XCEL FINAL EXAM MISSED QUESTIONS
nsurers must advise first-party claimants of acceptance or denial of a claim within how long after receipt of proof of loss? Select one: a. 21 working days b. 21 days c. 15 days d. 15 working days
15 working days
If a life insurance policy is being replaced, how long a "free look provision" is extended to the insured? Select one: a. 10 days b. 45 days c. 20 days d. 30 days
20
The LEAST expensive mode of premium payment is: Select one: a. quarterly b. monthly c. annual d. semiannually
Annually
The group conversion option is allowed for all of the following EXCEPT A) termination of the master policy. B) during the annual benefits enrollment period. C) loss of group coverage due to termination of employment. D) upon the loss of eligibility on the part of a class insureds.
B
Which of the following is an example of a premium payment mode? A) $200 per policy year B) annual premium payment C) payment by check D) automatic deductions of premium
B
Current assumption whole life policies are sensitive to which of the following? A) health of the insured B) current cash value of the policy C) interest rates D) age of the insured
C
Which of the following term insurance types provides temporary protection that can be changed to some type of permanent protection without evidence of insurability? A) decreasing B) re-entry C) convertible D) level
Convertible
The commuted value is a part of which type of policy? Select one: a. Deposit Term Policy b. Family Maintenance Policy c. Family Policy d. Family Income Policy
D
What is the purpose of Stranger-originated life insurance (STOLI)? A) it is a fraudulent policy meant for financial gain of someone of unknown to the insured. B) the policy is written so as to avoid proof of insurable interest. C) it is a method of insuring a person who has been previously declined. D) the policy is originated primarily or solely for the purpose of resale
D
How frequently must every licensed insurer be examined? Select one: a. Every ten years b. Every five years c. Every three years d. Every six years
Every five years
In which of the following must a beneficiary change request be filed in writing to the insurer and is made effective by the insurance company recording the change in its records? A) endorsement method B) recording method C) designation option D) succession of beneficiaries
Recording Method
Which of the following would most likely be handled by a lump-sum payment from a life insurance policy's death benefit? Select one: a. On-going expenses required by the insured's beneficiaries b. The insured's debts, estate taxes, final medical expenses and burial expenses c. Premiums to keep an annuity in force after the insured's death. d. The capitalized value of an individual?s earning ability into the future
b
Self-insuring is also known as what? Select one: a. Risk sharing b. Risk reduction c. Risk retention d. Risk transfer
c
What are dividends? Select one: a. The risk assumed by a syndicate insurer. b. The mandatory settlement option if the policy owner does not choose one before the insured's death. c. The return to the policy holder of part of the premium paid for a policy issued on a participating basis by the insurer. d. The tables used by underwriters to determine the amount of premium due on a policy.
c
Which of the following does not require a FINRA securities representative license in addition to an insurance license to sell? Select one: a. Variable Life b. Variable Universal Life c. Interest Sensitive Whole Life d. Variable Annuity
c
Which of the following is not a characteristic of adjustable life insurance? Select one: a. The policy combines term and whole life into a single policy. b. The policy can be converted from term to whole life. c. Changes have a retroactive effect on any policy provisions. d. The policy can be converted from whole life to term
c Adjustable life policies can be converted between term and whole life policies and can combine the two together as a hybrid policy. However, an adjustable life policy does not have any retroactive effect on any policy provisions.
Brian joined a company and met eligibility requirements for group coverage. If he applies for group life insurance coverage on day 31, which of the following can be expected? Select one: a. Coverage will be denied b. Health questions will be asked c. Coverage will not be denied d. A form must be submitted for delaying the application
c An employee cannot be denied coverage if he/she accepts coverage during the first 31 days of eligibility. If they wait until after the 31st day, however, health questions can be asked and coverage can be denied for pre-existing conditions.
All but which of the following are characteristics of a legal insurance contract? Select one: a. aleatory b. unilateral c. universal d. offer and acceptance
c An insurance policy is a legal contract and is both unilateral and aleatory. There must be an offer and acceptance. They are not universal.
C submitted an application to FEC Insurance for a 30 Year Term policy with a face value of $300,000. If she does not submit a premium with the application it is an: Select one: a. invitation to accept. b. acceptance. c. invitation to make an offer. d. offer.
c If no premium is submitted with the application, it is an invitation to the insurance company to make an offer.
