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Xcel Life Insurance Test > Don’t Knows > Flashcards

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1
Q

Life insurance immediately creates an estate upon the death of the insured. Which of the following policies is characterized by a guaranteed minimum death benefit?

A

Variable life

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2
Q

Jay let her life insurance policy lapse eight months ago due to nonpayment. She can reestablish coverage under which of the following provisions?

A

Reinstatement provision

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3
Q

Which of these is not considered to be a cost connected with an individuals death?

A

Business expenses

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4
Q

B receives yearly dividends and interest from a participating life insurance policy. Which of these should B include as gross income for federal income tax purposes?

A

Interest only

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5
Q

A qualified profit-sharing plan is designed to:

A

Allow employees to participate in the profits of the company

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6
Q

How are policy owner dividends treated in regards to Income Tax?

A

Interest on accumulations is taxed

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7
Q

What benefit does the payor clause on a juvenile life policy provide?

A

Premiums are waived if payor becomes disabled

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8
Q

A whole life insurance policy owner does not wish to continue making premium payments. Which of the following enables the policy owner to sell the policy for more then it’s cash value?

A

Life settlement contract

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9
Q

Which of the following types of permanent life insurance policies offers the highest initial cash value?

A

Single premium

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10
Q

D needs life insurance that provides coverage for only a limited amount of time while also paying the lowest possible premium. What kind of policy is needed?

A

Level term

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11
Q

Which of the following statements about accumulated interest earned on dividends from an insurance policy is true?

A

Taxed as ordinary income

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12
Q

D owns a whole life policy that was purchased 10 years ago. If the premium payments suddenly stop and takes no additional action, which non-forfeiture option will the insurer likely proceed with?

A

Extended term

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13
Q

All of these are characteristics of an adjustable life policy except:

A

Face amount can be adjusted using policy dividends

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14
Q

S has a whole life policy with a premium payment due soon. Which provision would keep the policy in force if S does not make the required payment and the policy has adequate cash value from which the premium payment can be made?

A

Automatic policy loan

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15
Q

Which of these types of life insurance allows the policy owner to have level premiums, and to also choose from a selection of investment options?

A

Variable life

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16
Q

A student pilot can pay regular premium cost for her life insurance policy with the addition of which of the following?

A

Aviation exclusion

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17
Q

Term life policies that have the ability to be converted to permanent coverage may do so during a specific time period. This conversion period:

A

Varies according to the contract

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18
Q

Additional coverage can be added to a whole life policy by adding a(n)

A

Decreasing term rider

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19
Q

C is trying to determine whether to convert her convertible term life policy to whole life insurance, using her original age or attained age. What factor would affect her decision the most?

A

The cost

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20
Q

Under a trustee group life policy, who would be eligible for a certificate of coverage?

A

Employee

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21
Q

What group term life feature permits an individual to depart from the group and continue to be covered without providing evidence of insurability?

A

Conversion

The conversion privilege

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22
Q

An immediate annuity consists of a

A

Single premium

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23
Q

An individual who purchases a life annuity is given protection against

A

The risk of living longer than expected

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24
Q

T has an annuity that guarantees an income payment for the rest of his life. The contract also guarantees that if T dies before receiving payments for 20 years, the remaining payments will be paid to his son for the balance of the 20 years. What type of annuity is this?

