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Michigan Life and Health Insurance Exam Questions, Exams of Insurance Economics

Virginia State University (VSU)Insurance Economics

A set of exam questions related to michigan life and health insurance. The questions cover a wide range of topics, including insurance policy types, insurance regulations, insurance fraud, tax implications, and insurance industry terminology. The document could be useful for students preparing for an insurance licensing exam or for insurance professionals looking to review key concepts. The questions are detailed and comprehensive, covering both theoretical and practical aspects of life and health insurance. The document could serve as a valuable study resource for those seeking to deepen their understanding of the insurance industry and prepare for relevant exams or certifications.

Typology: Exams

2023/2024

Available from 08/20/2024

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Final Exam - Michigan Life and Health Correctly Answered
Questions
1.defamation: Making a statement that is false or maliciously critical of
the financial condition of an insurer is known as
2.Business overhead expense policy: Which type of business insurance is
meant to cover the costs of continuing to do business while the owner is
disabled?
3.the protection ends: Dorian exercised a nonforfeiture option by using
his life policy's cash value to purchase an extended term insurance
option. When the term insurance expires,
4.must have an appointed guardian: To receive proceeds from a death
benefit, a minor
5.The insurer's obligation to pay a death benefit upon an approved
death claim: Under a life insurance policy, what does the insuring
clause state?
6.When contribution or participation rules have been violated: When can a
group health policy renewal be denied according to the Health
Insurance Portability and Accountability Act (HIPAA)?
7.It allows for cash advances to be paid against the death benefit if the
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Final Exam - Michigan Life and Health Correctly Answered

Questions

  1. defamation: Making a statement that is false or maliciously critical of the financial condition of an insurer is known as
  2. Business overhead expense policy: Which type of business insurance is meant to cover the costs of continuing to do business while the owner is disabled?
  3. the protection ends: Dorian exercised a nonforfeiture option by using his life policy's cash value to purchase an extended term insurance option. When the term insurance expires,
  4. must have an appointed guardian: To receive proceeds from a death benefit, a minor
  5. The insurer's obligation to pay a death benefit upon an approved death claim: Under a life insurance policy, what does the insuring clause state?
  6. When contribution or participation rules have been violated: When can a group health policy renewal be denied according to the Health Insurance Portability and Accountability Act (HIPAA)?
  7. It allows for cash advances to be paid against the death benefit if the

2 / 43 insured becomes terminally ill: What is the purpose for having an accelerated death benefit on a life insurance policy?

  1. Variable universal policy: Which type of life insurance offers flexible premiums, a flexible death benefit, and the choice of how the cash value will be invested?
  2. 1 month: An immediate annuity has been purchased with a single premium. When does the annuitant typically begin receiving benefit payments?
  3. an authorized agency makes a written request to the insurer during an insurance fraud investigation: Consumer privacy regulations permit the release of an insured's financial information when
  4. the right to return the policy for a full refund within a specified number of days: The free-look provision gives the policyowner
  5. Net death benefit will be reduced if the loan is not repaid: 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?
  6. modified application with a new signature: Tara the producer is delivering a specified disease insurance policy to a new policyowner.

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  1. The shorter the payment period, the higher the premium: The statement which best describes the relationship between the premiums of a whole life policy and the premium payment period is
  2. universal life: A life insurance policy that is subject to a contract interest rate is referred to as
  3. Average age: Which of these factors would an insurer consider when determin- ing whether to accept a group life plan?
  4. is eligible for coverage upon hire: According to HIPAA, when an insured individual leaves an employer and immediately begins working for a new company that offers group health insurance, the individual
  5. $5,000: An insured has a stop-loss limit of $5,000, a deductible of $500, and an 80/20 coinsurance. The insured incurs $25,000 of covered losses. How much will the insured have to pay?
  6. Guaranteed insurability rider: Barbara's policy includes a rider which allows her to purchase additional insurance at specific dates or events without evidence of insurability. This rider is called a(n)
  7. Pay age-corrected benefits: What is an insurer required to do when faced with an error made under the Misstatement of Age provision?

