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Michigan Life Insurance State Exam
Answer Key Well Solved.
Which is TRUE regarding the annuitant, when the annuitant is NOT the policy owner?
Annuity payments will be based on the annuitants life expectancy
Signing an applicants name for insurance is known as...?
Forgery
Failure to pay a penalty assessed by the commissioner may result in...?
Revoked or suspended license
Two business business partners own life insurance, which or the following allows the surviving partner to use death benefit to purchase the deceased owners share?
Buy-sell agreement
Policy owner surrenders a policy for its cash value, when is tax liability incurred?
The cash value exceeds all premiums paid
When is insurable interest required?
At the time of application
Which of the following best describes a single premium cash policy?
It requires only one payment to make the policy paid up
When life insurance is funded by contributions to a qualified retirement...
Premiums are taxable
How does a graded premium whole life policy differ from a modified premium?
It has a lower premium for the duration of the policy
Which of the following is NOT true about converting a group policy into an individual policy
Proof of insurability must be required
Before doing business under an assumed name, who must the producer first notify?
Commissioner
Taxable
Which type of annuity guarantees a level benefit payment?
Fixed
For a contract to be valid it MUST...
Include an offer and acceptance
Which of the following not an example of a producer duties?
Represent the insured
If a producer is found guilty of signing an applications name, the commissioner can do all of the following EXCEPT
Require the producer to tell the client
If an annuitant is making premium payments on a periodic which type of annuity?
Deferred
Generally If an application is not prepaid, the effective date of begins on the date the
Producer delivers the policy and collects the premium
Policy owner's future earning potential and determining how much of that amount would be devoted to his dependents..
At distribution
What info is NOT required for a credit life insurance contract?
Type of insurance being purchased
Which of the following statements is TRUE concerning classification of risk?
Preferred risk pay a lower premium than standard risks
An insured had a 5-year renewable term life insurance policy. Upon exercising the renewable privilege, the insured MUST
Pay an annual premium that may be higher
Statement by an applicant concerning personal health history, occupation, and hobbies are referred to as?
Personal characteristics
Group life underwriting protects from?
Adverse selection
A license can disclose a consumer's policy account number to all of the following EXCEPT...?
Nonaffiliated third party
Insurance applicants with an average life expectancy who represent the same risk classification as the majority of people with similar lifestyles are considered which type of risk?
Standard
It early withdrawal before age 59 1/2 from a qualified plan is taxed in additional...?
10%
ABC insurance agency is entering each applicant who purchases insurance through their agent into a drawing to win a free trip. This is an example of ...?
Illegal inducement
A method of handling risk such as having a sprinkler system installed in a building, is an example of...?
Risk reduction
In addition to the actual policy, an entire contract includes which of the following?
The application
Earnings in a Roth IRA are taxed...
At non-qualified distribution
Applicant concerning personal health history, family health history, occupation referred to as...?
Personal characteristics
The grace period is a period of time...
After the premium is due but while policy remains in force
A document that specifies the critical segments of a purchased policy is known as...?
Policy summary
How data reported and maintained on applicants for life or health by medical information?
In physician maintained database accessible by insurance companies and medical practitioners
Which of the following is the time period which is life insurance policy is considered incontestable, assuming otherwise in good standing...?
Period ends after 2 years
Which of the following statement BEST describes a single premium cash value policy?
It requires one payment to make the policy paid up
Which of the following giraffe from a producer would NOT be considering rebating?
$5 pen
When a beneficiary inherits a traditional IRA, which of the following is TRUE about taxation when the money is withdrawn? The beneficiary pays...?
Income tax
Upon the death of an insured individual, what does life insurance guarantee to deliver to the beneficiary?
A specific sum of money
Which of the following policies has a guaranteed interest rate with the possibility to earn an interest rate higher than the guarantee rate?
Universal life
Which statement is not a characteristic of a group life insurance plan?
