Xcel Practice Chapter Exam
___ of personal life insurance premiums is usually deductible for federal income tax
0%
D the agent met with a prospect and ended up selling an insurance policy. While filling out the insurance application, D makes a mistake. In this situation, D MUST
Correct the information and have the prospect initial the change
Which statement regarding the Misstatement of Age provision is considered to be true?
Coverage will be adjusted to reflect the insured's true age if a misstatement of age is discovered
Which of these policies may NOT have the Automatic Premium Loan provision attached to it?
Decreasing Term
What type of life policy has a death benefit that adjusts periodically and is written for a specific period of time?
Decreasing term
Circulation of a maliciously critical statement about an insurer's financial condition meant to damage the insurer's reputation or business is called
Defamation
How are Roth IRA distributions normally taxed?
Distributions are received tax-free
P owns a 25,000 Life policy that pays the face amount to him if he lives to age 70, or to his beneficiary if he dies before age 70. What kind of policy does P own?
Endowment at Age 70
Which of the following is an important wunderwriting principle of group life insurance.
Everyone must be covered in the group
A Universal Life policy is sometimes referred to as an unbundled Life Policy because the owner can see the interest earned, cost of insurance, and the
Expense Charges
Term Insurance has which of the following characteristics?
Expires at the end of the policy period
E and F are business partners. Each takes out a $500,000 life insurance policy on the other, naming himself as primary beneficiary. E and F eventually terminate their business, and four months later E dies. Although E was married with three children at the time of death, the primary beneficiary is still F. However, an insurable interest no longer exists. Where will the proceeds from E's life insurance policy be directed to?
F
M completes an application for life insurance but does not pay the initial premium. All of these actions must occur before M's policy goes into effect EXCEPT
Free-look period has expired
A life insurance application may be rejected on the basis of all of these factors EXCEPT:
Gender
Paying insurance premiums on a more frequent basis will cause the policy to have
Higher premiums
All of the following statements regarding a Tax Sheltered Annuity (TSA) are true EXCEPT:
Income derived from the TSA is received income tax-free
Information obtained from a phone conversation to the proposed insured can be found in which of these reports?
Inspection Report
a life insurance policy would be considered a wagering contract WITHOUT:
Insurable Interest
The accidental death and dismemberment (AD&D) provision in a life insurance policy would pay additional benefits if the insured:
Is blinded in an accident.
In Colorado which of the following is true regarding the commingling of an insured
It is never okay
K's whole life insurance policy lapsed two months ago due to nonpayment. She would now like to reinstate the policy. All of these statements Re correct about the policy's reinstatement EXCEPT
K will forfeit the right to use automatic loan provision upon reinstatement.
An architecture firm would stand to lose a lot of money in the event of the death of its project manager. Which type of policy should the firm purchase on its project manager?
Key Person Life Policy
K is looking to purchase Renewable Term insurance. Which of these types of Term insurance may be renewable?
Level
Which of these are NOT an example of a Nonforfeiture option?
Life Income
Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary?
Life income
A whole life insurance policyownet foes not wish to continue making premium payments. Which of the following enables the policyowner to call the policy for more than its cash value?
Life-Settlement Contract
An insured's inability to perform two or more activities of daily living may trigger which type of policy rider?
Long Term Care Rider
Which of these is an element of a Single Premium annuity?
Lump-sum payment
The entity whose sole purpose is sharing medical data among its member companies is called the
Medical Information Bureau (MIB)
A producer license may be suspended or revoked if the producer is found to be engaging in
Misrepresentation
Which of these life products is NOT considered interest-sensitive?
Modified Whole Life
Which of these is NOT an element of Life insurance premiums?
Morbidity Rate
Which of the following is TRUE about a qualified retirement that is "top heavy"?
More than 60% of plan assets are in key employee accounts
All of these statements concerning Settlement Options are true, EXCEPT:
Only the beneficiary may select
In a life insurance policy, which provision states who may select policy options, designate and name a beneficiary, and be the policy?
Owner's Rights
Which statement is TRUE in regards to a policy loan?
Past-due interest on a policy loan is added to the total debt
Which of the following best describes a contingent beneficiary?
Person designated by the insured to receive policy proceeds in the event that the primary beneficiary dies before the insured
A provision in a life insurance policy that pays the policyowner an amount that does not surpass the guaranteed cash value is called the:
Policy loan provision
Who benefits in Invested-Originated Life Insurance (IOLI) when the insured dies?
Policyowner
Which is true concerning a Variable Universal Life policy?
Policyowner controls where the investment will go and selects the amount of the premium payment
Consumer reports requested by an underwriter during the application process of a life insurance policy can be used to determine:
Probability of making timely premium payments
Which of these provisions require proof of insurability after a policy has lapsed?
Reinstatement
Statements made on an insurance application that are believed to be true to the best of the applicant's knowledge are called
Representations
When a minor is designated as the sole primary beneficiary,
a guardian will be court-appointed in the event of a death claim
A company that has not been authorized to operate in Colorado is known as
a nonadmitted insurer
A 15-year mortgage is best protected by what kind of life policy?
15-year decreasing term
An employee with 25,000 group term life coverage was recently fired. This employee's group coverage may be converted to a:
25,000 Individual Whole Life policy
Q is severely injured in an automobile accident and becomes totally disabled. How many months must Q be disabled before being able to apply for Social Security disability benefits?
5
P purchases a $50,000 term life insurance policy in 2005. One of the questions on the application ask if P engages in scuba diving, to which P answers "No". The policy is then issued with no scuba exclusions. In 2010, P takes up scuba diving and dies in a scuba-related accident in 2011. What will the insurer pay to P's beneficiary?
50,000 minus any outstanding policy loans.
