Life insurance

A licensee fails to earn the required CE credits by the expiration of the 90-day grace period, and the license has been terminated for education. How much time does the licensee have to meet the CE requirement to be considered for license reinstatement?

1 year

How long does a temporary producers licenses last without requiring an examination?

180 days

The commissioner has determined that a producer is ineligible for appointment by an insurer. The commissioner must notify the insurer within...

5 days

*Policy loan requests, except for loan requests for payment of due premiums, may be deferred for a period of up to

6 months

According to the life insurance replacement regulations, which of the following would be an example of policy replacement?

A policy is reissued with a reduction in cash value

The spouse of a retiring insurance producer

A temporary producer license could be issued without examination to all of the following EXCEPT

A copy of the original application for insurance

According to the Entire Contract provision, a policy must contain...

Risks with higher probability of loss seeking insurance more often than other risks.

Adverse selection is a concept best described as

Which of the following indicates the person upon whose life the annuity income amount is determined?

Annuitant

Which of the following documents used in the underwriting process contain specific medical details about an applicant?

Attending Physician's Statement (APS)

Which of the following would be TRUE of both the fixed-period and fixed-amount settlement options?

Both guarantee that the principal and interest will be fully paid out

How is a licensee's date of Continuing Education credit review determined

By the licensee's month and date of birth

An insured purchases a nonparticipating whole life policy. This policy includes all the following EXCEPT

Dividends

An important fact about the financial status of an insurer was deliberately withheld. Which of the following terms best describes this action?

False financial statement

Because of the imposed blackout period, the surviving spouse will not receive social security benefits until

He or she qualifies for retirement benefits

Under which of the following conditions would life insurance proceeds be taxable by the federal government?

If there is a transfer for value

All of the following are true regarding an Ordinary (Straight) Life policy EXCEPT

It does not have a guaranteed death benefit

Which of the following is true regarding pure life and pure life annuity settlement options?

It provides the highest monthly benefit

Guaranteeing future dividends is considered to be an unfair or deceptive act known as

Misrepresentation

An insurance company that is owned by the policyholders is called a...

Mutual insurer

How many hours of CE are required to maintain a counselors license?

None

cash value guarantees in a whole life policy are called

Nonforfeiture values

Which statement best describes agreement as it relates to insurance contracts?

One party accepts the exact terms of the other party's offer

Underwriters use all of these methods to protect the insurer against adverse selection EXCEPT

Only accepting a small percentage of applicants

When the owner of a participating whole life policy uses the dividend to provide more life insurance coverage, which of the following dividend options is being used?

Paid-up additions

Which dividend option increases the death benefit?

Paid-up additions

Which of the following is consideration on the part of an insurer?

Paying a claim

A married couple purchases a life insurance policy for their newborn baby. They are concerned about what would happen to the policy of either one of them were unable to continue making the premium payments due to death or disability. What rider should their agent recommend?

Payor benefit

Annuities Certain can limit the amount paid by the annuity to a certain fixed..

Period or fixed amount

All of the following statements about mutual insurance companies are correct EXCEPT

Policy dividends issued by mutual companies are guaranteed and not taxable

In a group life policy with a death benefit of more than $50,000

Premium cost above $50,000 is taxable as income to the employee

What is the difference between a straight life policy and a 20-pay whole life policy?

Premium payment period

If a life insurance company uses HIV testing as part of its underwriting, when must an applicant be notified of the procedure?

Prior to performance of the test

What affect will the long-term care (LTC) rider have in the death benefit of a life insurance policy if the LTC benefits were paid to the insured?

Reduce the death benefit

Which of the following individuals would be a likely candidate to purchase a deferred annuity?

Someone who wants to grow retirement funds tax deferred

Insurance companies from adverse selection by high risk persons

The Medical Information Bureau (MIB) was created to protect?

Set premium rates

The Ownership provision entitles the policyowner to do all of the following EXCEPT

Which of the following is NOT one of the requirements for obtaining a nonresident license in Michigan?

The applicant must complete pre licensing education and examination in the nonresident state

What is the cost of coverage based on for group life insurance?

The average age and the ratio of men to women

With Adjustable Life, the owner can change all of the following EXCEPT

The insured

All of the following are considerations under the needs approach planning for life insurance EXCEPT

The insured's income

Who is responsible for the content and form of insurance advertisements?

The insurer whose policies are being advertised

An annuitant dies before the annuity start date, which of the following is true?

