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88 XCEL SOLUTIONS: Georgia Life-Only
Pre-Licensing With Correct Answers
At what time must a policyowner have insurable interest on the insured in order for the life policy to be valid? -After the Contestable period -When the policy proceeds are paid -At the time of application -When the insured dies - โ โ -At the time of application With life insurance, insurable interest must exist only at the policy inception. 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: -policy is delivered -free-look period has expired -insurance company issues policy -initial premium is collected - โ โ -free-look period has expired What is the purpose of the U.S.A. Patriot Act? -detect and deter fraud -detect and deter alien insurance companies
-detect and deter terrorism -detect and deter misrepresentations - โ โ -detect and deter terrorism The purpose of the U.S.A. Patriot Act is to detect and deter terrorism. Any changes made on an insurance application requires the initials of whom? -Insured -Agent -Applicant -Beneficiary - โ โ -Applicant When an applicant makes a mistake in the information given to an agent in completing the application, the applicant can have the agent correct the information, but the applicant must initial the correction. A(n) _____________ contained in a life insurance policy states that the policy will NOT cover certain risks. -elimination -exclusion -limitation -curtailment - โ โ -exclusion An exclusion contained in a life insurance policy states that the policy will NOT cover certain risks.
-Warranty -Estoppel -Contract -Representation - โ โ -Contract Offer, acceptance, and consideration are all elements of a contract. What is the consideration given by the insurer in the Consideration clause of a life policy? -Promise to never cancel coverage -Promise to pay death benefit to a named beneficiary -Promise to not raise premiums -Promise to accept an insured's assignment of benefits - โ โ - Promise to pay death benefit to a named beneficiary Consideration is given by the insurer by promising to pay a death benefit to a named beneficiary. Statements made on an insurance application that are believed to be true to the best of the applicant's knowledge are called: -representations -consideration -warranties -guarantees - โ โ -representations
Statements made on an insurance application that are believed to be true to the best of the applicant's knowledge are called representations. Who makes the legally enforceable promises in a unilateral insurance policy? -Beneficiary -Insurance company -Insured -Applicant - โ โ -Insurance company Under a unilateral insurance policy, the insurance company makes the legally enforceable promises. Stranger Originated Life Insurance (STOLI) has been found to be in violation of which of the following contractual elements? -Consideration -Competent Parties -Offer/Acceptance -Legal Purpose (Insurable Interest) - โ โ -Legal Purpose (Insurable Interest) A STOLI arrangement is used to circumvent state insurable interest statutes. The Consideration Clause of an insurance contract includes: -the buyer's guide
-representation -exclusion -warranty -waiver - โ โ -warranty Warranties are statements that are considered literally true. A warranty that is not literally true in every detail, even if made in error, is sufficient to render a policy void. Which of these require an offer, acceptance, and consideration? -Warranty -Estoppel -Contract -Representation - โ โ -Contract Offer, acceptance, and consideration are all elements of a contract. Which of these is NOT considered to be an element of an insurance contract? -the offer -acceptance -negotiating -consideration - โ โ -negotiating The elements of an insurance contract do not include negotiating.
What kind of life policy either pays the face value upon the death of the insured or when the insured reaches age 100? -Term Life -Whole Life -Credit Life -Universal Life - โ โ -Whole Life Whole life insurance is designed to mature at age 100. A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct? -Straight life accumulates faster than Limited-pay Life -20-Pay Life accumulates cash value faster than Straight Life -Cash value accumulation of both 20-Pay Life and Straight Life depend on the insurer's financial rating -20-Pay Life and Straight Life accumulate cash value at the same rate - โ โ -20-Pay Life accumulates cash value faster than Straight Life 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 G's family receive an income? -5 years -10 years
Modified whole life policies are distinguished by premiums that are lower than typical whole life premiums during the first few years (usually five) and then higher than typical thereafter. Whole Life insurance is sometimes referred to as "Straight Life." What does the word "Straight" indicate when using this phrase? -The incontestable period -The ability to borrow against the cash value -The Grace Period -The duration of premium payments - โ โ -The duration of premium payments The word "straight" denotes the duration of premium payments, usually for the rest of the owner's life. Which statement about a whole life policy is true? -Beneficiary may be changed only with the consent of the premium payor -Death benefit can usually be adjusted -Cash value may be borrowed against -Premiums are flexible - โ โ -Cash value may be borrowed against One feature of whole life policies is that the policyowner may borrow against the cash value. Which of the following Life insurance policies combine term insurance with an investment element?
