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Michigan life insurance EXAM Questions
With Solved Solutions
Fair Credit Reporting Act main purpose is to protect consumers with guidelines regarding credit reporting and distribution Which of the following protects a policy owner from misrepresentation caused by an innocent mistake Incontestable clause A life insurance policy owner was injured in an automobile accident which results in a total and permanent disability. Which rider would pay a monthly amount because of this disability Disability income rider Which scenario would most life insurance policies exclude coverage for An individual who has a hobby racing cars once a month Dorian exercised a nonforfeiture option by using his life policy's cash value to purchase an extended term option. When the term insurance expires The protection ends What happens when an insurance policy is backdated? The policy's effective date is earlier than the present
Rob purchased a standard whole life policy with a $500,000 death benefit when he was age 30. His insurance agent told him the policy would be paid up if he reached age 100. The present cash value of the policy equals $250,000. Rob recently died at age 60. The death benefit would be 500, How is the cost of a policy affected when a policyowner pays premiums more frequently? Increases Intentional withholding of material facts that would affect an insurance policy's validity is called Concealment Under Michigan Law, which of the following would NOT be considered an illegal inducement? A promotional item with the producer's name and address valued at $ Which contract element is insurable interest a component of? legal purpose Which type of rider will waive the premium on a child's life insurance policy if the parent paying the premium dies? Payor benefit What is the nonforfeiture value of an annuity before annuitization? All premiums paid, plus interest, minus any withdrawals and surrender charges Who assumes the investment risk with fixed annuity The insurer
Karen is a producer who has obtained personal information about a client without having a legitimate reason to do so. Under the McCarran-Ferguson Act, what is the minimum penalty for this? $10, What is known as the immediate specific event causing loss and giving rise to risk peril The cause of a loss is referred to as a(n) Peril The term which describes the fact that both parties of a contract may NOT receive the same value is referred to as Aleatory In an insurance contract the insurer is the only party legally obligated to perform. Because of this an insurance contract is considered unilateral According to life insurance contract law, insurable interest exists At the time of application What is implied authority? authority not specifically defined in the contract but considered to be an extension of regular duties When the principal gives the agent authority in writing, it's referred to as express authority What makes a policy a unilateral contract
Only the insurer is legally bound to Under a contract of adhesion The terms must be accepted or rejected in full All of these are characteristics of a universal life insurance policy EXCEPT Fixed surrender value Which type of life insurance offers flexible premiums, a flexible death benefit and the choice of how the cash value will be invested? Variable universal policy A permanent life insurance policy where the policyowner pays premiums for a specified number years i called a Limited pay policy Which type of mutliple protection policy pays on the death of the last person Survivorship life policy A spouse and child cna be added to the primary insured's coverage as what kind of rider? Family term A business will typically use which type of life insurance to cover their employees? Group policy The type of policy which pays the death of the last person is called survivorship life What type of life insurance is normally associated with a Payer benefit rider Juvenile insurance
A renewable term life insurance policy can be renewed at a predetermined date or age, regardless of the insured's health A securities license is required for a life insurance producer to sell variable life insurance Shirley has a $500,000 10-year non-renewable level term life policy. If she dies 15 years after the policy's inception date, how much will her beneficiary receive? nothing Krissa purchases a 10-year level term life insurance policy that has a death benefit of $200,000. Which of these statements is true? The face amount and premium will remain constant over the 10 year period Which of these would the best example of a limited pay life insurance policy Whole life policy with premiums paid up after 20 years What kind of life insurance policy covers two or more people with the death benefit payable upon the last person's death Last survivor Life insurance What is created after policy proceeds are obtained in a lump sum and them immediately invested Estate An example of naming a beneficiary by class would be "to the children of my union with ned Jackson" A life insurance claim which involves a per capita distubution of policy proceeds would be payable to the "named living primary beneficiaries "
A policy owner prohibited from making any changes to the policy without the beneficiary's written consent under which beneficiary designation irrevocable beneficiary How is the cost of a policy affected when a policyowner pays premiums more frequently increases Naming a contigent beneficiary as "all surviving children" is described by which term Class designation Which of these is considered a major tax advantage of life insurance income tax is typically not wed on proceeds paid directly to a beneficary Purchasing a life insurance policy in order to avoid the forced sale of assets upon death is called estate conservation which settlement option involves having the proceeds remain with the insurer and earning paid on a monthly basis to the beneficiary interest only which type of beneficiary should be named if the insured wants to give a explicit direction on how the policy proceeds should be paid? individual A tax-free Section 1035 Exchange of a life insurance policy to a different policy is permitted if it occurs from insurer to insurer and no cash is received by the policyowner
Which of these is considered to be a living benefit option in a life insurance policy Accelerated death benefit all of the following riders can increase the death benefit amount EXCEPT Waiver of Premium What is the name of the provision which states that a copy of the application must be attached to the policy when issued Entire Contract An individual most likely will have an insurable interest in insuring a person's life if an economic interest exists for the continuance of the insured's life Which if the following signatures is not required on an individual insurance application Insurer Upon policy delivery, which of the following must a producer have an applicant sign if no initial premium was collected with the life insurance application? a good health statement An applicant's character and personal habits can be obtained for underwriting purposes from which source Investigative consumer report Underwriters can acquire information from all of follwing sources EXCEPT genetic testing In which of the following relationships would there NOT be an insurable interest
Business owner to Business customer When does a life insurance policy typically become effective? When initial premium is collected and policy is issued Which of the following does a life insurance policy summary normally include The policy's cash value An insurance producer is often responsible for field underwriting during the application process. ALL of the these are possible filed underwriting roles EXCEPT providing commission information to the applicant In regards to a life insurance contract, which of the following statements is NOT true regarding the concept of insurable interest? insurable interest can be established sufficiently by sentimental attachment alone Preferred risk policies with reduced premiums are issued by insurance companies because the insured has better than average mortality or morbidity experience An employee under a group insurance policy has the right to name a beneficiary and right to convert to an individual policy in the event of employment termination The coverage, conditions, and limitation in the master policy of a group contract can be found in which document Certificate of coverage and benefits The conversion privilege under a group life plan allows an employee to convert to a(n)
An immediate annuity has been purchased with a single premium. When does the annuitant typically begin receiving benefit payments 1 month The taxable portion of each annuity payment is c Exclusion ratio Maria would like an annuity that provides a guaranteed accumulation or payout. The type of annuity she is seeking is called annuity certain Kristi purchases an annuity that will pay her husband an income for 15 years. If he dies, this income will become payable to their children for the remainder of the period. Kristi has what kind of annuity? Temporary annuity certain Which of these statements regarding the annuitant is CORRECT? The annuitant's life expectancy determines the annuity payments Which of these will have highest monthly payout upon annuitization Straight life Lisa has recently bought a fixed annuity. Which of these is considered to be a disadvantage of owning this type of annuity During periods of inflation annuitants will experience a decrease in purchasing power of their payments An annuitant dies during the distribution period. What kind of annuity will return to a beneficiary the difference between the annuity value and the income payments already made?