Individual underwriting
What type of authority is given by an insurer to a provider but NOT formally communicated?
Implied
Which of the following is an example of an unfair claim settlement practice?
Delaying the settlement of claims in which liability has become clear
Term life insurance offers pure protection...?
For a specific period of time
Following is a characteristic of a level premium term life insurance...
It matches the level amount of protection on the insureds life expectancy
Consumer privacy regulations permits the release of an insured's financial information when?
An authorized agency makes a written request to the insurer during an insurance fraud investigation
The death benefit is in force for a specific period of time
When an insured desires to give specific directions on how proceeds are distributed including to minors most appropriate beneficiary?
Trust
Premium payments for a universal life policy are NOT used for which of the following...?
Separate account investments
An insurer that is owned by their policyholder and can pay annual dividends to them..?
Mutual company
Before doing business under an assumed name, who must a producer first notify?
Commissioner
Who can surrender an annuity during the accumulation period?
The policy owner
Maximum penalty commissioner can fine a producer?
10,
All of the following policies qualify for 1035 exchange EXCEPT?
An annuity to a whole life policy
Which type of insurance is sometimes referred to as a non participating company?
Stock insurer
How can the insured prevent the face amount of a life insurance policy from being subjected to the federal estate tax?
By naming the insured estate as the beneficiary
An insurance policy is a on lateral contract because ONLY the...?
Insurer is legally bound
Providing incorrect, misleading, incomplete, or materially untrue information...
Misinterpretation
A whole life policy is replaced with an annuity without incurring a tax penalty?
A 1035 exchange
Which of the following is TRUE regarding 1035 exchange?
An exchange for another policy or annuity generally avoids any taxes
Failure of an insurance producer to timely remit premiums to an insurer?
A fiduciary violation
A whole life policy that offers the policy owner ability to adjust face amount l, premium and length without having to complete a new application...?
An adjustable life policy
Which of following statement is NOT true regards to the waiver of premium rider?
An additional premium is charged for this rider
Which of the following individuals is REQUIRED to be licensed as an insurance counselor in the state of Michigan...?
A person providing insurance advice to a person of business for a fee
Differed commissions may be paid to a person who sold an insurance policy when the person...?
Was a licensed producer at the time of the sale
In contract law, legal purposes refer to the fact that...?
The reason for entering into a contract must be lawful
Option that allows proceeds to remain with the insured and earnings to be paid to a beneficiary on a monthly basis...?
Interest only
A deliberate lie by an insured to the insurer to obtain a lower premium is an example of...?
Fraud
Which rider would allow additional insurance to be purchased at specific dates or events, without additional underwriting?
Guaranteed insurability
Which type of policy is used to add addition insured riders?
Term life
The entity that has the power to revoke a producer's insurance license is the...?
National association of insurance commissioners (NAIC)
Purchasing an insurance policy to cover liability exposure
Predicting an individuals earning potential, how much of that would be devoted to his dependents incorporates the...?
Human life value approach
A producer who knowingly submits a false statement in support of a claim may be found guilty of...?
Fraud
How does a graded premium whole life policy differ from a modified premium whole life policy?
It has a lower premium for the duration of the policy
Who can terminate a producer's appointment?
The insurer
Term Life Insurance, what's true?
Remains in force for a specific period of time
Premium payments for a universal Life policy are NOT used for which of the following?
Cash value accumulation
A method of handling risk such as having a sprinkler system installed in a building...?
Risk reduction
What does a limited payment whole life policy provide?
Lifetime protection
Each of the following are characteristics of a fixed annuity contract EXCEPT?
Funds are invested in a separate account
Annuities purchased with a series of premium payments that vary year to year are called...?
Flexible premium deferred annuities
What is withholding of material fact called?
Concealment
Betty has a 200,000 whole life policy with a 50,000 cash value she wants to take out 30,000 to buy a van...
If the loan is not repaid the new death benefit will be reduced