Which of the following is not required by most states that have privacy acts? Select one: a. The company must inform applicants if credit reports will be obtained. b. Applicants are to be given notice if any information will be used for marketing purposes. c. The company must not gather information from certain sources if the applicant tells them not to do so. d. Applicants must sign disclosure statements.
c Insurance privacy acts require that applicants be given notice of a particular action that the insurance company takes. The acts do not prohibit a company from doing anything. They only require companies to notify applicants.
Claims or surrender options must be settled upon receipt of due proof of death of the insured or upon surrender of the policy within what time period? Select one: a. Two months b. Three months c. One month d. Five months
A
Which of the following lists the three common types of permanent individual life insurance? A) Variable Life, Whole Life, Universal Life B) Group Life, Whole Life, Variable Life C) Universal Life, AD&D, Term Life D) Whole life, Incidental Life, Term Life
A
Which one of the following is particularly important for an insurance producer to explain to a client upon delivery of a life insurance policy? A) any exclusions B) loan interest rates C) the effective date D) premium due dates
A
Which of the following is a characteristic of a Modified Premium Whole Life policy? Select one: a. A level premium is paid to age 100, at which time the policy endows and the cash value is paid out to the owner and the insurance coverage ends. b. Premiums are low initially and increase after a period of 3 or 5 years, staying level after this initial increase. c. Complex combinations of whole life, term, and paid-up additions are used in proportions allowing favorable premium levels and adjustable face amounts. d. Premiums increase periodically (every 3-5 years) for up to 15 years.
B
Which of the following is common in an increasing term life policy? A) Insurance protection decreases over time. B) It begins with little or no insurance protection. C) It is used as mortgage credit insurance. D) The premium increases over time.
B
Many states require a producer to maintain a ________ in which to deposit any cash they receive for an insurance policy premium before transmitting the money to the insurer. Select one: a. FIFO b. PFTA c. VGLI d. LIFO
B Cash received for premiums must be kept separate from personal or other business accounts. To facilitate this, many states require agents to maintain a PFTA (Premium Fund Trust Account) if the agent holds premium money for any length of time before giving it to the insurer. This would be particularly important if the agent needs to deposit the cash into an account and forward a check to the insurer.
All life insurance and health insurance contracts contain all of the following EXCEPT A) Policy face B) conditions C) representation D) Insuring clause
C
In a level term life policy, which ALWAYS remains constant? A) beneficiary B) premium C) death benefit D) maximum age of the insured
C
The Consideration Clause does what? Select one: a. States that the insurer will provide coverage if it can verify statements made on the application b. States the insurance company's promise to pay c. States that the insured pay a premium, in return for which the insurer will provide coverage as stated in the policy d. None of these
C
why is relying solely on employer group life insurance generally considered inadequate for most individual's needs? A) It does not pay off the insured's mortgage. B) It is meant to cover funeral expenses only. C) It is financially insufficient to cover end of life expenses. D) It is based on salary amounts that are too low
C
All of the following are features of the spendthrift clause EXCEPT A) the proceeds are paid in some other way than a single lump sum. B) proceeds are protected by the insurer from the beneficiary's creditors. C) transfer of proceeds to creditors is prohibited. D) the beneficiary may encumber the proceeds.
D
All of the following are ownership rights EXCEPT A) changing the beneficiary of the policy B) borrowing funds against cash value C) assigning all of the rights of the policy to another person D) switching the policy from one insured to anther
D
Which of the following is TRUE for a flexible premium annuity? A) The company promises to pay the annuitant an amount each period beginning after a single lump sum payment. B) The actual amount of the annuity benefit is determined in advanced. C) A single set amount premium is paid by the annuitant on an annual basis. D) The purchaser has the option to vary the amount of each premium payment falling between a minimum and maximum amount.
D
Which of the following is TRUE regarding assignment rights for irrevocable beneficiaries? A) They are responsible for premium payment when policyholder fails to pay. B) They can be changed without the beneficiary's consent after a life changing event. C) They are LESS likely to receive a loan based on the expectations of the proceeds. D) They are MORE likely to receive a loan based on the expectations of the proceeds.
