XCEL Chapter 4

Which policy feature makes a universal life policy different from a whole life policy? A. A fixed cash value B. A flexible premium schedule C. A fixed death benefit D. The ability to take out a policy loan

A flexible premium schedule

All of these are valid options for an Adjustable Life Policy EXCEPT? A. The policy's premium can be increased or decreased B. The policy's death benefit can be increased or decreased C. A nonforfeiture option can be used to increase the death benefit D. The policy's protection period can be modified

A nonforfeiture option can be used to increase the death benefit

Which of these is considered to be a Living Benefit option in a life insurance policy? A. Reinstatement B. Waiver of premium C. Accelerated death benefit D. Payor benefit

Accelerated death benefit

Of the following dividend options, which of these is taxable? A. Reduction of premium B. One year term C. Paid-up additions D. Accumulation at interest

Accumulation at interest

An error was made on Mary's life insurance application. Which of the following areas do errors commonly occur on applications and for which the incontestable clause does NOT apply? A. Marital status B. Age C. Address D. Income

Age

Donald is the primary insured of a life insurance policy and adds a children's term rider. What is the advantage of adding this rider? A. Can be converted to permanent coverage without evidence of insurability B. Coverage can be different for each child C. Premiums on this rider are not required until the limiting age is reached D. Increases the policy's overall cash value

Can be converted to permanent coverage without evidence of insurability

Which of the following is NOT part of an insurance contract? A. Policy B. Application C. Riders D. Certificate of Authority

Certificate of Authority

Jonas is a whole life insurance policyowner and would like to add coverage for his two children. Which of the following products would allow him to accomplish this? A. Child term rider B. Payor rider C. Family maintenance rider D. Family income rider

Child term rider

Which of these would limit a company's liability to provide insurance coverage? A. Waiver B. Exclusion C. Rider D. Provision

Exclusion

What is the purpose for having an accelerated death benefit on a life insurance policy? A. It allows for a spouse to be added as a rider to a life insurance policy B. It allows for policy loans to be advanced to the insured in the event of unemployment C. It allows for cash advances to be paid against the death benefit if the insured becomes terminally ill D. It allows for a third party to purchase a life insurance policy at a discounted rate and immediately advance a portion of the death benefit

It allows for cash advances to be paid against the death benefit if the insured becomes terminally ill

Which type of life insurance is normally associated with a Payor Benefit rider? A. Juvenile insurance B. Family income insurance C. Spouse insurance D. Term rider

Juvenile insurance

Which of these is NOT considered to be a common life insurance nonforfeiture option? A. Cash surrender B. Extended term insurance C. Reduced paid-up insurance D. Life income annuity

Life income annuity

Which situation accurately describes a reduced paid-up nonforfeiture option? A. Policy has a decreased face amount B. Face amount of the new policy equals that of the original policy C. Cash value is surrendered to policyowner D. Premiums must continue to be paid

Policy has a decreased face amount

Decreasing term life insurance is often used to? A. provide retirement funds B. provide coverage for a home mortgage C. accumulate cash value D. provide coverage for estate taxes

Provide coverage for a home mortgage

How are survivorship life insurance policies helpful in estate planning? A. Provide funds to help fund retirement B. Provide funds to help pay taxes C. Provide funds for funeral expenses D. Provide tax deductions for premium payments

Provide funds to help pay taxes

Which of the following policies does NOT build cash value? A. Term B. Straight Life C. Endowment D. Variable Life

Term

Which of these is NOT a characteristic of the Accelerated Death Benefit option? A. The face amount and policy premium are not affected by the payment B. Before payment of the benefit is made, specific conditions must exist, such as suffering from a terminal illness C. There may be a dollar limit on the maximum benefit D. The benefit can be offered as a rider at a specific extra cost or may be at no cost

The benefit can be offered as a rider at a specific extra cost or may be at no cost