A

Life annuity with period certain

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25
What type of annuity has a cash value that is based upon the performance of its underlying investment funds?
Variable
26
In a key employee life insurance policy, the third-party owner can be all of the following except:
The insured
27
What is considered a valid reason for a small business to ensure the lives of its major shareholders?
Fund a buy-sell agreement
28
Which of these is not a reason for a business to buy key person life insurance?
A pension deficiency if the key employee dies
29
Which statement regarding third-party ownership of a life insurance policy is true?
It is used extensively in estate planning as well as business circumstances
30
What type of life insurance incorporates flexible premiums and an adjustable death benefit?
Universal life
31
What type of insurance offers permanent life coverage with premiums that are payable for life?
Whole life
32
Which of these statements describe a modified endowment contract?
Exceeds the maximum amount of premium that can be paid into a policy and still have it recognized as a life insurance contract
33
What type of life insurance are credit policies issued as?
Term
34
All of these insurance products require an agent to have proper FINRA securities registration in order to sell them, except for:
Modified whole life
35
Which type of policy is considered to be overfunded, as stated by IRS guidelines?
Modified endowment contract (MEC)
36
When a life insurance policy exceeds certain IRS table values, the result would create, which of the following?
Modified endowment contract (MEC)
37
When an individual is planning to protect his family with life insurance, one method of doing so is called needs analysis. What exactly does needs analysis involved?
Establish the needs of the individual and his dependents
38
Additional coverage can be added to a whole life policy by adding a(n)
Decreasing term rider
39
In order to sell a(n) __________ life policy, a producer is required to register with the financial industry regulatory authority (FINRA)
Variable
40
Which of these characteristics is consistent with a straight life policy?
Premiums are payable for as long as there is insurance coverage in force
41
Whole life insurance policies are contractually guaranteed to provide due to the following, except:
Partial withdrawal features beyond a surrender charge period
42
S is close to retiring, and would like to purchase a policy that will yield greater gains than bonds, but will still protect the principal with a minimum level or risk which product would S be advised to purchase?
Equity index insurance
43
G purchased a family income policy at age 40. The policy has a 20 year rider period. If G were to die at age 50, how long would geez family receive an income?
10 years
44
Which type of plan allows an employer to give money to an employee for buying a life insurance policy, and also permits the employee to select the beneficiary?
Split-dollar plan
45
Which of the following life insurance policies combine term insurance with an investment element?
Universal life
46
Which of these policy types may not have the automatic premium loan provision attached to it?
Decreasing term
47
Company Z has a cross purchase buy-sell agreement in place among its three founding partners. If the agreement is funded with individual life insurance, what would it require?
Each partner must own a policy on the other partners
48
The combination of whole life and _____________ term insurance is referred to as a family income policy
Decreasing
49
Life insurance immediately creates an estate upon the death of an insured. Which of the following policies is characterized by a guaranteed minimum death benefit?
Variable life
50
A life policy that contains a monthly mortality charge as well as self-directed investment choices is called a(n)
Variable universal life policy
51
T would like to be assured $10,000 is available in 10 years to replace a roof on his house. What kind of $10,000 policy should T purchase?
Ten-year endowment
52
What type of life policy covers two lives and pays the face amount after the first one dies?
Joint life policy
53
K buys a policy where the premium stays fixed for the first five years. The premium then increases in year six and stays level thereafter, all the while the death benefit remains the same. What kind of policy is this?
Modified whole life
54
What type of life policy covers two people and pays upon the death benefit of the last insured?
Survivorship
55
A ________________ life policy combines investment choices with a form of term coverage
Variable universal
56
A contract owner terminates an annuity before the income payment period begins. The owner will then receive:
The current contract surrender value
57
How does an indexed annuity differ from a fixed annuity?
Indexed annuity owners may receive credited interest tied to the fluctuations of the linked index
58
N, age 50, recently bought an annuity that will pay a guaranteed $2000 a month at age 70 for life. What type of annuity did N purchase?
Fixed deferred
59
T, age 70, withdrawals cash from a profit, sharing plan and purchases a straight life annuity. What will this transaction provide?
Income that cannot be outlived by the owner
60
Which of the following are equity indexed annuities typically invested in?
S&P 500
61
Which of the following is not included in an annuity contract?
AD&D rider
62
Which of these statements concerning an individual straight life annuity is accurate?
Payments are made to an annuitant for life
63
Which of these statements concerning an individual straight life annuity is accurate?
Payments are made to an annuitant for life
64
What is considered a valid reason for small businesses to insure the lives of its major shareholders?
Fund a buy-sell agreement
65
Which of the following actions is NOT possible with a Universal Life Policy?
Premiums may be applied as a credit against income tax
66
Which statement about a Whole Life policy is true?
Cash value may be borrowed against
67
Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it?
Decreasing Term

Xcel Life Insurance Test (19 decks)

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