D
Which part of an insurance contract contains the promise to pay losses covered by the policy in exchange for the insured's premium and compliance with policy terms? A) conditions B) policy title pages C) definitions D) insuring clause
D
Which type of annuity attempts to offset inflation by providing a benefit linked to an underlying investment account? A) deferred B) immediate C) fixed D) variable
D
Why is the accidental death benefit referred to as double indemnity? A) It provides for both the actual death as well as other losses from the accident. B) The beneficiaries have twice the amount of time to provide proof of loss. C) The beneficiaries must provide proof of death due to multiple causes. D) It provides twice the face value in the policy for death due to accident.
D
What is the primary advantage for obtaining a reinstatement of a policy rather than obtaining a new one? A) No application is required B) insured original issue age is used C) No proof of insurability is required D) outstanding loans are cancelled
Insured original Issue age is used
Which of the following is NOT a factor in premium determination of a life insurance policy? Select one: a. Morbidity b. Mortality c. The insurance producer's commission d. Interest
Morbidity never a factor in premium determination
P is an up and coming executive and wants to purchase a life insurance policy that will allow him to accumulate cash value quickly. He also wants to be able to direct in which investment options the cash values are invested. His agent should recommend which type of policy? Select one: a. Endowment at age 65 b. Interest Sensitive Whole Life c. Variable Life d. Universal Life
P is an up and coming executive and wants to purchase a life insurance policy that will allow him to accumulate cash value quickly. He also wants to be able to direct in which investment options the cash values are invested. His agent should recommend which type of policy? Select one: a. Endowment at age 65 b. Interest Sensitive Whole Life c. Variable Life d. Universal Life
Which of the following is correct about a life insurance Disability Waiver of Premium Rider? Select one: a. Premiums no longer need to be paid when the policy owner becomes disabled. b. A disability must last longer than 3 months. c. Non-refundable premiums must be paid during the "waiting period" from the date of disability. d. The insured must pay premiums while disabled until considered permanently disabled
Premiums must be paid until the policy owner is declared permanently disabled. The owner then pays premiums for the first six months of the permanent disability, after which the insurer reimburses the owner for the premiums paid during that 6-month period. The insured's disability does not matter unless they are also the policy owner. The correct answer is: Premiums no longer need to be paid when the policy owner becomes disabled.
How might someone cover the extra expenses of child care and home-related costs? A) purchasing family term insurance B) adding coverage of a grandparent C) adding cost of living coverage D) purchasing a substitute insured rider
Purchasing family insurance term
Group AD&D policies may be deducted by whom and under which deduction category? A) the employee under medical expenses B) the employee under business expenses C) the employer under business expenses D) the employer under worker's compensation
The employer under business Expense
Agent N is helping an applicant with her insurance application. The applicant's writing hand is injured and can't be used. What should N do? Select one: a. Complete the form and have the insured sign with her other hand. b. Have the applicant's spouse complete and sign the form. c. Have the applicant's parent complete and sign the form. d. Fill out and sign the form while the applicant dictates the information.
a
One method of determining the amount of insurance someone should buy is to calculate Human Life Value, which is calculated by: Select one: a. (Current Income) x (Number of years until retirement) b. (Maximum Income) x (Number of years until expected death) c. (Maximum Income) x (Number of years until retirement) d. (Current Income) x (Number of years until expected death)
a
B, when applying for life insurance, stated that she has never smoked, and that no one in her family has had a heart attack before age 50. These are examples of a _____and a _____. Select one: a. warranty, representation b. representation, representation c. representation, warranty d. warranty, warranty
a A warranty is a specific, guaranteed statement made in answer to a specific question, while representations are statements believed to be true by the applicant. When B says she has never smoked, she is stating something she can know and is making a warranty. The statement that no one in her family has had a heart attack before age 50 is a representation, one that B believes to be true, but cannot know for sure. In general, however, all statements made by an applicant on an application are considered to be representations.