Refund annuity Which market index is normally associated with an indexed annuity's rate of return S & P 500 Which of the following is considered to be the period when the accumulated value in an annuity is paid out Annuitization phase How soon can the benefit payments begin with deferred annuity 12 months after the date of purchase Which of the following would disqualify a company's retirement plan from receiving favorable tax treatment it is temporary When a qualified plan starts making payments to its recipient, which portion of the distributions is taxable gains An example of a tax-qualified retirement plan would be a(n) defined contribution plan In Michigan a person providing insurance advice Counselor The____ must notify the producer in the event of the producer's insurance appointment being terminated Insurer
Providing commission information to the applicant Which of these is NOT the responsibility of the producer represent the insured An annuitant dies during the distribution period what kind of annuity will return to a beneficiary the difference between the annuity value and the income payments already made? Refund annuity Which of these riders will pay a death benefit if the insured's spouse dies? Family term insurance rider Which of the following is an example of the insured's consideration a paid premium Which contract element is insurable interest a component of? legal purpose What does a life insurance policy guarantee to the stated beneficiary upon the death of the insured Specified amount of money Which of the following is present when an applicant stands to lose value if the insured dies? Insurable Interest If an insured dies during the grace period with no premiums paid The policy would be payable minus the premium amount How many months can a life insurance policy normally be backdated from the date of application
6 months Which of these is NOT a characteristic of the Accelerated Death Benefit Option The benefit can be offered as the a rider at a specific extra cost or may be at no cost Tim is covered under a group plan and would like to change his group coverage to an individual policy with the same insurer because of employment termination. Which of these describes the change that will takt place Conversion An attending physician's statement would be appropriate for which life insurance purpose? At the request of the insurer to assist in the underwriting decision Which of the following is an example of a producer's fiduciary duty Recording receipt and remittance of premiums due the insurance company What kind of life insurance policy issued by a mutual insurer provides a return of divisible surplus? Participating life insurance policy Which of the following actions is REQUIRED by a producer who is replacing an existing life insurance policy Submit to the replacing insurer a list of the policies to be replaced In what part of an insurance policy are policy benefits found Declarations Converting a group plan to permanent life insurance requires the conversion being applied for within 31 days of termination
A spouse and child can be added to the primary Insured's coverage as what kind of rider? Family term Which type of policy combines the flexibility of a universal life policy with investment choices? Variable universal life policy Which multiple protection policy pays on the death of the last person? Survivorship life policy Which type of life insurance policy pays the face amount at the end of specified period if the insured is still alive Endowment policy What is a corridor in relation to a universal life insurance policy All of these are valid options for an Adjustable Life policy EXCEPT A nonforfeiture option can be used to increase the death benefit Which of these would be the best example of a limited pay life insurance policy Whole life policy with premiums paid up after 20 years A life insurance policy written on one contract for two people which it is payable upon the first death is called Joint A life insurance rider allows an individual to purchase insurance as they grow older, regardless of insurability, is called a guaranteed insurability
A provision in a whole life policy that allows a policyowner to terminate the policy in return for a reduced paid-up policy of the same type is called a(n) nonforfeiture option The suicide clause of a life insurance 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 Minus indebtedness and without interest The two major actions required for a policyholder to comply with the Reinstatement Clause are Provide evidence of insurability, pay past due prmeiums Which of these is NOT a characteristic of the Accelerated Death Benefit option? The benefit can be offered as a rider at a specific extra cost or may be at no cost The free-look provision gives the policyowner the right to return the policy for a full refund within a specified number of days The automatic premium load provision authorizes an insurer to withdraw from a policy's cash value the amount of past due premiums that have not been paid by the end of the grace period All of the following are considered to be nonforfeiture option available to a policyowner EXCEPT Reduction of Premium An insurance producer is often responsible for field underwriting during the application process. All of these are possible field underwriting roles EXCEPT Providing commission information to the applicant