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  1. twisting: The unfair trade practice of replacing an insurance policy from one insurer to another based on misrepresentation is called
  2. Life annuity: Which type of annuity stops all payments upon the death of the annuitant?
  3. liquidity: An insurer's ability to make unpredictable payouts to policyowners is called
  4. Exclusion Ratio: The taxable portion of each annuity payment is calculated using which method?
  5. adverse selection: Group dental plans will frequently place a limit on annual benefits in order to minimize
  6. subrogation: An insurer has the right to recover payment made to the insured from the negligent party. These rights are called
  7. The greater of the accumulated cash value or the total premium paid: What will the beneficiary receive if an annuitant dies during the accumulation period?
  8. time deductible: A disability elimination period is best described as a
  9. have a legitimate non-insurance purpose: An association wanting to buy insurance under a group health plan MUST
  10. Talking: In a Long-Term Care policy, activities of daily living (ADL's)

7 / 43 a date 60 days from satisfactory proof of loss at the rate of

  1. It must include outpatient prescription drug coverage: A Medicare Supple- ment policy issued in the state of Michigan is required to provide each of the following EXCEPT
  2. seeks temporary protection and lower premiums: Term insurance is appro- priate for someone who
  3. a disease: A fee for service health insurance plan will normally cover
  4. Integrated deductible: Which of the following types of deductibles would apply a single deductible to both medical and dental insurance coverage?
  5. 2 years: When can a life policy no longer be cancelled for nonfraudulent mis- statements after its date of issue?
  6. 2-50 employees: In Michigan, a small employer is comprised of
  7. Group: A master contract and certificate of coverage can be found in which type of policy?
  8. producing an inadequate amount of new premium: All of the following occur- rences may result in license revocation EXCEPT
  9. deductible: Jennifer is required to pay a specific sum out of pocket before any benefits are paid in a year. Her health policy most likely

8 / 43 contains a(n)

  1. mutual: A type of insurer that is owned by its policyowners is called
  2. When the recipient pays the premiums: When are group disability benefits considered to be tax-free to the insured?
  3. No deductible payment is required: When an insured has a major medical plan with first dollar coverage, how does this impact the benefits paid?
  4. Entire Contract: What is the name of the provision which states that a copy of the application must be attached to the policy when issued?
  5. intimidation: The unfair trade practice of using threat or force to restrict fair trade in the transaction of insurance is called
  6. Hospital indemnity: Which type of coverage pays an amount per day for hospi- talization directly to the insured regardless of the insured's other health insurance?
  7. Premiums paid plus interest earned is returned to the beneficiary: Andy the annuitant dies before the annuity start date. Which of the following is a TRUE statement?
  8. Benefits are limited to a specific maximum dollar amount per procedure: - With a scheduled dental policy, how are covered

10 / 43 Renewable Noncancellable

  1. Enroll in a health plan with a prescription drug benefit: All of the following are qualifications for establishing a health savings account (HSA) EXCEPT Enrolled in a high deductible health plan Be under the age of 65 (not enrolled in Medicare) Enrolled in a health plan with a prescription drug benefit Enrolled in a health plan that limits out of pocket expenses
  2. Determines what is paid by the primary and secondary insurers in the event of a claim: In group health care, what is the purpose of the coordination of benefits provision? Determines where an insured goes to receive treatment Determines what is paid by the primary and secondary insurers in the event of a claim Ensures that a health provider receives the proper benefit amount owed Determines which parent's plan covers a dependent child
  3. an unfair claim settlement practice: An insurer, in general business

11 / 43 practice, fails to promptly provide a reasonable explanation for the denial of a claim. This is considered to be

  1. $500: If an employee contributes 50% toward the disability plan premium pro- vided by an employer, what would be considered the taxable income of a $1,000 monthly disability benefit?
  2. Annuities are intended to create an estate: Which of these is NOT considered to be a purpose of an annuity? Annuities are intended to create an estate Annuities are intended to liquidate an estate Annuities are intended for the tax-free growth of principal Annuities are intended to distribute accumulated principal
  3. The policy's effective date is earlier than the present: What happens when an insurance policy is backdated? The policy's elimination period is waived The time frame for reinstating a lapsed policy is extended The policy's probation period is earlier than the present The policy's effective date is

13 / 43 A field underwriter's main task is

  1. Family term: A spouse and child can be added to the primary insured's cover- age as what kind of rider?
  2. A business entity soliciting insurance: Which of the following is REQUIRED to be licensed as an insurance producer?
  3. be the same and the premium cannot exceed 102%: Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), a terminated employee's benefits must
  4. The applicant's medical history may be analyzed and reported: Which of the following statements is CORRECT regarding an individual applying for life or health insurance?
  5. temporary relief to the patient's primary caregiver: Respite care is able to provide
  6. Not tax deductible: How are contributions made to a Roth IRA handled for tax purposes?
  7. adverse selection: An underwriter's primary responsibility to an insurer is to protect against
  8. at least annually: A notice of cash surrender value must be sent to a Universal Life policyowner

