XCEL EXAM PREP PART 2
Ron has a life insurance policy with a face value of $100,000 and a cost of living rider. If the consumer price index has gone up 4%, how much may Ron increase the face value of the policy? $400 $800 $2,000 $4,000
$4,000
If an insured's age on a life insurance policy has been misstated, what is the insurer's liability if the insured dies? No death benefit is owed because of the misstatement of age The full original death benefit listed on the policy A prorated death benefit based on the amount of insurance the insured's premiums would have been if purchased at the correct age The original death benefit listed on the policy minus any outstanding loans and interest
A prorated death benefit based on the amount of insurance the insured's premiums would have been if purchased at the correct age
Which of these is considered to be a Living Benefit option in a life insurance policy?
Accelerated death benefit
Which of these is considered to be a Living Benefit option in a life insurance policy? Reinstatement Waiver of premium Accelerated death benefit Payor benefit
Accelerated death benefit
Which of the following is considered to be an alternative to a life settlement? Accelerated death benefit rider Waiver of premium rider Extended term option Decreasing term insurance
Accelerated death benefit rider
Which dividend option would an insurer invest the policyowner's money and add any interest earnings as the dividends accrue? Accumulation at Interest Option Cash Dividend Option Paid-Up Additions Option One-Year Term Dividend Option
Accumulation at Interest Option
Of the following dividend options, which of these is taxable?
Accumulation at interest
Of the following dividend options, which of these is taxable? Reduction of premium One year term Paid-up additions Accumulation at interest
Accumulation at interest
An error was made on Mary's life insurance application. Which of the following areas are errors commonly made on applications for which the incontestable clause does NOT apply? Marital status Age Address Income
Age
In what part of an insurance policy are policy benefits found? Declarations Entire contract Waivers Conditions
Declarations
What is the name of the provision which states that a copy of the application must be attached to the policy when issued?
Entire Contract
What is the name of the provision which states that a copy of the application must be attached to the policy when issued? Policy Summary Buyer's Guide Entire Contract Entire Policy
Entire Contract
Which of these would limit a company's liability to provide insurance coverage?
Exclusion
Which of these would limit a company's liability to provide insurance coverage? Waiver Exclusion Rider Provision
Exclusion
Which of these would limit a company's libaility to provide insurance coverage?
Exclusion
An insurer will accept a premium from the insured and continue the coverage in full force as though it was NOT late during which time period?
Grace period
An insurer will accept a premium from the insured and continue the coverage in full force as though it was NOT late during which time period? Incontestable period Probation period Reinstatement period Grace period
Grace period
Which of the following protects a policyowner from a misrepresentation caused by an innocent mistake? Reinstatement clause Entire Contract clause Incontestable clause Nonforfeiture clause
Incontestable clause
Which of these is NOT considered to be a nonforfeiture option in a whole life insurance policy? Interest only Reduced paid-up insurance Extended term insurance Cash surrender
Interest only
Which of these is NOT considered to be a common life insurance nonforfeiture option? Cash surrender Extended term insurance Reduced paid-up insurance Life income annuity
Life income annuity
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?
Net death benefit will be reduced if the loan is not repaid
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? Net death benefit will be reduced if the loan is not repaid No interest will be charged on loan balance Term life policies are the only type of insurance that allows policy loans A loan can be taken out for up to the face amount of the policy
Net death benefit will be reduced if the loan is not repaid
What is an insurer required to do when faced with an error made under the Misstatement of Age provision?
Pay age-corrected benefits
What is an insurer required to do when faced with an error made under the Misstatement of Age provision? Cancel the policy Pay age-corrected benefits Pay full benefits as stated in the policy Bill the policyowner for back premiums
Pay age-corrected benefits
Which type of rider will waive the premium on a child's life insurance policy if the parent paying the premium dies.
Payor benefit
Which type of rider will waive the premium on a child's life insurance policy if the parent paying the premium dies? Waiver of premium Juvenile waiver Guaranteed insurability Payor benefit
Payor benefit
What is an insurance policy's grace period?
Period of time after the premium is due but the policy remains in force
What is an insurance policy's grace period? Period of time after the initial premium is paid and before the policy is issued Period of time it takes for a policy's underwriting to complete Period of time after a policy is issued and before it is delivered to policyowner Period of time after the premium is due but the policy remains in force
Period of time after the premium is due but the policy remains in force
Which situation accurately describes a reduced paid-up nonforfeiture option? Policy has a decreased face amount Face amount of the new policy equals that of the original policy Cash value is surrendered to policyowner Premiums must continue to be paid
Policy has a decreased face amount
All of the following are considered to be nonforfeiture options available to a policy owner EXCEPT
Reduction of Premium
All of the following are considered to be nonforfeiture options available to a policyowner EXCEPT Extended Term Insurance Cash Surrender Reduction of Premium Reduced Paid-Up Insurance
Reduction of Premium
A policyowner may exercise which of these dividend options that uses the dividend to pay all or part of the next premium due? Reduction of premium dividend option Extended term option Paid-up option Cash dividend option
Reduction of premium dividend option
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?