The interest is taxable

Reduction of premium

The policyowner pays for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would allow her to do this?

2 years

The validity of coverage under a life insurance policy may not be contested, except for nonpayment of premium, after the policy has been in force for at least how many years?

Reduced Paid-Up

This nonforfeiture option provides coverage for the longest period of time?

A producer's retirement

This state provided for a temporary license for all of the following EXCEPT

Certificate of Authority

To legally transact insurance in this state, an insurer must obtain..

Owner's income

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

The same face amount as in the whole life policy

Under an extended term nonforfeiture option, the policy cash value is converted to

Which of the following policies can be described as a flexible premium adjustable life policy?

Universal Life

If the policy summary for a life insurance policy is not given when the application is taken, when must the policy summary be given to the policyowner?

When the policy is delivered

Implied

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

It may last for the lifetime of the annuitant.

Which of the following is TRUE regarding the annuity period?

The cash value available to the policyowner

Which of the following is an example of liquidity in a life insurance contract?

To create an estate

Which of the following is the best reason to purchase life insurance rather than annuities?

Graded Premium Whole Life

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

Standard risk is representative of the majority of people.

Which of the following statements is correct about a standard risk classification in the same age group and with similar lifestyles?

When an insured terminates membership in the insured group, the insured can convert to..

Whole life without proof of insurability

It has a guaranteed minimum interest rate

Why is an equity Indexed annuity considered to be a fixed annuity?

An IRA contribution can be made from which of the following?

cash

During policy solicitation, an insurer exaggerates the financial condition of one of its competitors, and makes it sounds worse than it is. This is an example of an unfair trade practice of

defamation

Which of the following is NOT a standard exclusion in life insurance policies?

disability

All of the following are ways to handle risk EXCEPT

elimination

If a loan request is for payment of due premiums on the policy, how soon must the insurer issue a loan?

immediately

To purchase insurance, the policy owner must face the possibility of losing money or something of value in the event of loss. What is this concept called?

insurable interest

Among the applicants in the same class and life expectancy, which of the following factors can be used to influence premium rates?

occupation

A stock insurer is defined as an insurer

owned by its stockholders

Key person insurance can provide protection for all of the following economic losses to a business EXCEPT

pay the death benefit to the estate of the insured

All of the following are true of annually renewable term insurance EXCEPT

proof of insurability must be provided at each renewal

Automatic Premium Loan

protects the insured from an unintentional policy lapse due to a nonpayment of premium

The Guaranteed Insurability Rider allows the owner to purchase additional amounts of life insurance without proof of insurability at all of the following EXCEPT

purchase of a new home

If an insured purchases an insurance policy with a large deductible, what risk management technique is the insured exercising?

retention

What guarantees that the information explained in the insurance contract is true?

warranty

Collateral Assignment

A business owner was trying to obtain a bank loan to fund the purchase of a new business facility, but the bank required proof of additional assets to secure the loan. The business owner then decided to use her $250,000 life insurance policy to secure the loan. Which provision makes this possible?

The benefit is received tax free

A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then

If the father is disabled for more than 6 months

A father purchases a life insurance policy on his teenage daughter and adds the Payor benefit rider. What must be acceptable in order for the ride to be able to waive the payment of premium?

30 days

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

Pay dividends to the policyowner

A participating insurance policy may do which of the following?

Automatic Premium Loan

A policyowner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision?

Annually

A policyowner of universal life insurance policy must receive a policy status report from the insurer at least...

Pay the policy proceeds only if it would have issued the policy.

A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will

Cost of living rider

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

Risks with higher probability of loss seeking insurance more often than other risks.

Adverse selection is a concept best described as...

Premiums are determined by the age, sex and occupation of each individual certificate holder.

All of the following are characteristics of group life insurance, EXCEPT

The plan is funded by permanent insurance only

All of the following are true of Key Person insurance EXCEPT

Dividends from a mutual insurer

All the following could be considered rebates if offered to an insured in the sale of insurance except?

Cost of Living Rider

Allows the policy face amount to be adjusted to account for inflation based on the consumer price index.

50% tax on the amount not distributed as required

An IRA uses immediate annuities to pay out benefits; the IRA owner is nearly 75 years old when he decides to collect distributions. What kind of penalty would the IRA owner pay?

When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health

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?

The insured my choose to convert to term or permanent individual coverage

An employee is insured under her employers group life plan. If she terminates coverage which of the following statements is INCORRECT?