-Increasing Term Life -Decreasing Term Life -Universal Life -Graded Life - โ โ -Universal Life A Universal life policy combines term insurance and an investment element. What kind of life insurance product covers children under their parent's policy? -Family Maintenance rider -Term rider -Family Income rider -Payor benefit - โ โ -Term rider Family plan policies usually cover the family head with permanent insurance and the coverage on the spouse and children is term insurance in the form of a rider. Which is true concerning a Variable Universal Life policy? -Policyowner controls where the investment will go and selects the amount of the premium payment -Policyowner has no say where the investment will go but can choose the premium mode -The investment vehicle for this type of policy is held in the insurer's general portfolio
-adjustable -level -deferred - โ โ -level A Whole Life insurance policy has a level premium. When is the face amount of a Whole Life policy paid? -At the policy's maturity date only -When the insured dies or at the policy's maturity date, whichever happens first -Only when the insured dies -When the policy is surrendered - โ โ -When the insured dies or at the policy's maturity date, whichever happens first The face amount of a Whole Life policy will be paid when the insured dies or on the maturity of the policy, whichever occurs first. Which statement is TRUE regarding a Variable Whole Life policy? -A minimum guaranteed Death benefit is provided -It is a combination of an Endowment and an Increasing Term policy -Its premiums and benefits are variable -It has guaranteed dividends - โ โ -A minimum guaranteed Death benefit is provided A Variable Whole Life policy provides a minimum guaranteed death benefit.
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? -Interest-Sensitive Whole Life -Ten-Year Endowment -Variable Universal Life -Ten-Year Renewable Term - โ โ -Ten-Year Endowment In this situation, a Ten-Year Endowment should be purchased to ensure the funds will be available when needed. The investment gains from a Universal Life Policy usually go toward: -the death benefit -the dividends -the cash value -paying off a policy loan - โ โ -the cash value In Universal Life Policy, income is usually directed toward the cash value. 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 -inherent risk -commission rate -inflation factor
T took out a $50,000 life insurance policy with an Accidental Death and Dismemberment rider. Five years later, T commits suicide. How much will the insurer pay? -The total premiums paid minus any policy loans -Nothing -$50, -$100,000 - โ โ -$50, The suicide occurred outside the Suicide Clause period (normally 1- years), thus the face amount will be paid. An insurer may normally delay the payment of a cash value loan or surrender value for up to -2 months -4 months -6 months -8 months - โ โ -6 months An insurer may delay the payment of a cash value loan or surrender value for up to 6 months. A life insurance policyowner would like to take out a policy loan against the cash value in his Whole Life policy. The interest rate applied to this loan may vary over time. This is referred to as a(n) ____________ rate loan. -Fluctuating
-Fixed -Variable -Increasing - โ โ -Variable The interest rate on a Variable rate cash value loan may vary over time. Which of these is NOT considered to be a right given to a policyowner? -Surrendering the policy's cash value -Modify a provision in the insurance contract -Assignment of ownership -Change the beneficiary, if revocable - โ โ -Modify a provision in the insurance contract Changing contract provisions is not a policyowner right. All of these Settlement options involve the systematic liquidation of the death proceeds in the event of the insured's death, EXCEPT: -Fixed Period -Interest Only -Fixed Amount -Life Income - โ โ -Interest Only The Interest Only option does NOT involve the systematic liquidation of the death proceeds.
-Loan provision -Reduced Paid-up -Cash Surrender - โ โ -Extended term Choosing the nonforfeiture extended term option allows the policyowner to use the cash value to purchase a term insurance policy with a death benefit equal to that of the original whole-life policy. Extended-term insurance is often the default nonforfeiture option in the event of nonpayment of premiums. 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? -Automatic Policy Loan -Assignment -Grace Period -Waiver of Premium - โ โ -Automatic Policy Loan The Automatic Policy Loan provision will keep a Whole Life policy in force if a required premium payment is not made and there is sufficient cash value. The agreement in a life insurance contract that states a specific sum of money will be paid to a designated person upon an insured's death is called a(n): -Entire Contract provision
-Consideration clause -Insuring agreement -Assignment agreement - โ โ -Insuring agreement The insuring clause or provision sets forth the company's basic promise to pay benefits upon the insured's death. When a misrepresentation on a life insurance policy application is discovered, what action may an insurance company take? -Void the policy if found during the Contestable period -Void the policy, no matter when it is discovered -Void the policy at any time only if it is found to be material -Void the policy only if it is discovered during the Contestable period and proven to be material - โ โ -Void the policy only if it is discovered during the Contestable period and proven to be material An insurer may void the policy only if the misrepresentation is discovered during the Contestable period and proven to be material. Which of these statements about a Guaranteed Insurability Option rider is NOT TRUE? -Coverage can be added at specific events such as marriage or having a child -Evidence of insurability is not required when the option is exercised -Evidence of insurability is required when the option is exercised
