job

a risk must meet the following criteria

1. is definable - time, place, and location 2. loss must be measurable - setback of the loss 3. results from a peril that is out of the insurers control 4. risk must be part of a large group of similar risks 5. cannot be catastrophic 6. cannot be excluded

To be considered legal, a contract requires five things:

1. offer 2. acceptance 3. consideration 4. competent parties 5. legal purpose

An insurer must notify its current customers of its privacy policies or practices at least once every how often?

12 months

Most states now refer to agents and brokers by the collective term

"producer."

How long from when an insurance contract is issued does an insurance company have to void a life insurance policy on the basis of fraud?

24 months

Jeff is a licensed insurance producer in both New York and Michigan. He is charged with embezzlement in New York, and his first pretrial hearing is set for March 1. He must notify the Michigan Commissioner of Insurance of this charge within how many days of the hearing?

30 days

The Commissioner will issue a counselor's license to a qualified applicant within how many days of the application?

60 days

A producer who fails to complete the continuing education requirements on time has a

90-day grace period during which he or she can complete the required courses. If a producer has not completed the continuing education requirements by the end of the grace period, the license will be canceled. A producer whose license is canceled must apply for a new license.

Counselor

A counselor provides advice regarding the values, terms, and provisions of insurance policies

Which of the following statements about agent/producer responsibilities is correct?

Agents must always act ethically and professionally in all dealings with policyowners and future policyowners.

All of the following statements about the regulation of the sale of variable products are correct, EXCEPT: The sale of variable products is regulated by the Financial Industry Regulatory Authority (FINRA). Agents who only sell variable life products and do not sell fixed life products are not required to hold a life insurance license. Many states also require a state-issued variable life or variable producer's license. Agents who sell variable life products are required to comply with all state laws and regulations dealing with the sale of life insurance.

Agents who only sell variable life products and do not sell fixed life products are not required to hold a life insurance license.

The federal Risk Retention Act of 1986 contains guidelines for which of the following entities?

risk retention groups

Adam is a licensed insurance counselor in Michigan. Which statement best describes his authority?

He provides advice regarding insurance policies AND charges a fee for such advice.

All of the following statements regarding the money laundering process and anti-money laundering efforts are correct EXCEPT:

Insurance companies are exempt from the need to create and maintain anti-money laundering programs.

When must insurable interest exist for a life insurance policy to be valid? Insurable interest must exist only at the time of the insured's death for a life insurance policy to be valid. Insurable interest must always exist for a life insurance policy to be valid. Insurable interest is never required for a life insurance policy to be valid. It is only necessary for insurable interest to exist at the time the applicant applies for a life insurance contract.

It is only necessary for insurable interest to exist at the time the applicant applies for a life insurance contract.

Astrid, a licensed producer, meets with a prospective client to review his insurance needs. When Astrid senses that he is reluctant to buy the policy she recommends, she reminds him that the policy is protected by the Michigan Life and Health Insurance Guaranty Association. Which statement is true about Astrid's conduct?

It is prohibited in all cases.

Adam is a producer for ABC Insurance Co. He becomes a professor at the community college and no longer sells insurance, so ABC terminates his appointment on May 1. ABC must notify the Commissioner of Insurance of this termination by

MayMay 31 31

Insurance policy must have three elements

Offer acceptance consideration

Melanie, a licensed producer, often reminds prospective clients that the policies she sells are protected by the Michigan Life and Health Insurance Guaranty Association. Melanie's practice is considered

Prohibited as an unfair trade practice

Samantha, Trudy, Raul, and Justin are applying for producers' licenses in Michigan. The Commissioner will probably NOT waive the prelicensing and examination requirements for which applicant? Trudy, who is applying for a limited license Samantha, who holds a certified financial planner (CFP) designation Raul, who holds undergraduate and graduate degrees in accounting Justin, who was licensed as a producer but let his license lapse one month ago

Raul, who holds undergraduate and graduate degrees in accounting

Life insurance has been purchased by ABC Company on the lives of two partners, Hugh and Danny, and three key employees Eileen, Vern, and June. Which of the following would apply if Hugh and June were to leave the business? The company would have to drop its coverage for both Hugh and June within 30 days of their departures. The company could keep the life insurance it has on both Hugh and June, even though both are no longer employed there. The company could keep the life insurance it has on Hugh, since he is a principal of the company, but would have to drop June's coverage, because she is not. The company can only retain its coverage on June because she is not a principal of the company.

The company could keep the life insurance it has on both Hugh and June, even though both are no longer employed there.

Replacement occurs if a life insurance policy is purchased and, in conjunction, any of the following happen EXCEPT:

The existing policy's beneficiary designation is changed.

All the following statements regarding stranger-owned life insurance (STOLI) are correct EXCEPT:

The insured retains the right to designate the policy's beneficiary.

Which one of the following best describes a "level premium" payment plan?

The policyowner pays the same amount each time the premium is due for the full duration of the premium-paying period.

All the following statements regarding life insurance level premiums are correct EXCEPT:

The premium amount does not change even though the risk to the insurer increases over time.

n setting premiums for a new policy, when do actuaries assume those premiums will be paid?

