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XCEL Final Exam California Life Insurance Questions And Correct Detailed Answers (Verified Answers) Already Graded A+
1. Question: Which of the following is NOT a benefit of insurance?
Correct Answer: Losses due to fraud are eliminated
- Question: Which of the following is a contract that involves one party which indemnifies
another when a loss arises from an unknown event?
Correct Answer: Insurance Policy
- Question: An annuity which is backed by a life insurer's separate account is called a(n)
Correct Answer: Variable Annuity
- Question: An annuitant would like to determine the amount of an annuity distribution
that is exempt from taxation. What is used to calculate this?
Correct Answer: Exclusion Ratio
- Question: Which of the following is NOT a feature of equity-indexed annuities?
Correct Answer: Offers a maximum interest rate that increases annually
- Question: What kind of annuity pays income to two annuitants until their deaths?
Correct Answer: Joint And Survivor Annuity
7. Question: The systematic liquidation of a sum of money is provided by a(n)
Correct Answer: Annuity
8. Question: What distinguishes a deferred annuity from an immediate annuity?
Correct Answer: The time at which benefit payments start
- Question: Cindy buys a 10-year certain annuity with an installment refund. After
receiving monthly payments for 5 years, Cindy dies. How many remaining payments will the insurer make to her beneficiary?
Correct Answer: 60 Payments
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10. Question: A savings vehicle designed to first accumulate funds and then
systematically liquidates the funds is called a(n)
Correct Answer: Deferred Annuity
11. Question: What is a participating life insurance policy?
Correct Answer: Contract that allows the policyowner to receive a share of surplus in the form of policy dividends
- Question: Which of the following is an insurer established by a parent company for the
purpose of insuring the parent company's loss exposures?
Correct Answer: Captive Insurer
13. Question: Which of the following is NOT a characteristic of reinsurance?
Correct Answer: Increases the unearned premium reserve
- Question: Which of the following is a type of insurance where an insurer transfers loss
exposures from policies written for its insureds?
Correct Answer: Reinsurance
15. Question: An insurer owned by its policyholders is called a
Correct Answer: Mutual Insurer
- Question: Which of the following contracts is defined as "one that restores an injured
party to the condition that was present before the loss"?
Correct Answer: Indemnity Contract
- Question: If a material warranty violation on the part of the insured is found, what
recourse does an insurer have?
Correct Answer: Rescind The Policy
- Question: Restoring an insured to the same condition as before a loss is an example of
the principle of
Correct Answer: Indemnity
- Question: Reasonably necessary acts that an agent must perform for carrying out
his/her expressly authorized duties are covered by an agent's
Correct Answer: Implied Authority
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- Question: Which principle is accurately described with the statement "Insureds are
entitled to recover an amount NOT greater than the amount of their loss"?
Correct Answer: Indemnity
- Question: Which statement is CORRECT when describing a contract of adhesion?
Correct Answer: Contract may be accepted or rejected by the insured
22. Question: Express power given to an agent in an agency agreement is
Correct Answer: The authority to represent the insurer
23. Question: What is the price of insurance for each exposure unit?
Correct Answer: Rate
- Question: A creditor would be allowed rights to life insurance policy proceeds if which
of the following beneficiaries is chosen?
Correct Answer: The Insured's Estate
25. Question: A spendthrift clause in a life insurance policy
Correct Answer: Restricts the ability of the beneficiary to assign benefits
26. Question: Which of the following is NOT an insurer policy expense?
Correct Answer: Premiums
- Question: Pam is the primary beneficiary of a life insurance policy and wants to let the
death benefit accumulate and receive only the monthly investment proceeds. Which settlement option should she choose?
Correct Answer: Interest Option
28. Question: Premiums are best described as
Correct Answer: The amount an insured pays per unit of coverage
- Question: How are death benefits that are received by a beneficiary normally treated
for tax purposes?
Correct Answer: Exempt from federal income taxes
30. Question: When calculating life insurance premium rates, which component is
affected by an insured's age and gender?
Correct Answer: Mortality
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31. Question: Which of the following is NOT a component of determining policy
premiums?
Correct Answer: Dividends
- Question: What does the guaranteed insurability option allow an insured to do?
- Question: Which of the following is NOT a common life insurance policy rider?
Correct Answer: Purchase additional coverage with no evidence of insurability required
Correct Answer: Extended Term
- Question: Jerry is an insured who understated his age on his life insurance application,
paying $12 per $1,000 of insurance instead of $15 per $1,000. If he dies, how will the adjusted death benefit be calculated?
Correct Answer: 12/15th of the policy's face amount
- Question: An insurer can be protected from adverse selection with which policy
provision?
Correct Answer: Suicide Clause
- Question: When an accidental death benefit is added to a whole life policy, how does
this affect the policy's cash value?
Correct Answer: Policy's cash value is not affected
- Question: When a life insurance is surrendered, how does the cost recovery rule
apply?
Correct Answer: The policy's cost basis is exempt from taxation
- Question: If an insured dies because of an accident, which type of life insurance rider
will provide additional coverage?
Correct Answer: Accidental Death Rider
39. Question: How is a life insurance policy dividend legally defined?
Correct Answer: A return of excess premium and not taxable
- Question: Mike and Ike are 30 year old identical twins. Both are in excellent health.
Each brother purchases a life policy that has a $750 annual premium. Mike buys a 10-year renewable term policy. Ike purchases a whole life policy. All of the following statements are true EXCEPT
