract element is insurable interest a component of? - ANSWER-Legal
purpose
According to the principle of Utmost Good Faith, the insured will answer questions
on the application to the best of their knowledge and pay the required premium,
while the insurer will deal fairly with the insured and it's - ANSWER-promises made
In an insurance contract, the applicant's "consideration" is the - ANSWER-
statements made in the application and the premiums
Pre-death distributions from a modified endowment contract (MEC) receive different
tax treatment than other life insurance policies because - ANSWER-the MEC tends
to be an investment vehicle
Which of these is NOT subject to income taxation under a Modified Endowment
Contract (MEC)? - ANSWER-Death benefit
What happens to the coverage under a children's term rider when that child receives
a certain specified age? - ANSWER-Coverage is eliminated
A business will typically use which type of life insurance to cover their employees? -
ANSWER-Group policy
Which of the following are the premium payments for a Universal life policy NOT
used for? - ANSWER-Separate account investments