What does a producer NOT need to do upon delivery of a rated policy to an applicant? Select one: a. deliver the conditional receipt. b. receive a signed acceptance that the applicant accepts the modified policy c. pick up any extra premium that may be required. d. have the applicant sign a statement of continued good health
a Conditional receipts are only given at the time of application and receipt of the proposed premium. Once the policy is issued on a rated basis, the conditional receipt is not valid and there has been no insurance in force, nor will there be until the applicant signs a statement of continued good health, and extra premium and a signed acceptance of the changes. No conditional receipt is required at this time as the policy is in force as soon as these conditions are met.
Which of the following statements is CORRECT about insurable interest in a life insurance contract? Select one: a. Everyone has unlimited insurable interest in his or her own life. b. An individual has insurable interest in another person only if they are related by blood or marriage. c. When insurable interest ceases between parties to a contract, the contract is voided automatically. d. Insurable interest must exist when a claim is filed.
a Each individual has unlimited insurable interest in their own life but varying degrees of interest in the lives of others. Insurable interest for life insurance policies need exist only at the time of application. If the relationship between the policy owner and the insured dissolves the policy will continue in force as long as the premiums are paid.
An applicant who pays the initial premium for a life policy and receives the application receipt is considered to be: Select one: a. conditionally insured b. requesting an offer from the insurance company c. accepting a contract with the insurance company d. uninsured
a No coverage is in effect until the initial premium is paid in full to the insurance company. A Conditional Receipt is given to the applicant at time of application and receipt of initial premium acknowledging that the insurance is in force from the date of receipt or medical exam if a medical exam is required, assuming the applicant is insurable at standard rates.
S has a split-dollar life insurance policy with her employer. When S dies, what will her beneficiary receive? Select one: a. The death benefit minus the policy's cash value b. Half the value of the death benefit c. Twice the value of the death benefit d. The death benefit
a Since the employer pays the cost of the insurance that will be applied to the cash value of the policy, the employer is entitled to either the cash value in the policy or to the amount of premium which the employer has paid for the policy, whichever is more.
What is it called when there is a certainty of a loss? Select one: a. Certain risk b. Speculative risk c. Pure risk d. Guaranteed risk
a This is the definition of a certain risk and is only insurable in a life insurance policy, and even then there is no certainty on when the death will occur.
A non-contributory group policy is one in which: Select one: a. The employees pay the full premium. b. The employer pays the full premium. c. The employee pays all or a portion of the cost.
b
Which is not true concerning an Education IRA or Coverdell Savings Account? Select one: a. Contributions must be made in cash before the beneficiary is 18. b. Cash contributions can be made up to $2,500 in any one year. c. Cost of room and board are sometimes covered. d. Cost of books, supplies, and equipment are always covered.
b
Which of the following would not be considered an adverse underwriting decision? Select one: a. Coverage is placed with a different insurer than the company the applicant requested coverage from. b. Issuance of the policy as applied for. c. The policy coverage is terminated. d. Coverage is offered at a rate higher than the standard rate because of information that differs from that supplied by the applicant.
b Adverse underwriting decisions include coverage which is (1) declined, (2) terminated, (3) offered at, or being charged higher than standard rates based on information that differs from that given by the applicant, (4) limited or has benefits or exceptions not applied for, (5) placed with an unauthorized insurer or a different insurer than the one requested.
On-going income needs that an individual would consider for survivors when determining the amount of insurance needed would include all but which of the following? Select one: a. Clothing expense b. Burial expense c. Food expense d. Mortgage expense
b On-going income needs vary greatly from one family to the next and involve several time frames: When there are minor children, when children have left the home, and the spouse's retirement. They include mortgage/rent, utilities, clothing, food, and transportation. Burial and final medical expenses are not on-going, but would best be covered by a lump-sum settlement.
Which of the following is a fiduciary responsibility of insurance producers? Select one: a. The producer must pay all claims within 15 days. b. The producer may not co-mingle premiums received with agency operating capital. c. The producer may write only business that is acceptable to the insurer he/she represents. d. The producer is the representative of the insured first and then of the insurer.
b The insurance producer stands in a special position of trust, confidence and responsibility in his relationship to the insurer called a fiduciary relationship. Money received in return for an insurance policy or binding of insurance coverage is held in a fiduciary capacity and may not be used by the agent for any other purpose. Many states require a producer to maintain a Premium Fund Trust Account (PFTA) if they hold premium money for any length of time before giving it to the insurer. The PFTA must be separate from personal or other business accounts.