Results
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? Active Status Results Leave
Results
Which of these is NOT a characteristic of the Accelerated Death Benefit option? The face amount and policy premium are not affected by the payment Before payment of the benefit is made, specific conditions must exist, such as suffering from a terminal illness There may be a dollar limit on the maximum benefit 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
James is the insured on a life insurance policy where his age was misstated on the application. Which of the following is CORRECT regarding the death benefit amount.
The death benefit paid will be the premium would have purchased the correct age.
James is the insured on a life insurance policy where his age was misstated on the application. Which of the following is CORRECT regarding the death benefit amount? The original face amount will be paid to the beneficiary The policy will be voided with no death benefits paid The death benefit paid will be what the premium would have purchased at the correct age The amount of premiums paid will be returned with interest
The death benefit paid will be what the premium would have purchased at the correct age
All of the following riders can increase the death benefit amount EXCEPT
Waiver of Premium
All of the following riders can increase the death benefit amount EXCEPT Cost of Living Waiver of Premium Accidental Death Rider Guaranteed Insurability
Waiver of Premium
Which of these is considered to be a Living Benefit option in a life insurance policy?
accelerated death benefit
The double indemnity provision in a life insurance policy pertains to an insured's death caused by a(n) sickness suicide accident war
accident
All of these are common exclusions to a life insurance policy EXCEPT
accidental death
All of these are common exclusions to a life insurance policy EXCEPT accidental death military service aviation hazardous occupations
accidental death
All of these common exclusions to a life insurance policy EXCEPT
accidental death
All of these are valid options for what a policy owner may do with policy dividends EXCEPT
accumulate without interest
All of these are valid options for what a policyowner may do with policy dividends EXCEPT cash outlay to the policyowner accumulate without interest reduction in policy premium buy additional insurance coverage
accumulate without interest
All of these are valid policy dividend options for a life insurance policyowner EXCEPT...
accumulate without interest
Which dividend option would an insurer invest the policyowner's money and add any interest earnings as the dividends accrue?
accumulation at interest option
An error made on Mary's life insurance application. Which of the following areas are errors commonly made on applications for which the incontestable clause does NOT apply?
age
A provision that allows a policyowner to temporarily give up ownership rights to secure a loan is called a(n)
collateral assignment
A provision that allows a policyowner to temporarily give up ownership rights to secure a loan is called a(n) automatic premium loan nonforfeiture option collateral assignment irrevocable assignment
collateral assignment
A provision that allows a policyowner to temporarily give up ownership rights to secure a loan is called a...
collateral assignment
Ownership of a life insurance policy may be temporarily transferred with a(n) collateral assignment absolute assignment transferable assignment beneficiary assignment
collateral assignment
Ownership of a life insurance policy may be temporarily transferred with a...
collateral assignment
Life insurance policies will normally pay for losses arising from commercial aviation war suicide hazardous jobs
commercial aviation
A waiver of premium rider allows an insured to waive premium payments if the insured is temporarily disabled unemployed completely and permanently disabled experiencing financial hardship
completely and permanently disabled
A waiver of premium rider allows an insured to waive premium payments if the insured is...
completely and permanently disabled
In what part of an insurance policy are policy benefits found?
declarations
Matt is applying for life insurance and requests a double indemnity rider. A double indemnity benefit will be payable to Matt's beneficiary if Matt is killed while committing a felony dies of a stroke dies instantly from a car accident is injured in a skiing accident and dies 18 months later
dies instantly from a car accident
All of these are standard exclusions found in a life insurance policy EXCEPT hazardous occupations aviation disability war
disability
All of these are standard exclusions found in a life insurance policy EXCEPT
disabillity
What is the name of the provision which states that a copy of the application must be attached to the policy when issued?
entire contract
A life insurance policy normally contains a provision that restrict coverage in the event of death under all of the following situations EXCEPT
fare-paying passenger
A life insurance policy normally contains a provision that restricts coverage in the event of death under all of the following situations EXCEPT fare-paying passenger pilot of personal airplane suicide war
fare-paying passenger
A life insurance rider that allows an individual to purchase insurance as they grow older, regardless of insurability, is called a(n) guaranteed term rider guaranteed insurability rider accelerated benefit rider cost of living rider
guaranteed insurability rider
Which of the is NOT considered to be a nonforfeiture option in a whole life insurance policy?
interest only
Which of these is NOT considered to be a common life insurance nonforfeiture option?
