EXAMFX

Within what time period after completing pre-licensing education must an applicant file a certificate of education completion with the commissioner?

12 months.

If a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select?

Fixed Period.

What is the purpose of a conditional receipt?

It is intended to provide coverage on a date earlier than the date of the issuance of the policy.

Which of the following is true of a children's rider added to an insured's permanent life insurance policy?

It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age.

Traditional IRA contributions are tax deductible based on which of the following?

Owner's income.

Who might receive dividends from a mutual insurer?

Policyholders.

All of the following are examples of risk retention EXCEPT?

Premiums.

The risk of loss may be classified as

Pure risk and speculative risk

Which type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?

Twisting.

Which of the following best describes annually renewable term insurance?

it is level term insurance.

Which of the following are generally NOT considered when underwriting group insurance?

The insured's medical history.

Which of the following is an example of a producer's fiduciary duty?

The trust that a client places in the producer in regard to handling premiums.

In case where the primary beneficiary predeceases the insured, in the event of the insured's death benefit proceeds will be paid to

The contingent beneficiary.

If an insurer terminates a producer, the Commissioner must be notified. How many days does the insurer have to deliver this notice?

30 days.

if a policy is in danger of being terminated due to nonpayment of premium, how many days before termination must an insurer send written notice to the policy owner?

30 days.

In this state, a temporary license may be issued for any of the following reasons EXCEPT

A producer's retirement.

What does "liquidity" refer to in a life insurance policy?

Cash values can be borrowed at any time.

Which of the following terms describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance?

Defamation

Which is NOT required of an applicant for an insurance license in Michigan?

Two letters of recommendation attesting to trustworthiness, reliability, & good reputation.

An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. When will coverage begin?

When the agent delivers the policy, collects the initial premium, & the applicant completes an acceptable statement of good health.

If an insured changes his payment plan from monthly to annually, what happens to the total premium?

Decreases.

Which of the following premium modes would result in the highest annual cost for an insurance policy?

Monthly.

The automatic premium loan provision is activated at the end of the?

Grace Period.

An underwriter is reviewing the medical questions in the application & needs further information due to a medical situation applicant had in the past. What will the underwriter require?

Attending physician statement

Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled?

Payor Benefit.

Which option for universal life allows the beneficiary to collect both the death benefit & cash value upon the death of the insured?

Option B.

Which of the following is another term for the accumulation period of an annuity?

Pay-in period.

An insured will be allowed to reactivate her lapsed life insurance policy if action is taken within a certain period of time, and proof of insurability is provided. Which policy provision allows this?

Reinstatement Provision.

After three years of making payments into a flexible premium deferred annuity, the owner decides to surrender the annuity. The insure returns all the premium payments to the owner, except for a predetermined percentage. What is this percentage called?

Surrender Charge.

Which of the following individuals could qualify for a temporary insurance license?

The designee of a producer that is called to active service with the Navy.

Who is the owner & who is the beneficiary on the Key Person Life Insurance policy?

The employer is the owner & beneficiary.

Which of the following policies is characterized by a provision where the premiums are lower in the early years of the policy & increase over time to a point where they become level for the remainder of the policy?

Graded premium whole life.

Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean?

The beneficiary will only receive payments of the interest earned on the death benefit.

In a group life insurance policy, the employer may select all of the following EXCEPT?

The beneficiary.

If an applicant for a life insurance policy & person to be insured by the policy are two different people, the underwriter would be concerned about?

Whether an insurable interest exists between the individuals.

An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy?

$50,000.

Which of the following applicants could the insurer charge a higher rate of premium & not violate regulations regarding unfair discrimination?

An applicant who is a smoker.

Graded- Premium whole life policy premiums are typically lower initially, but gradually increase for a period of 5 to 10 years. After the period of increase the premiums will

Be level thereafter.

Producers are permitted to share or split commissions, providing that

Both are properly licensed for the line of insurance.

