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Michigan life insurance state exam
Questions With Answers
Which is TRUE regarding the annuitant, when the annuitant is NOT the policy owner?
- The annuitant has the right to name the beneficiary
- The annuitant is the person paying the premiums
- The cash value is available to the annuitant for withdrawals
- Annuity payments will be based on the annuitants life expectancy - ANSWER>>Annuity payments will be based on the annuitants life expectancy
Signing an applicants name for insurance is known as...?
- Concealment
- Defamation
- Coercion
- Forgery - ANSWER>>4. Forgery
Failure to pay a penalty assessed by the commissioner may result in...?
- Revoked or suspended license
- Require the license to retake the examination
- Complete 5 extra hours of continuing education
- Pay a late charge of 1.5% - ANSWER>>1. 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
- Key employee life insurance
- Business continuation
- Accidental death - ANSWER>>1. Buy-sell agreement
Policy owner surrenders a policy for its cash value, when is tax liability incurred?
- It waives one future premium of the owner becomes disabled
- It requires the policy owner to pay one premium annually - ANSWER>>1. 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
- Death benefits are taxable
- The insurance must be incidental to the plan
- Death benefits are paid to the employer - ANSWER>>1. Premiums are taxable
How does a graded premium whole life policy differ from a modified premium?
- It increase the premium annually during the first several years of the policy
- It increase the premium annually for the duration of the policy
- It increases the premium once during the duration of the policy
- It has lower premium for the duration of the policy - ANSWER>>1. 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?
- The converted policy must be the same amount as the group coverage
- Group policies must include a guarantee of conversion
- Coverage continues during the conversion period
- Proof of insurability must be required - ANSWER>>4. Proof of insurability must be required
Before doing business under an assumed name, who must the producer first notify?
- Insured
- insurer
- Commissioner
- Insurance agency - ANSWER>>3. Commissioner
- Play the premium within 15 days of the grace period.
- Provide the insurer with the evidence of insurability
- Apply for a new life insurance policy
- Demonstrate the incontestable clause can be invoked - ANSWER>>2. Provide the insurer with the evidence of insurability
Term life insurance differs from permanent life insurance in that MOST often, term life insurance... - ANSWER>>Remains in force for a specific period of time
Which activity does NOT require an insurance producer's license? - ANSWER>>Underwriting
Which nonforfeiture option allows the policy owner to purchase less coverage for life?
- Reduced paid-up insurance
- Cash surrender value
- Settlement value
- Extended term - ANSWER>>1. Reduced paid-up insurance
If the annuitant dies before the annuity start date, the interest earned is...
- Taxable
- Nontaxable
- Never taxed
- Taxed if the beneficiary is a spouse - ANSWER>>1. Taxable
Which type of annuity guarantees a level benefit payment?
- Variable
- Universal
- Limited life
- Fixed - ANSWER>>4. Fixed
For a contract to be valid it MUST... - ANSWER>>Include an offer and acceptance
Which of the following not an example of a producer duties?
- Fixed period
- Fixed amount - ANSWER>>1. Deferred
Generally If an application is not prepaid, the effective date of begins on the date the...
- Application is signed
- Application is postmarked and mailed to the insurer
- Company underwriter approves the risk
- Producer delivers the policy and collects the premium - ANSWER>>4. 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...
- Loss exposure report
- Salary projection approach
- At distribution
- Only if there is a premature distribution - ANSWER>>3. At distribution
What info is NOT required for a credit life insurance contract?
- Charge for each type of insurance being purchased
- Type of insurance being purchased
- Post claim underwriting date
- Insurer name - ANSWER>>2. Type of insurance being purchased
Which of the following statements is TRUE concerning classification of risk?
- Substandard applications are never issued policies
- Rated policies merit lower premium
- A preferred individual is issued a rated policy
- Preferred risk pay a lower premium than standard risks - ANSWER>>4. Preferred risk pay a lower premium than standard risks
- Depictions
- Certification
- Representation
- Personal characteristics - ANSWER>>4. Personal characteristics
A license who informs an insurance fan inaccurate terms, benefits, or advantages of any policy is committing which of the following...?
- Discrimination
- Misrepresentation
- Fraud
- Defamation - ANSWER>>2. Misrepresentation
Insurer's intentional relinquishment of a known right is...?
- An estoppel
- A privilege
- A wavier
- A choice - ANSWER>>3. A waiver
Which type of life insurance policy is characterized by premiums that are fully paid within a stated period, after which no further premiums are REQUIRED...
- Vanishing premium
- Continues premium
- Endowment insurance
- Limited payment insurance - ANSWER>>4. Limited payment insurance
Human life value approach measures which of the following...?
- Total lifetime earnings
- Total lifetime benefits
- Total lifetime family needs
- Total lifetime dividends - ANSWER>>3. Total lifetime family needs
A license can disclose a consumer's policy account number to all of the following EXCEPT...?
- Member in an affinity program that was identified to the consumers
- Service provider marketing on behalf of the license
- Consumer reporting cause
- Nonaffiliated third party - ANSWER>>4. 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?
- Declined
- Preferred
- Standard
- Substandard - ANSWER>>3. Standard
It early withdrawal before age 59 1/2 from a qualified plan is taxed in additional...? - ANSWER>>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
- False advertising
- Concealment
- Fraud - ANSWER>>1. Illegal inducement
A method of handling risk such as having a sprinkler system installed in a building, is an example of...?
- Transfer
- Loss retention
- Risk reduction
- Avoidance - ANSWER>>3. Risk reduction
- Between the death of the insured individual and the payment of benefits
- After the premium is paid and policy is issued
- After the premium is received and before the policy is based
- After the premium is due but while policy remains in force - ANSWER>>4. 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...?
- Buyers guide
- Policy summary
- Conditional receipt
- Underwriters report - ANSWER>>2. Policy summary
How data reported and maintained on applicants for life or health by medical information?
- In code symbols to preserve confidentiality
- In public database with meme er insurance companies reporting data
- In physician maintained database accessible by insurance companies and medical practitioners
- As secured historical data to be purchased by member insurance companies seeking to enforce adverse underwriting - ANSWER>>3. In physician maintained database accessible by insurance companies and medical practitioners
Which approach considers the future needs of the survivors in determining amounts of life insurance?
- Human life approach
- Cost of comparison approach
- Living benefits approach
- Needs approach - ANSWER>>1. Human life approach
What is insurable interest required?
- At the time of a claim
