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Michigan life and health insurance
exam Questions With Answers
Accelerated Benefits - CORRECT ANSWER>>Riders attached to life insurance policies which allow death benefits to be used to cover nursing or convalescent home expenses.
accident - CORRECT ANSWER>>An unplanned unforeseen event, which occurs suddenly and an unspecific place
accident insurance - CORRECT ANSWER>>A type of insurance that protects the insured against loss due to accidental bodily injury.
Accidental Bodily Injury - CORRECT ANSWER>>Unplanned, unforeseen traumatic injury to the body.
Accidental death and dismemberment AD&D - CORRECT ANSWER>>An insurance policy which pays a specified amount or a specified multiple of the insured's benefit if the insured dies, loses his/her sight, or loses two limbs due to an accident.
Accidental death benefits - CORRECT ANSWER>>A policy rider that states that the cause of death will be analyzed to determine if it complies with the policy description of accidental death.
Accidental death insurance - CORRECT ANSWER>>An insurance policy that provides payment if the insured's death is the result of an accident.
Accumulation Period - CORRECT ANSWER>>The time over which the annuitant makes payments or investments in an annuity And when those payments earn interest tax deferred
Acquired immunodeficiency system (AIDS) - CORRECT ANSWER>>Infectious an incurable disease caused by the human immunodeficiency virus HIV
activities of daily living (ADLs) - CORRECT ANSWER>>Activities individuals must do every day such as moving about, getting dressed, eating, bathing, etc.
Actual Cash Value (ACV) - CORRECT ANSWER>>The required amount to pay damages or for property loss, which is calculated based on the property's current replacement value minus depreciation.
Actual Charge - CORRECT ANSWER>>The amount a physician or supplier actually bills for a particular service or supply.
Adverse Selection - CORRECT ANSWER>>The tendencies of risk, with higher probability of lost purchase, and maintain insurance more often than the rest to present lower probability
agency - CORRECT ANSWER>>An insurance sales officer company
Agent - CORRECT ANSWER>>An individual who is licensed to sell, negotiate or effect insurance contracts on behalf of the insurer
Agent's Authority - CORRECT ANSWER>>Special powers granted to an agent by his or her agency contract.
aleatory - CORRECT ANSWER>>A contract in which participating parties exchange on equal amounts. Insurance contracts are aleatory in that the amount that the insured will pay, the premiums is an equal to the amount of the insurer will pay in the back
Alien Insurer - CORRECT ANSWER>>An insurance company that is incorporated outside the United States.
Alzheimer's disease - CORRECT ANSWER>>A disease that causes the victim to become dysfunctional due to the degeneration of brain cells, causing severe memory loss
ancillary - CORRECT ANSWER>>Additional miscellaneous services provided by a hospital such as x-rays anesthesia lab work, but do not hospital room and board expenses
Annual Statement - CORRECT ANSWER>>Detailed financial report, the insurance company must submit every year to the insurance department of state in which it conducts business
annuity - CORRECT ANSWER>>A contract that provides income for a specified Period of years or for life
Apparent Authority - CORRECT ANSWER>>The appearance or the assumption of authority based on the actions, words, or deeds of the principal or because of circumstances the principal created.
applicant - CORRECT ANSWER>>A person making application for, or offering him/herself or another to be insured under an insurance contract
application - CORRECT ANSWER>>A document that provides information for underwriting purposes. After the policy is issued, any unANSWERed questions are considered waived by the insurer.
Approved Amount - CORRECT ANSWER>>The amount Medicare determines to be reasonable for a service that is covered under part B of Medicare.
Basic Illustration - CORRECT ANSWER>>A ledger or proposal used in the sale of a life insurance policy that shows both guaranteed and nonguaranteed elements.
basic medical insurance - CORRECT ANSWER>>Coverage for doctor visits x-rays left us an emergency room Visits benefits, however, are limited to specific dollar amounts
beneficiary - CORRECT ANSWER>>The person who receives the proceeds from the policy when the insured dies
Benefit Period - CORRECT ANSWER>>The length of time over which the insurance benefits will be paid for each illness, disability or hospital stay.
Binder (Binding Receipt) - CORRECT ANSWER>>A temporary contract that puts an insurance policy into force before the premium has been paid.
Blanket Medical Insurance - CORRECT ANSWER>>A policy that provides benefits for all medical costs, including doctor visits, hospitalization, and drugs.