Which of the following would describe a legal document which would dictate who can buy a decreased partner's share of a business & for what amount?

Buy-Sell Agreement.

A long stretch of national economic hardship causes a 7% rate of inflation. Devonne notices that the face value of her life insurance policy has been raised 7% as a result. What is the name of the provision that caused this change?

Cost of Living Rider.

Which of the following best describes the aleatory nature of an insurance contract?

Exchange of unequal values.

Which nonforfeiture option has the highest amount of insurance protection?

Extended Term.

The requirement that agents not commingle insurance monies with their own funds in known as?

Fiduciary responsibility.

All of the following actions by a person could be described as risk avoidance EXCEPT?

Investing in the stock market.

Which of the following is usually true of a participating life insurance policy?

It may pay dividends to policy owners.

Which of the following is the basis for a claim against an insurance policy?

Loss.

Which of the following is NOT true regarding policy loans?

Money borrowed from the cash value is taxable.

A couple owns a life insurance policy with a children's term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability.

Proof of insurability is not required.

An insured pays $1,200 annually for her life insurance premium. The insured applies this year's $300 worth of accumulated dividends to the next year's premium, thus reducing it to $900 What option does this describe?

Reduction of premium.

Upon policy delivery, the producer may be required to obtain any of the following EXCEPT

Signed waiver of premium.

Which of the following types of risk will result in the highest premium?

Substandard Risk.

The annuity owner dies during the accumulation period without naming a beneficiary. Annuity's cash value exceeds premiums paid. Which of the following is TRUE?

The cash value will be paid to the annuitants estate.

All of the following are true statements regarding the accumulation at interest option EXCEPT?

The interest is not taxable since it remains inside the insurance policy.

What happens if a deferred annuity is surrendered before the annuitization period?

The owner will receive the surrender value of the annuity.

In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describe?

Unilateral.

An insured pays a $100 premium every month for his insurance coverage, yet the insurer promises to pay $10,000 for a covered loss. What characteristic of an insurance contract does this describe?

Aleatory

Two individuals are in the same risk & age class; yet, they are charged different rates for their insurance policies due to an insignificant factor. What is this called?

Discrimination.

What describes the specific information about a policy?

Policy Summary.

What is the major difference between a stock company & a mutual company?

Ownership.

Because an agent is using stationery with the logo of an insurance company, applicants for insurance assume that the agent is authorized to transact on behalf of that insurer. What type of agent authority does this describe?

Apparent

After a back injury, an insured is disabled for a year. His insurance policy carries a disability income benefit rider. Which of the following benefits will he receive?

Monthly premium waiver & monthly income.

A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as

Survivor Protection.

A rider that may be attached to a life insurance policy that will adjust the face amount based upon a specific index, such as the Consumer Price Index, is called

Cost of living rider.

A flexible premium universal life insurance policy must provide a grace period of?

30 days.

A temporary license in this state is valid for a maximum of?

180 Days.

When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount?

Equal to the original policy for as long as the cash values will purchase.

A banker is ready to close on a customer's loan. The bank is prepared to offer the loan but only if the customer purchases a life insurance policy from the bank in the amount of the loan. This is an example of?

Coercion

If an insurer wishes to appoint a producer, it must file a notice of appointment within how many days of the date that the contract is executed

15 days.

If the annuitant dies during the accumulation period, who will receive the annuity benefits?

The beneficiary.

An applicant for a counselor's license in Michigan must possess all of the following EXCEPT

A license to practice law.

Life insurance death proceeds are

Generally not taxed as income.

Which of the following ultimately determines the interest rates paid to the owner of a fixed annuity?

Insurer's guaranteed minimum rate of interest

The provision which states that both the policy & a copy of the application form the contract between the policyowner & the insurer is called the?

Entire Contract.

Which authority is NOT stated in an agent's contract but is required for the agent to conduct business?

Implied.

The commissioner may waive relicensing requirements or examinations for someone who has been a licensed insurance producer

In the preceding 2 years