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  1. Authority that is not specifically given to an agent in the agency contract, but that an agent can reasonably assume to carry out his/her duties: What is implied authority defined as?
  2. require the producer to notify their clients: If a producer is found guilty of forging another's name to an application for insurance, the insurance commissioner may do all of the following EXCEPT
  3. Estate conservation: Craig purchased a life insurance policy for enabling his heirs to pay estate taxes. What is this called?
  4. elimination periods: All of these are characteristics of a major medical expense policy EXCEPT
  5. number of children: Which of these characteristics of an applicant is NOT taken into consideration when assessing risk for Disability coverage?
  6. The application: In addition to the actual policy, an entire contract includes which of the following?
  7. 90: A producer's license has been suspended due to failure of completing the required continuing education credits. The license may be activated by completing the CE requirement within how many days of the renewal date?

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  1. Loss of income: Coming from an insurance point of view, which of the following is the main risk associated with disability?
  2. optionally renewable: Richard owns an insurance policy that is renewable only at the option of the insurance company. His policy is considered to be
  3. Irrevocable beneficiary: A policyowner is prohibited from making any changes to the policy without the beneficiary's written consent under which beneficiary designation?
  4. preferred risk: An insurance applicant with a below-average likelihood of loss is typically considered to be a
  5. The family's financial objectives if the income earner were to die or become disabled: When calculating the amount of life insurance needed for an income earner, what has to be determined when using the Needs Approach?
  6. Own occupation: Chris is an insured bricklayer who severed his left hand in an automobile accident. Although his primary duty cannot be performed, Chris is also a substitute high school teacher. He collects a full disability income check every month. How does his policy define total disability?

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  1. the policy loan value which the insured may borrow against: A whole life insurance policy accumulates cash value that becomes
  2. Roth IRA: Which of these retirement plans do NOT qualify for a federal income tax deduction?
  3. Limited policies: Low frequency diseases can be exclusively covered by what kind of health insurance policies?
  4. Variable Whole Life: A life insurance policy which contains cash values that vary according to its investment performance of stocks is called
  5. The face amount: What does the word "level" in Level Term describe?
  6. nonforfeiture provision: A provision in a whole life policy that allows a policy- owner to terminate the policy in return for a reduced paid-up policy of the same type is called a(n)
  7. Insurance carriers: Who is responsible for assembling the policy forms for insureds?
  8. 20: Written notice for a health claim must be given to the insurer days after the occurrence of the loss.

19 / 43 action can be taken by the insurer against the

  1. On a tax-deferred basis: How do interest earnings accumulate in a deferred annuity?
  2. minus indebtedness and without interest: The suicide clause of a life insur- ance 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
  3. Straight life: Which of these will have the highest monthly payout upon annu- itization?
  4. help pay off existing loans during periods of disability: Credit Accident and Health plans are designed to
  5. equal the face amount of the policy: Level premium permanent insurance accumulates a reserve that will eventually
  6. Becoming cognitively impaired (mentally ill): Which situation would qualify an individual for receiving benefits from a qualified long- term care policy?
  7. indicates a preexisting condition: A proposed insured for a health insurance policy was treated for heart disease within the past year. When applying for health insurance, the heart disease treatment

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  1. skilled nursing care: Continuous 24-hour care provided by licensed medical professionals under the direct supervision of a physician is called
  2. Deferred compensation option: Rob has a benefit at work which enables him to defer his current receipt of income and have it paid at a later date, when he will probably be in a lower tax bracket. Which benefit fits this description?
  3. $5 pen: Which of the following gifts from a producer would NOT be considered rebating?
  4. genetic testing: Underwriters can acquire information from all of the following sources EXCEPT
  5. Recording the receipt and distribution of premiums due to an insurer: A producer's fiduciary responsibility includes which of the following activities?
  6. 12 months: Under an expense-incurred individual health policy, what is the MAXIMUM length of time after issuance of the policy that an insurer can exclude coverage for a pre-existing condition?
  7. Physical therapy: Which of the following is NOT a common