Boycott - CORRECT ANSWER>>An unfair trade practice, in which one person refuses to business with another, until he, or she agrees to certain conditions
Broker - CORRECT ANSWER>>An individual who represents an insured in the process of purchasing and negotiating a contract of insurance
Buy-Sell Agreement - CORRECT ANSWER>>A legal contract that determines what will be done with a business in the event that an owner dies or becomes disabled.
Buyer's Guide - CORRECT ANSWER>>A booklet that describes insurance policies and concepts, and provides general information to help an applicant make an informed decision.
cafeteria plan - CORRECT ANSWER>>A selection of health care benefits from which an employee may choose the ones that he/she needs.
Capital Amount - CORRECT ANSWER>>A percentage of the principal amount of a policy paid to the insured if he/she suffered the loss of an appendage.
Carriers - CORRECT ANSWER>>Organizations that process claims and pay benefits in an insurance policy
cash value - CORRECT ANSWER>>the amount of money a whole life policyholder would receive if the policy were surrendered before death or maturity
cease and desist order - CORRECT ANSWER>>A demand of a person to stop committing an action that is in violation of a provision.
certificate - CORRECT ANSWER>>A statement or booklet that confirms the policy Has been written, and that describes coverage in General
commission - CORRECT ANSWER>>The payment made by insurers two agents or brokers for the sale in service of policies
Commissioner (Superintendent, Director) - CORRECT ANSWER>>The chief executive and administrative officer of a state insurance department.
comprehensive policy - CORRECT ANSWER>>A plan that provides a package of health care services, including preventive care, routine physicals, immunization, outpatient services and hospitalization.
Comprehensive major medical - CORRECT ANSWER>>A combination of basic coverage and major medical coverage that features low deductibles, high maximum benefits, and coinsurance.
Concealment - CORRECT ANSWER>>The withholding of known facts, which, if material can void a contract
Conditional Contract - CORRECT ANSWER>>A type of an agreement in which both parties must perform certain duties and follow rules of conduct to make the contract enforceable.
Consideration - CORRECT ANSWER>>The binding force in a contract that requires something of value to be exchanged for the transfer risks. The consideration on the part of the insured is the representations made by the application of the
payment of the premium. The consideration on the part of the insure is the promise to pay in the event of loss.
Consideration Clause - CORRECT ANSWER>>A part of the insurance contract that states that both parties must give something of value for the transfer of risk, and specifies the conditions of the exchange.
Consolidated Omnibus Budget Reconciliation Act (COBRA) - CORRECT ANSWER>>The law that provides for the continuation of group healthcare benefits for the insured, for up to 18 months, if he/he terminates employment, or is no longer eligible and for the insured departments for up to 36 months, in case of loss of eligibility to the death of the insured, divorced or attainment of the limiting age
Consumer Reports - CORRECT ANSWER>>Written and /or oral statements regarding a consumer's credit, character, reputation, or habits collected by a reporting agency from employment records, credit reports, and other public sources.
contract - CORRECT ANSWER>>An agreement between two or more parties that is enforceable by law
Contributory - CORRECT ANSWER>>A group insurance plan that requires the employees to pay part of the premium.
CSO Table (The Commissioner's Standard Ordinary Table) - CORRECT ANSWER>>A mortality table used in life insurance that mathematically predicts the likelihood of death.
Custodial Care - CORRECT ANSWER>>Care that is rendered to help an insured complete his/her activities of daily living.
Death Benefit - CORRECT ANSWER>>The amount payable upon the death of the person whose life is insured.
Decreasing Term - CORRECT ANSWER>>A type of life insurance that features a level premium and a death benefit that decreases each year over the duration of the policy.
Deductible - CORRECT ANSWER>>The portion of the loss that is to be paid by the insured for any claim benefits may be paid by the insurer
Defamation - CORRECT ANSWER>>An unfair trade practice, in which one agent or insurers make an injury, a statement about another, with the intention of harming, the person or company's reputation
dependent - CORRECT ANSWER>>A person who relies on another for support and maintenance
Director (Commissioner, Superintendent) - CORRECT ANSWER>>The head of the state department of insurance.
disability - CORRECT ANSWER>>A physical or mental impairment, either congenital or resulting from an injury or sickness.
disability income insurance - CORRECT ANSWER>>Health insurance provides periodic payments to replace an insured income when he or she is injured or ill
disclosure - CORRECT ANSWER>>An act of identifying the name of the producer, representative or firm, limited insurance representative, or temporary insurance producer on any policy solicitation.
