XCEL Exam 1

K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary?

$20,000 death benefit

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?

10 years

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?

20-Pay Life accumulates cash value faster than Straight Life

N is a 40-year old applicant who would like to retire at age 70. He is looking to buy a life insurance policy with level premiums, permanent protection, and be paid-up at retirement. Which of these should N purchase?

30 Pay Life

If X wants to buy $50,000 worth of permanent protection on his/her spouse and $25,000 worth of 10-year Term coverage on X under the same policy, the applicant should purchase

A Whole Life Policy with an Other Insured Rider

Decreasing term policy

A life insurance policy written for a specified period of time with a death benefit that changes regularly according to a schedule. A type of life policy that has a death benefit that adjusts periodically and is written for a specified period of time

Which of the following types of policies pays a benefit if the insured goes blind?

AD&D

What kind of life insurance starts out as temporary coverage but can be later modified to permanent coverage without evidence of insurability?

Convertible term

K purchased a $10,000 Life Policy that will pay the face amount to her if she lives to age 65, or to her beneficiary if she dies before age 65. K purchase which of the following types of policies?

Endowment at Age 65

L, aged 50, and L's spouse, 48, have one natural child and one adopted child. They purchase a Family Policy that covers L's spouse to age 65. A death benefit will NOT be paid in which of the following circumstances?

L's spouse dies at age 66

K is looking to purchase Renewable Term insurance. Which of these types of Term insurance may be renewable?

Level

D needs life insurance that provides coverage for only a limited amount of time while also paying the lowest possible premium. What kind of policy is needed?

Level term

When a life insurance policy exceeds certain IRS table values, the result would create which of the following?

Modified Endowment Contract (MEC)

K buys a policy where the premium stays fixed for the first 5 years. The premium then increases in year 6 and stays level thereafter, all the while the death benefit remains the same. What kind of policy is this?

Modified Whole Life

T has a term policy that allows him to continue the coverage after expiration of the initial policy period. What type of term coverage is this?

Renewable

How does a typical Variable Life Policy investment account grow?

Through mutual funds, stocks, bonds

A 42-year-old executive wants to purchase life insurance that will allow for increases or decreases to coverage as his/her needs change. Which of the following policies will best meet this need?

Universal Life

Which of the following types of policies BEST identifies one in which the cash value may fluctuate to reflect changing assumptions regarding mortality cost, interest, and expense factors?

Universal Life

Life insurance immediately creates an estate upon the death of an insured. Which of the following policies is characterized by a guaranteed minimum death benefit?

Variable Life

Which of the following policies is characterized by a flexible premium and death benefit and allows the policyowner control of the investment aspect of the plan?

Variable Universal Life

Which type of life policy contains a monthly mortality charge as well as self-directed investment choices?

Variable Universal Life

A life insurance policy that provides a policyowner with cash value along with a level face amount is called:

Whole Life

What kind of life policy either pays the face value upon the death of the insured or when the insured reaches age 100?

Whole Life

What type of insurance offers permanent life coverage with premiums that are payable for life?

Whole Life

Which of these is an element of a Variable Life Policy?

a fixed, level premium

Additional coverage can be added to a Whole Life policy by adding a(n):

additional term rider

Accidental Death & Dismemberment

can provide financial benefits if an insured is killed, loses a limb, suffers blindness, or is paralyzed in a covered accident

A Whole Life Insurance Policy endows when the:

cash value equals the death benefit

Which statement about a whole life policy is correct?

cash value may be borrowed against

Endowment Policy

characterized by cash values that grow at a rapid pace so that the policy. matures or endows at a specified date (or before age 100)

Universal Life

characterized by flexible premiums and an adjustable death benefit. Has a cash value that may fluctuate to reflect changing assumptions regarding mortality cost, interest, and expense factors

S is covered by a whole life policy. Which insurance product can cover his children?

child term rider

When a policyowner exchanges a term policy for a whole life policy without providing proof of good health, which of these apply?

conversion provision

What type of life policy has a death benefit that adjusts periodically and is written for a specific period of time?

decreasing term

Which of these statements describe a Modified Endowment Contract (MEC)?

exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract

P is looking to purchase a life insurance policy that will pay a stated monthly income to his beneficiaries for 20 years after he dies and a lump sum of $20,000 at the end of that 20 year period. What type of policy should P purchase?

family maintenance policy

What kind of special need would a policyowner require with an Adjustable Life insurance policy?

flexible premiums

Renewable Term Policy

guarantee the insured the right to continue term coverage after expiration of the initial policy period

Variable Life products require a producer to

hold a life insurance license and a securities license

Which of the following actions require a policyowner to provide proof of insurability in an Adjustable Life policy?

increase face amount

Variable Universal Life

is comprised of monthly mortality charges and self directed investment choices. It's characterized by a flexible premium and death benefits and allows the policyowner control of the investment aspect of the plan.

Life insurance that covers an insured's whole life with level premiums paid over a limited time is called:

limited pay life

Which of these life products is NOT considered interest-sensitive?

modified whole life

Whole Life Insurance policies are contractually guaranteed to provide each of the following, EXCEPT:

partial withdrawal features beyond a surrender charge period

Family Maintenance Policy

pays a monthly income from the date of death of the insured to the end of the preselected period. The payment of the face amount of the policy is payable at the end of such preselected period

Level Term Policy

pays the same benefit amount if death occurs at any point during the term. They may be renewable

Equity Indexed Life Insurance

permanent life insurance that allows policyholders to tie accumulation values to a stock market index

Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies?

policyowner

A Limited-Pay Life Policy has

premium payments limited to a specified number of years

Which of these characteristics is consistent with a Straight Life policy?

premiums are payable for as long as there is insurance coverage in force

Whole Life Insurance

premiums are payable throughout the insured's lifetime, and coverage continues until the insured's death. This includes: cash value that will ultimately replace the death benefit, nonforfeiture benefit options, and premiums that remain fixed for the life of the policy

Which statement is correct regarding the premium payment schedule for whole life policies?

premiums are payable throughout the insured's lifetime/coverage lasts until death of the insured

Straight Whole Life

provides permanent level protection with level premiums from the time the policy is issued until the insured's death (or age 100)

What type of life policy covers two people and pays upon the death of the last insured?

survivorship

What type of life insurance are credit policies issued as?

term

The most important factor to consider when determining whether to convert term insurance at the insured's attained age or the insured's original age is:

the cost

The amount of coverage on a group credit life policy is limited to

the insured's total loan value

All of these statements about Equity Indexed Life Insurance are correct, EXCEPT:

the premiums can be lowered or raised, based on investment performance

Under a Renewable Term policy,

the renewable premium is calculated on the basis of the insured's attained age

When is the face amount paid under a Joint Life and Survivor policy?

upon death of the last insured

A term life insurance policy matures:

upon the insured's death during the term of the policy

Which policy requires an agent to register with the National Association of Securities Dealers (NASD) before selling?

variable life

Which of the following policies combines investment choices with a form of Term coverage?

variable universal life