A life insurance policy normally contains a provision that restricts coverage in the event of death under all of the following situations EXCEPT? A. fare-paying passenger B. pilot of personal airplane C. suicide D. war

fare-paying passenger

A limited payment whole life policy provides? A. protection for 20 years B. lifetime protection C. protection for more than one person D. discounted premiums

lifetime protection

A life insurance policy that has premiums fully paid up within a stated time period is called? A. stated payment insurance B. limited universal insurance C. stated modified insurance D. limited payment insurance

limited payment insurance

A guaranteed issue insurance policy has no? A. initial premium requirement B. incontestable period C. waiting period D. medical underwriting

medical underwriting

A whole life policy option where extended term insurance is selected is called a(n)? A. dividend option B. settlement option C. nonforfeiture option D. interest-only option

nonforfeiture option

A Renewable Term Life insurance policy can be renewed? A. at a predetermined date or age, regardless of the insured's health B. only if the insured provides evidence of insurability C. anytime at the policyowner's request D. typically with no change in premium

only if the insured provides evidence of insurability

The two major actions required for a policyholder to comply with the Reinstatement Clause are? A. provide evidence of insurability, agree to a new incontestable period B. provide evidence of insurability, pay past due premiums C. pay past due premiums, agree to a new incontestable period D. pay past due premiums, agree to a reduction in coverage

provide evidence of insurability, pay past due premiums

An endorsement found in an insurance plan which modifies the provisions of the policy is called a(n) A. attachment B. add-on C. rider D. supplement

rider

If an insured dies during the grace period with no premiums paid? A. the policy would be payable, minus the premium amount B. the policy would be payable only after the beneficiary makes past due premium payment C. all past premiums will be refunded with interest D. the claim would be denied

the policy would be payable, minus the premium amount

The free-look provision gives the policyowner? A. the right to return the policy for a partial refund within a specified number of days B. the right to contest the terms of the policy C. the right to change a policy provision D. the right to return the policy for a full refund within a specified number of days

the right to return the policy for a full refund within a specified number of days

Loans obtained by a policyowner against the cash value of a life insurance policy? A. are treated as taxable income B. would not be treated as taxable income C. are limited by the face amount of the policy D. would be subject to a Federal estate tax

would not be treated as taxable income

A life insurance policyowner was injured in an automobile accident which results in a total and permanent disability. Which rider would pay a monthly amount because of this disability? A. Long-term care rider B. Disability income rider C. Annuity rider D. Waiver of premium

Disability income rider

Peter has a policy where 80% to 90% of the premium is invested in traditional fixed income securities and the remainder of the premium is invested in contracts tied to a stipulated stock index. What kind of policy is this? A. Modified Endowment Contract B. Current assumptive whole life C. Credit life insurance D. Equity index whole life

Equity index whole life

Which of these describes the result of a modified endowment contract that failed to meet the seven-pay test? A. Policy loans are disallowed B. The premium payments will be tax deductible C. Pre-death distributions are typically taxable D. Withdrawals will be prohibited

Pre-death distributions are typically taxable

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? A. Active B. Status C. Results D. Leave

Results

The type of multiple protection coverage that pays on the death of the last person is called a(n)? A. joint life policy B. survivorship life policy C. annuity joint policy D. dual life policy

Survivorship life policy

What does the word "level" in Level Term describe? A. The period of coverage B. The face amount C. The premium payments D. The cash value

The face amount

What is a corridor in relation to a Universal Life insurance policy? A. The gap between the total death benefit and the policy's cash value B. The gap between when a claim is filed and when the death benefit is received C. The amount of interest that has accumulated in the policy's cash value D. The point in time when the policy's cash value reaches $0

The gap between the total death benefit and the policy's cash value

Pat owns a 20-pay life policy with a paid-up dividend option. Which of the following statements is true? A. The policy may be paid up early by using accumulated cash values B. The policy may be paid up early by using policy dividends C. The policy's premiums will increase after 20 years D. The policy's cash values steadily decrease after 20 years

The policy may be paid up early by using policy dividends

The statement which best describes the relationship between the premiums of a whole life policy and the premium payment period is? A. The shorter the payment period, the lower the premium B. The longer the payment period, the higher the premium C. The shorter the payment period, the higher the premium D. The payment period has no affect on the premium payment

The shorter the payment period, the higher the premium

A renewable Term Life insurance policy allows the policyowner the right to renew the policy? A. at anytime the policyowner chooses B. as many times as the policyowner chooses C. paying the same premium as before the renewal D. without producing proof of insurability

without producing proof of insurability

A life insurance policy that contains a guaranteed interest rate with the chance to earn a rate that is higher than the guaranteed rate is called? A. whole life B. group life C. credit life D. universal life

Universal life

Which type of policy combines the flexibility of a universal life policy with investment choices? A. Adjustable universal life policy B. Flexible universal life policy C. Variable universal life policy D. Modified universal life policy

Variable universal life policy