Domestic Insurer - CORRECT ANSWER>>An insurance company that conducts business in the state of incorporation.
Domicile of Insurer - CORRECT ANSWER>>Insurer's location of incorporation and the legal ability to write business in a state.
Dread (Specified) Disease Policy - CORRECT ANSWER>>A policy with a high maximum limit that covers certain diseases named in the contract (such as polio and meningitis).
Dual Choice - CORRECT ANSWER>>A federal requirement that employers who have 25 or more employees, who are within the service area of a qualified HMO,
endorsement - CORRECT ANSWER>>A form of changing the provisions of and attached to a life insurance policy, also known as a rider
endow - CORRECT ANSWER>>To reach the maturity date or time I watch face amounts, equal cash values
Enrollment Period - CORRECT ANSWER>>The amount of time an employee has to sign up for a contributory group health plan.
Errors and omissions policy (E&O) - CORRECT ANSWER>>A professional liability insurance that protects the insurer from claims by the insured for errors or oversights on the part of the insurer.
Estoppel - CORRECT ANSWER>>A legal impediment to denying a fact or restoring a right that has been previously waived.
excess charge - CORRECT ANSWER>>The difference between the Medicare approved amount for a service or supply and the actual charge.
Excess Insurance - CORRECT ANSWER>>Insurance that pays over and above or in addition to basic policy limits.
Exclusions - CORRECT ANSWER>>Causes of loss, exposures, conditions, etc. listed in the policy for which the benefits will not be paid.
Exectory contract - CORRECT ANSWER>>A contract, which has not been fulfilled by one or both parties that promises actions in the event of a specified future occurrence
expiration - CORRECT ANSWER>>The date specified in the policy as the date of termination
Explanation of Benefits (EOB) - CORRECT ANSWER>>A statement that outlines what services were rendered how much is insurance paid and how much the insured with billed
Explanation of medical benefits - CORRECT ANSWER>>A statement sent to a Medicare patient indicating how the Medicare claims will be settled
exposure - CORRECT ANSWER>>A unit of measure used to determine rates charged for insurance coverage
Express Authority - CORRECT ANSWER>>The authority granted to an agent by means of the agent's written contract.
extended care facility - CORRECT ANSWER>>Facility, which is license by the state to ride 24 hour nursing care
Extension of Benefits - CORRECT ANSWER>>A provision that allows coverage to continue beyond the policy's expiration date for employees who are not actively
Foreign Insurer - CORRECT ANSWER>>An insurance company that is incorporated in another state.
Fraternal benefit society's - CORRECT ANSWER>>Life or health insurance companies form provide insurance for the members of an affiliated lodge religious organization, or fraternal organization with a representative form of government
fraud - CORRECT ANSWER>>Intentional misrepresentation or deceit with the intent to induce a person to part with something of value.
Free look - CORRECT ANSWER>>A period of time, usually required by law, during which a policyowner may inspect a newly issued individual life or health insurance policy for a stated number of days and surrender it in exchange for a full refund of premium if not satisfied for any reason.
front-end load - CORRECT ANSWER>>A fee or commission charged at the time of purchase of a annuity or security
Gatekeeper Model - CORRECT ANSWER>>A model of HMO and PPO organizations that uses the insured's primary care physician (the gatekeeper) as the initial contact for the patient for medical care and for referrals.
Grace Period - CORRECT ANSWER>>Period of time after the premium due date, during which premiums may still be paid and the policy and its riders remain in force
Group Disability Insurance - CORRECT ANSWER>>A type of insurance that covers a group of individuals against loss of pay due to accident or sickness.
Group Health Insurance - CORRECT ANSWER>>Health coverage provided to members of a group.
Group Life - CORRECT ANSWER>>Life insurance provided for members of a group.
hazard - CORRECT ANSWER>>A circumstance that increase the likelihood of loss
Hazard, Moral - CORRECT ANSWER>>The effect of a person's reputation, character, living habits, etc. on his/her insurability.
Hazard, Morale - CORRECT ANSWER>>The effect a person's indifference concerning loss has on the risk to be insured.
Hazard, Physical - CORRECT ANSWER>>A type of hazard that arises from the physical characteristics of an individual, such as a physical disability due to either current circumstance or a condition present at birth.