If an insured buys a $10,000 life policy on June 1 and commits suicide on December 31 of that year, the insurance company will probably pay which of the following sums to the beneficiary? Select one: a. $10,000 minus premiums paid b. The cash value of the policy only c. $10,000 d. The amount of premiums paid only
d
In the case of viatical settlements, creditors . . . Select one: a. Must be one of the parties to sign the viatical settlement. b. Are legally obligated to suggest in writing that a debtor enter into a viatical settlement. c. Cannot receive proceeds from the settlement. d. May be able to make claims on the proceeds.
d
The disclosure authorization notice which an insurance producer gives to an applicant must be approved by: Select one: a. the insurance company. b. the producer's agency manager. c. the agent himself. d. the insurance commissioner.
d
The term insurance means: Select one: a. The concept of restoring a person to the financial position they were in before a loss occurred. b. An agreement to pay for losses c. A contractual coverage binding the insured to indemnify the insurer against a specified loss in return for paid premiums. d. A contractual coverage binding the insurer to indemnify the insured against a specified loss in return for paid premiums.
d
What type of policy might be used to fund business Buy-Sell agreements? Select one: a. Survivorship Life b. Section 303 Stock Redemption c. TSA d. Joint Life
d
Which of the following constitutes misrepresentation? Select one: a. Making disparaging remarks about another agent or policy b. Promoting a competitors company c. Presenting the audited financial statements to gain the trust of a client d. Stating that the state or federal government guarantees funds in any way
d
Which of the following is true concerning backdating? Select one: a. Backdating is allowed by all companies if the applicant's birthday was within the past six months. b. Insurers do not use backdating for marketing purposes. c. Backdating does not require premiums to be collected from the date at which the policy is dated and causes slightly lower premiums. d. If a policy is backdated, the date from which premiums must be collected becomes the policy's anniversary.
d
Which of the following insurers often offer insurance coverage for situations where standard insurers will not offer coverage because of particularly high risk or loss potential? Select one: a. Syndicate insurers b. Mutual insurers c. Reciprocal companies d. Federal or state government
d Some areas have such high risks that private insurers cannot or will not enter the market. In these cases, the federal or state government may step in to offer the needed coverage. Examples include Social Security, Medicare, flood insurance, and federal crop and crime insurance.
From which of the following sources does an underwriter obtain the producer's report? Select one: a. Investigative Report b. Credit Report c. Application d. Agent's Statement
c
Interest adjusted life insurance policy cost comparison methods include: Select one: a. Net Payment Cost Index and Modified Cash Index b. Surrender Cost Index and Consumer Price Index. c. Surrender Cost Index and Net Payment Cost Index d. Consumer Price Index and Modified Cost Index
c
Which of the following is true? Select one: a. Life insurance can only be purchased for one who is a legal relative (i.e., a spouse or child). b. Life insurance is easily accessible to all applicants who are willing to pay the premium. c. An applicant cannot buy life insurance on another person without a legal insurable interest. d. It is not possible for life insurance to be purchased for a partner in a business.
c
Which of the following must be communicated to applicants in order to comply with insurance privacy acts? Select one: a. Applicants must be notified of changes made to their pending policy. b. Insurance privacy acts do not concern applicants, only insurers. c. They must be told whether any information will be used for marketing purposes. d. All of the different options, riders, etc., must be made known to the applicant.
c An insurer gains much information from an insurance application, and may want to use the information in trying to sell other policies or products. Insurance privacy acts require that companies inform applicants before trying to market other products to them, and the applicant has the right to request that no such marketing take place.
The responsibilities of an insurance producer who sells a policy that replaces an already existing policy include all of the following except: Select one: a. Leave with the applicant the original or a copy of written or printed communications used for presentation to the applicant relative to policies or annuities associated with the replacement sale. b. Present to the applicant, not later than at the time of taking the application, a Notice Regarding Replacement of Life Insurance and Annuities. c. Send to each existing insurer a written communication advising of the replacement or proposed replacement. d. Obtain a list of existing life insurance or annuities, or both, to be replaced and properly identified by name of insurer, the insured and contract number.
c It is the responsibility of the insurance company, not the producer, to send to each existing insurer a written communication advising of the replacement or proposed replacement.
