Download Michigan life insurance EXAM Questions With Solved Solutions and more Exams Insurance law in PDF only on Docsity!
Michigan life insurance EXAM Questions
With Solved Solutions
Under a traditional IRA, interest is taxed:
Only if withdrawn prior to age 59 1/
According to the capital gains rate
Upon distribution
During the accumulation phase - ANSWER>>Upon distribution
Which of these statements concerning Traditional IRAs is CORRECT?
Earnings are not taxable when withdrawn
Earnings are taxable when withdrawn
Contribution are never tax deductible
Contributions are always made by the employer - ANSWER>>Earnings are taxable when withdrawn
Which of these describes the result of a modified endowment contract that failed to meet the seven- pay test?
Policy loans are disallowed
The premium payments will be tax deductible
Pre- death distributions are typically taxable
Withdrawals will be prohibited - ANSWER>>Pre- death distributions are typically taxable
In order for a contract to be valid, it must
be filled with the state
be signing and witnessed by an attorney
be in writing
contain offer and acceptance - ANSWER>>Contain offer and acceptance
Which of the following actions is REQUIRED by a producer who is replacing an existing life insurance policy?
premiums are forwarded to the insurer on a timely basis
premiums be commingled - ANSWER>>Premiums are forwarded on a timely basis
An individual who removes the risk of losing money in the stock market by never purchasing stocks is said to be engaging in
Risk reduction
Risk Transference
Risk avoidance
Risk retention - ANSWER>>Risk avoidance
A type of group that has a constitution and has been organized for purposes other than obtaining insurance is called a(n)
employer group
employee group
association or labor group
multiple coalition - ANSWER>>association or labor group
Which of the following is NOT a federal requirement of a qualified plan?
Must benefit a broad cross-section of employees
Employee must be able to make unlimited contributions
Vesting schedule must be defined
Employer establishes the plan - ANSWER>>Employee must be able to make unlimited contributions
The acceptance of a credit life application requires the submission of a certificate of insurance to the insured within __ days.
10
20
30
40 - ANSWER>>
year
2 years
5 years - ANSWER>>year
A Roth IRA owner must be at least what age in order to make tax free withdrawals?
59 1/2 and owned account for a minimum of 10 years
59 1/2 and owned account minimum of 5 years
70 1/2 and owned account for a minimum of 10 years
70 1/2 and owned account for a minimum of 5 years - ANSWER>>59 1/2 and owned the account for 5 years
In Michigan, legal action may be taken against an insurer for up to ___ Years for failing to pay a life insurance claim after proof of loss was submitted
4 5 6
7 - ANSWER>>
Level premium permanent insurance accumulates a reserve that will eventually equal the face amount of the policy pay a dividend to the policyowner require the policyowner to make periodic withdrawals become larger than the face amount - ANSWER>>equal the face amount of the policy
Under a life insurance policy, what does the insuring clause state?
The agents obligation to provide the proper amount of coverage
The insurers obligation to return all premiums upon an approved death claim
The Insurers obligation to pay a death benefit upon an approved death claim
The agents obligation to pay a death benefit upon an approved death claim - ANSWER>>The Insurers obligation to pay a death benefit upon an approved death claim
Term insurance is appropriate for someone who
seeks living benefits for themselves
4 - ANSWER>>
What kind of insurance policy issued by a mutual insurer provides a return of divisible surplus?
Nonparticipating life insurance policy
participating life insurance policy
divisible surplus life insurance policy
straight life insurance policy - ANSWER>>Participating life insurance policy
Which of these would limit a company's liability to provide insurance coverage?
Waiver Exclusion Rider Provision - ANSWER>>Exclsuion
How do insurers predict the increase of individual risks?
Law of large numbers
U.S. Census
Average mortality incidents
Experience of morbidity - ANSWER>>Law of large numbers
Pre-death distributions from a modified endowment contract (MEC) receive different tax treatment than other life insurance policies because
the MEC has tax deductible premiums
the MEC is considered an illegal product
the MEC tends to be an investment vehicle
the MEC does not accumulate cash value - ANSWER>>the MEC tends to be an investment vehicle
Peter has a policy where 80% to 90% of the premium is invested in traditional fixed income securities and the remainder of the premium is invested in contracts tied to a stipulated stock index. What kind of policy is this? Modified Endowment Contract Current assumptive whole life Credit life insurance
Market related annuity
Equity indexed annuity
Deferred risk annuity
Fixed amount annuity - ANSWER>>Equity indexed annuity
Paul the producer has provided a false statement in relation to an insurance claim. Which illegal act has been committed?
Intimidation
Rebating
Subrogation
Fraud - ANSWER>>Fraud
Which of the following BEST describes a conditional insurance contract?
A contract that requires certain conditions or acts by the insured individual
A contract that has the potential for the unequal exchange of consideration for both parties
A contract where one party "adheres" to the terms of the contract
A contract where only one party makes any kind of enforceable contract - ANSWER>>A contract that requires certain conditions or acts by the insured individual
All of these are valid policy dividend options for a life insurance policyowner EXCEPT
Cash outlay to the policy owner
accumulate without interest
reduction in policy premium
buy additional insurance coverage - ANSWER>>accumulate without interest
The power given to an individual producer that is not specifically addressed in his/her contract is considered what type of authority?
discreet
apparent
It provides retirement and survivor benefits to a worker and the workers family - ANSWER>>It provides a source of meaningful standard of living during retirement
All of the following are characteristics of a Group Life Insurance Plan EXCEPT
Group underwriting
Master Contract
Individual Underwriting
Probationary period - ANSWER>>Individual Underwriting
A non contributory health insurance plan helps the insurer avoid
adverse selection
state compliance
the underwriting process
tax deductions - ANSWER>>adverse selection
A type of insurer that is owned by its policyowners is called
domestic mutual stock in house - ANSWER>>Mutual
Which of these factors would an insurer consider when determining whether to accept a group life plan?
Number of dependents
Incontestable period
Average age
Grace period - ANSWER>>Average age
All of these are common exclusions to a life insurance policy EXCEPT
accidental death
military service
aviation
Hazardous occupations - ANSWER>>accidental death
population table data - ANSWER>>law of large numbers and risk pooling
The act of using misrepresentation to induce an insured person to terminate an existing policy and purchase a new policy is referred to as
twisting
subrogation
defamation
intimidation - ANSWER>>Twisting
Pat owns a 20-pay life policy with a paid-up dividend option. Which of the following statements is true?
The policy may be paid up early by using accumulated cash values
The policy may be paid up early by using policy dividends
The policy's premiums will increase after 20 years
The policys cash values steadily decrease after 20 years - ANSWER>>The policy may be paid up early by using policy dividends
If an insured dies during the grace period with no premiums paid
the policy would be payable, minus the premium amount
the policy would be payable only after the beneficiary makes past due premium payment
all past premiums will be refunded with interest
the claim would be denied - ANSWER>>the policy would be payable, minus the premium amount
A life insurance policy written on one contract for two people in which it is payable upon the first death is called
Split
Shared
Joint
Survivorship - ANSWER>>Joint
