Xcel Solutions - Life Insurance Prep Review
Questions with Correct Answers 2025
An insurer's claim settlement practices are regulated by the - CORRECT 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? - CORRECT ANSWER -$10,000
(or up to 1 year in jail)
An insurer's ability to make unpredictable payouts to policyowners is called - CORRECT ANSWER
-liquidity
A nonparticipating company is sometimes called a(n) - CORRECT 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 -
CORRECT ANSWER -insurance sales calls
The authority granted to a licensed producer is provided via the - CORRECT ANSWER -Law of
Agency
(makes principal responsible for the acts of the agent)
Who is responsible for assembling the policy forms for insureds? - CORRECT ANSWER -Insurance
carriers
, All of the following are elements of an insurance policy EXCEPT - CORRECT ANSWER -claim
forms
Which contract element is insurable interest a component of? - CORRECT 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 - CORRECT ANSWER -promises made
In an insurance contract, the applicant's "consideration" is the - CORRECT 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 - CORRECT ANSWER -the MEC tends to be
an investment vehicle
Which of these is NOT subject to income taxation under a Modified Endowment Contract
(MEC)? - CORRECT ANSWER -Death benefit
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? - CORRECT ANSWER -Universal life
(pays a death claim in the amount of the death benefit plus the savings element)
Which of the following policies does NOT build cash value? - CORRECT ANSWER -Term
Questions with Correct Answers 2025
An insurer's claim settlement practices are regulated by the - CORRECT 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? - CORRECT ANSWER -$10,000
(or up to 1 year in jail)
An insurer's ability to make unpredictable payouts to policyowners is called - CORRECT ANSWER
-liquidity
A nonparticipating company is sometimes called a(n) - CORRECT 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 -
CORRECT ANSWER -insurance sales calls
The authority granted to a licensed producer is provided via the - CORRECT ANSWER -Law of
Agency
(makes principal responsible for the acts of the agent)
Who is responsible for assembling the policy forms for insureds? - CORRECT ANSWER -Insurance
carriers
, All of the following are elements of an insurance policy EXCEPT - CORRECT ANSWER -claim
forms
Which contract element is insurable interest a component of? - CORRECT 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 - CORRECT ANSWER -promises made
In an insurance contract, the applicant's "consideration" is the - CORRECT 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 - CORRECT ANSWER -the MEC tends to be
an investment vehicle
Which of these is NOT subject to income taxation under a Modified Endowment Contract
(MEC)? - CORRECT ANSWER -Death benefit
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? - CORRECT ANSWER -Universal life
(pays a death claim in the amount of the death benefit plus the savings element)
Which of the following policies does NOT build cash value? - CORRECT ANSWER -Term
