XCEL SOLUTIONS - LIFE INSURANCE
PREP REVIEW QUESTIONS
COMPLETE ANSWERS
In what part of an insurance policy are policy benefits found? - ANSWER- Declarations (quick guide to the insurance policy, providing all of the basic information the policyholder needs to know) A guaranteed issue insurance policy has no - ANSWER-medical underwriting An endorsement found in an insurance plan which modifies the provisions of the policy is called a(n) - ANSWER-rider 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 - ANSWER-minus indebtedness and with interest 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? - ANSWER-Net death benefit will be reduced if the loan is not repaid 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? - ANSWER-Results (insurer is excused from paying the amount only if the death is a result of war) Which of these is NOT a characteristic of the Accelerated Death Benefit option? - ANSWER-The benefit can be offered as a rider at a specific extra cost or may be at no cost Mike inherited his father's traditional IRA. As beneficiary, he will pay ________ taxes on any money withdrawn. - ANSWER-income Which of the following employers is required to follow ERISA regulations? - ANSWER-A local electrical supply company with 12 employees An insurer's claim settlement practices are regulated by the - ANSWER-State insurance departments Karen is a producer who has obtained personal information about a client without having a legitimate reason to do so. Under the McCarran-Ferguson Act, what is the minimum penalty for this? - ANSWER-$10,000 1 / 2
(or up to 1 year in jail) An insurer's ability to make unpredictable payouts to policyowners is called - ANSWER-liquidity A nonparticipating company is sometimes called a(n) - ANSWER-stock insurer (policyholders do not participate in dividends resulting from stock ownership) The Do Not Call Registry offers exemptions for calls placed from all of the following except - ANSWER-insurance sales calls The authority granted to a licensed producer is provided via the - ANSWER-Law of Agency (makes principal responsible for the acts of the agent) Who is responsible for assembling the policy forms for insureds? - ANSWER- Insurance carriers All of the following are elements of an insurance policy EXCEPT - ANSWER-claim forms Which contract element is insurable interest a component of? - ANSWER-Legal purpose According to the principle of Utmost Good Faith, the insured will answer questions on the application to the best of their knowledge and pay the required premium, while the insurer will deal fairly with the insured and it's - ANSWER-promises made In an insurance contract, the applicant's "consideration" is the - ANSWER- statements made in the application and the premiums Pre-death distributions from a modified endowment contract (MEC) receive different tax treatment than other life insurance policies because - ANSWER-the MEC tends to be an investment vehicle Which of these is NOT subject to income taxation under a Modified Endowment Contract (MEC)? - ANSWER-Death benefit What happens to the coverage under a children's term rider when that child receives a certain specified age? - ANSWER-Coverage is eliminated A business will typically use which type of life insurance to cover their employees? - ANSWER-Group policy Which of the following are the premium payments for a Universal life policy NOT used for? - ANSWER-Separate account investments
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