life income annuity
A guaranteed issue insurance policy has no initial premium requirement incontestable period waiting period medical underwriting
medical underwriting
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 minus indebtedness and with interest during the last 12 months minus indebtedness and without interest during the last 6 months
minus indebtedness and without interest
A whole life policy option where extended term insurance is selected is called a
nonforfeiture option
A provision in a whole life policy that allows a policyowner to terminate the policy in return for a reduced paid-up policy of the same type is called a(n) insuring clause payor provision reinstatement provision nonforfeiture provision
nonforfeiture provision
A provision that allows a policy owner to withdraw a policy's cash value interest free is a(n)
partial surrender
A provision that allows a policyowner to withdraw a policy's cash value interest free is a(n) partial surrender waiver of premium automatic premium loan grace period
partial surrender
The automatic premium loan provision authorizes an insurer to withdraw from a policy's cash value the amount of any interest payable from an outstanding policy loan balance past due premiums that have not been paid by the end of the grace period the outstanding policy loan balance any surrender charges owed by the policyowner
past due premiums that have not been paid by the end of the grace period
What is an insurer required to do when faced with an error made under the Misstatement of Age provision?
pay age-corrected benefits
A rider that assures premiums will be paid on a juvenile policy until the child reaches a specific age is called a(n) waiver of premium rider payor rider automatic premium loan rider juvenile waiver rider
payor rider
Which situation accurately describes a reduced paid-up nonforfeiture option?
policy has a decreased face amount
In order to activate the reinstatement clause of a lapsed life insurance policy, the insured MUST
provide evidence of insurability to the insurer
In order to activate the reinstatement clause of a lapsed life insurance policy, the insured MUST remit all past-due premiums within the grace period provide evidence of insurability to the insurer resubmit a new life insurance application provide a valid reason for the lapse
provide evidence of insurability to the insurer
The two major actions required for a policyholder to comply with the Reinstatement Clause are provide evidence of insurability, agree to a new incontestable period provide evidence of insurability, pay past due premiums pay past due premiums, agree to a new incontestable period pay past due premiums, agree to a reduction in coverage
provide evidence of insurability, pay past due premiums
All of the following are considered to be nonforfeiture options available to a policyowner EXCEPT...
reduction of premium
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?
results
A life insurance policy owner does NOT have the right to
revoke an absolute assignment
A life insurance policyowner does NOT have the right to change a beneficiary select a beneficiary take out a policy loan revoke an absolute assignment
revoke an absolute assignment
A life insurance policyowner does NOT have the right to...
revoke an absolute assignment
An endorsement found in an insurance plan which modifies the provisions of the policy is called a...
rider
Which of these is NOT a characteristic of the Accelerated Death Benefit option?
the benefit can be offered as a rider at a specific extra cost or may be at no cost
James is the insured on a life insurance policy where his age was misstated on the application. Which of the following is CORRECT regarding the death benefit amount?
the death benefit paid will be what the premium would have purchased at the correct age
An insured individual and the policy's beneficiary die from the same accident. The common disaster provision states the insurer will continue as if the insured outlived the beneficiary the beneficiary outlived the insured no beneficiary was ever named the insured and beneficiary died at the same time
the insured outlived the beneficiary
A whole life insurance policy accumulates cash value that becomes the policy loan value which the insured may borrow against the death benefit the source of funding for administration fees a source of funding a term rider to the policy
the policy loan value which the insured may borrow against
Pat owns a 20-pay life policy with a paid-up dividend option. Which of the following statements is true?
the policy may be paid up early by using policy dividends
If an insured dies during the grace period with no premiums paid
the policy would be payable, minus the premium amount
If an insured dies during the grace period with no premiums paid the policy would be payable, minus the premium amount the policy would be payable only after the beneficiary makes past due premium payment all past premiums will be refunded with interest the claim would be denied
the policy would be payable, minus the premium amount
Dorian exercised a nonforfeiture option by using his life policy's cash value to purchase an extended term insurance option. When the term insurance expires, he has the option of resuming the original policy and paying the same premium the coverage can be extended with a lump sum payment all remaining cash values are paid to the policyowner the protection ends
the protection ends
The free-look provision gives the policyowner the right to return the policy for a partial refund within a specified number of days the right to contest the terms of the policy the right to change a policy provision 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
All of the following riders can increase the death benefit amount EXCEPT...
waiver of premium
Loans obtained by a policy owner against cash value of a life insurance policy
would not be treated as taxable income
Loans obtained by a policyowner against the cash value of a life insurance policy are treated as taxable income would not be treated as taxable income are limited by the face amount of the policy would be subject to a Federal estate tax
would not be treated as taxable income
Loans obtained by a policyowner against the cash value of a life insurance policy...
would not be treated as taxable income