They will be paid in full at the beginning of the policy year.

All of the following statements about key person life insurance are correct, EXCEPT:

Upon the insured employee's death, the employee's surviving family receives the policy's death benefit.

Alex sold an insurance policy before his license lapsed and earned a commission on the sale. Is he entitled to a commission if the policy is renewed?

Yes, because he was licensed when the policy was sold.

When holding insurance premiums and other funds, producers must act in what role?

a fiduciary capacity

Which insurance company function calculates company mortality and morbidity rates as well as the dividends on participating life insurance policies?

actuarial division

Mutual companies, owned by their policyowners, issue participating policies, which pay

ax-free policy dividends to their policyowners.

A producer owes a fiduciary duty to:

both the insurer and the customer

a peril is the...

cause of the loss, which insurance protects against

The tendency of a person diagnosed with a serious illness to try to buy life or health insurance is known as:

concealment

Robert is purchasing a life insurance policy in which he is the insured. If he wants to keep the policy proceeds out of his estate for tax purposes, all of the following arrangements would help him meet that goal EXCEPT:

designate an irrevocable life insurance trust to be the owner and Robert's estate to be the policy beneficiary

An insurance company is developing a new product. Which of the following is the actuaries' most important responsibility?

determining the basic premium rates for the new product

Stock companies, owned by stockholders, do not issue participating policies; profits are

distributed as taxable stock dividends to their stockholders

Jerry owns a life insurance policy with premiums payable directly to the insurer's home office. However, for the past five years Jerry has sent his payments to his agent, who then forwards them to the insurer. The insurer had accepted this arrangement but then tries to cancel Jerry's policy when it learns he had died while the premium was being forwarded by the agent. The insurer will probably not be able to cancel the policy in this case because of which of the following legal principles?

estoppel

The contract between the producer and insurer, setting forth certain acts and duties the producer is specifically authorized to perform, describes the producer's:

express authority

Which of the following is NOT an unfair claims settlement practice if committed by an insurance company in Michigan?

failing to promptly settle a claim for which liability is uncertain

The activities a producer performs to support the insurance company in learning all it can about the applicant when seeking applications for insurance are generally called:

field underwriting

Acme Insurance Company wants to employ Anthony as a producer. To do so, what must Acme do?

file a notice of appointment with the Commissioner

Which penalty can the Commissioner impose if a person acts as an agent without a license?

fine of up to $1,000

The Excalibur Insurance Company, domiciled in Iowa, transacts business legally in Nebraska. In Nebraska, Excalibur is a(n):

foreign insurance company

If the Alpha-Omega Corporation wants to provide cost-effective life insurance for all its full-time employees, it will most likely buy which of the following?

group term life insurance

Agent Tom just sold a Medicare supplement policy to his client, Matilda. Which of the following acts would violate his fiduciary duties?

having Matilda make the check for the premium payable to Agent Tom

only pure risk (not speculative risk)...

is insurable

Which of the following best describes an agent's responsibilities?

n agent has to act in the best interests of insureds, applicants, and insurers.

When a customer chooses to prevent disclosure of nonpublic personal financial information to third parties not affiliated with an insurer or producer, the customer

opts out of the otherwise permissible disclosure.

The purpose for the Policy Summary, which must be given to every insurance applicant before an application is signed, is to:

provide buyers with details of the specific insurance contract they are considering for purchase

When collecting personal financial or health information, an insurance company is required to do all of the following EXCEPT:

provide individuals with copies of documents disclosed to other parties

To boost her sales at the end of the year, Agent Trudy started offering potential clients a $250 cash gift card in exchange for purchasing a life insurance policy. Which ethical sales practice has Agent Trudy violated?

rebating

loss is an unplanned...

reduction in economic value

Industrial life insurance, sold by home service insurance companies, is sold in

small face amounts, usually less than $10,000 (and frequently between $1,000 and $2,500).

Question 1 Kevin tells his insurance agent that he wants a life insurance policy that will last for his entire lifetime as long as he pays the premiums, will maintain a level premium, and will generate a cash value. This may describe any of the following types of policy, EXCEPT: ordinary whole life insurance term life insurance industrial whole life insurance variable life insurance

term life insurance

Who normally owns life insurance that is used to meet business insurance needs?

the business

risk means

the chance of loss

Under group insurance coverage, one policy covers a number of people. Who owns these group polices?

the organization that represents the group and which sponsors the coverage

All the following reasons that a business might buy life insurance represent a valid insurable interest, EXCEPT: to insure liquidity in case one of the owners or key employees dies to provide insurance coverage for large-volume customers to insure partners' lives to provide funds to buy out a deceased partner's interest to insure the lives of key employees or owners

to provide insurance coverage for large-volume customers

Why would a large manufacturer choose to self-insure rather than buy an insurance policy from an insurance company?

to save insurance premiums by paying relatively minor losses out of company funds

James is a licensed producer who lives in Michigan. He moves to a new town in the state. When must he notify the Michigan Department of Insurance of his move?

within 30 days