An IRA owner can start making withdrawals and NOT be subjected to a tax penalty beginning at what age?
59 1/2
The cash value in a(n)_________________ Life policy may fluctuate to reflect changing assumptions regarding mortality cost, interest, and expense factors.
A Universal Life policy
Which of the following statements regarding the Notice Regarding Replacement of Life Insurance is CORRECT?
A copy of the Notice must be signed by the applicant and submitted with the application
Which of these is an element of a Variable Life Policy?
A fixed, level premium
The option that provides an additional death benefit for a limited amount of time at the lowest possible cost is called a(n)
Accidental Death and Dismemberment (AD&D)
P is blinded in an industrial accident. Which provision of his life insurance policy will pay a stated benefit amount?
Accidental Death and Dismemberment clause
A policyowner may generate a taxable income from which of the following Dividend options
Accumulation at Interest
A Cost of Living rider gives the insured
Additional Death benefits
Which of the following statements is CORRECT regarding the tax treatment of a lump-sum payment paid to a life insurance policy's primary beneficiary?
All proceeds are income tax free in the year they are recieved
The amount of monthly disability benefits payable under Social Security is affected by which of the following factors?
Amount of the benefits available from other sources
P is a forty year old woman and would like to purchase an annuity that will provide a lifetime income stream beginning at age sixty. Which of the following did she NOT buy?
An immediate annuity
Which product would best serve a retired individual looking to invest a lump-sum of money through an insurance company?
Annuity
A student pilot can pay regular premium costs for her life insurance policy with the addition of which of the following?
Aviation Exclusion
T is the policy owner for a Life Insurance policy with an Irrevocable beneficiary designation. If T wishes to change the beneficiary
Beneficiary
S is covered by a whole life policy. Which insurance product can cover his children?
Child Term Rider
On August 6, D submitted an application for a $50,000 Life Insurance policy and did not pay the initial premium. On August 18, D went to his doctor complaining of chest pains and some tests were given by the doctor. The life policy was delivered by the producer on August 20 and D explains what had recently taken place with the doctor. What action should the producer then take?
Collect initial premium along with a signed health statement
Which of the following is NOT a problem when existing life insurance is replaced with new coverage?
Comprehensive coverage may increase under the new policy
t is given a receipt after completing a life insurance application and paying the initial premium. Under this situation, T's coverage is
Conditional, depending on the insurer's underwriting guidelines.
Which of the following consists of an offer, acceptance, and consideration?
Contract
Insurance policies are offered on a "take it or leave it" basis which make them
Contracts of adhesion
If its employees share in the cost of insurance, what type of group life insurance plan would a corporation have?
Contributory
A producer that only sells insurance to family members is said to be engaging in
Controlled business
What group term life feature permits an individual to depart from the group and continue to be covered without providing evidence of insurability?
Conversion
S buys a $10,000 Whole Life policy in 2003 and pays an annual premium of $100. S dies 5 years later in 2008 and the insurer pays the beneficiary $10,500. What kind of rider did S include on the policy?
Return of a premium rider
Which of the following are Equity Indexed Annuities typically invested in?
S&P 500
When a life insurance underwriter is determining insurability, it is illegal to base those decisions on
Sexual Orientation
Upon delivery of a rated life insurance policy, the Producer must obtain each of the following EXCEPT:
Signed HIPAA disclosure
S recently received a $500,000 lump sum retirement buyout from her employer. She would like to buy an annuity that will immediately furnish her with a guaranteed income for life. What type of annuity is best suited for her situation?
Single Premium
K has inherited a large sum of money. J purchases an annuity with this sum on July 1, and starts receiving payments August 1. These payments will continue for as long as she and her spouse lives. Which type of annuity did K purchase?
Single Premium immediate Joint With Sirvivor Annuity
Which if the following best describes a warranty
Statement gaurenteed to be true
The premiums paid by an employer for his employee's group life insurance are usually considered to be
Tax-deductible to the employer
A policy if adhesion can only be modified by whom?
The Insurance company
Whole Life Insurance is sometimes referred to as "Straight Life" What does the word straight indicate when using this phrase?
The duration of premium payments
In an insurance contract, the insurer is the only party who makes a legally enforceable promise. What kind of contract is this?
Unilateral
The free-look provision begins
Upon receipt of the policy by the policyowner
What type of annuity has a cash value that is based upon the performance of it's underlying investment funds?
Variable
Which type of life policy contains a monthly mortality charge as well as self-directed investment choices?
Variable Universal Life
Term Life Policies that have the ability to be converted to permanent coverage may do so during a specific time period. This conversion period
Varies according to the contract
The part of a Life Insurance policy guaranteed to be true is called a(n):
Warranty
At what point does an informal agreement become a binding contract?
When consideration is provided by one of the parties to the contract
Which of the following consists of an offer, acceptance, and consideration?
contract
All of these are characteristics of an Adjustable Life policy, EXCEPT:
face amount can be adjusted using policy dividends
In an individual retirement account (IRA) rollover contributions are
not limited by dollar amount
Which of these is NOT a type of agent authority?
principal
What is the Suicide provision designed to do?
safeguard the insurer from an applicant who is contemplating suicide
Under a Graded Premium Whole Life policy,
the Premium increases each year during the early years of the conteact and remains the same after that time.
A noncontributory group term life plan is characterized by:
the entire cost of the plan is paid for by the employer
All of these are considered to be a benefit under Social Security, EXCEPT for:
unemployment
A term life insurance matures:
upon the insured's death during the term of the policy.
ABC Insurance Company has accepted a life insurance application which contains unanswered questions. The company then makes the application part of the life contract. In this situation the insurer has:
waived one of its legal rights
A policy that becomes a Modified Endowment Contract (MEC)
will lose many of its tax advantages