Conditional

An insurance contract requires that both the insured and the insurer meet certain conditions in order for the contract to be enforceable

Single Premium Whole Life

An insurance policy that only requires a payment of premium at its inception and no further premiums contributions, and in addition to providing insurance protection for the life of the insured, endows at the insured's age 100, is called

Adjustment in the amount of the death benefit

An insured misstates her age at the time the life insurance application is taken. This misstatement may result in?

Universal Life

An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have?

Mutual

An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year she receive a check from the insurer. From what type of insurer did the insured purchase the policy?

The insured will need a written consent of the insurer.

An insured wants to transfer his personal insurance policy to a friend. Under what conditions would this be possible?

Inspection Report

An insurer receives a report regarding a potential insured that includes the insured's financial status, hobbies and habits. What type of a report is that?

Attending Physician's Statement (APS)

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

Increases annually

Annually Renewable Term policies provide a level death benefit for a premium that?...

Predicted needs of the family after the insured's death.

Based on Human Life Value Approach, which of the following is NOT used to calculate an individual's life value?

A whole life policy is surrendered for a reduced paid-up policy. The cash value in the new policy will...

Continue to increase

Are subject to vesting requirements

Employer contributions made to a qualified plan..

Enployees

For a retirement plan to be qualified, it must be designed for the benefit of?

Until the beneficiary's death

How long will the beneficiary receive payments under the single life settlement option?

90 days

If a licensee does not earn 24 hours of CE by the license review date, the license will be suspended for up to how many days?

With the policy

If a policy includes a free-look period of at least 10 days, the Buyer's Guide must be delivered to the applicant no later than?

Require evidence of insurability

If an employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer may?

An unfair trade practice

If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered

The death benefit will be smaller

If an insured withdraws a portion of the face amount in the form of accelerated benefits because of a terminal illness, how will that affect the payable death benefit from the policy?

Either the amount paid into the annuity or the cash value, whichever is greater

If the annuitant dies before the annuitization period starts, what will the beneficiary receive?

Handling insurer funds in a trust capacity

In insurance transactions, fiduciary responsibility means

The loss may be intentional

Not all losses are insurable, and there are certain requirements that must be met before a risk is proper subject for insurance. These requirements include all of the following EXCEPT

Misrepresentation

On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. The company is guilty of?

Any form of life insurance

Partners in a business enter into a buy-sell agreement to purchase life insurance, which states that should one of them die prematurely, the other would be financially able to buy the interest of the deceased partner. What type of insurance policy may be used to fund this agreement?

One-Year Term Option

The dividend option in which the policyowner used dividends to purchase a term policy for one year is referred to as the...

To purchase a smaller amount of the same type of insurance as the original policy

The paid-up addition option uses the dividend...

Interest Only Option

The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. What settlement option should the policyowner choose?

All the following are true regarding the waiver of insurance rider EXCEPT

The rider expires when the insured reaches age 60

Signed waiver of premium

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

The period of time during which accumulated money is converted into income payments

What describes what an annuity period is?

Guides describing company financial integrity

What insurance concept is associated with the names Weiss and Fitch?

Current assumption life

What is another name for interest-sensitive whole life insurance?

The original age is used for premium determination

What is the advantage of reinstating a policy instead of applying for a new one?

It has the highest amount of insurance protection

What is the benefit of choosing extended term as a nonforfeiture option?

To allow the consumer to compare the costs of different policies

What is the purpose of the buyer's guide?

Group Insurance

What kind of policy issues certificates of insurance to insureds?

Modified life

What type of whole life insurance policy has premiums that are adjusted so that during the first years of the policy, the premiums are lower than those of a straight whole life policy, and in subsequent years the premiums are higher than those of a straight whole life policy?

Option A

What universal life option has a gradually increasing cash value and a level death benefit?

The insurance companies general account

When a fixed annuity owner pays a monthly annuity premium to the insurance company, where is the money placed?

Annuitant

When an annuity is written, whose life expectancy is taken into account?

Transfer

When an individual purchases insurance, what risk management technique is he/she practicing?

False Financial Statement

When an insurance agency published an advertising brochure, it emphasized the company's financial stability and sound business practices. In reality, its financial health is terrible, and the company will soon have to file for bankruptcy. Which of the following terms best describes the advertisement?

Indemnity

Which insurance principle states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost?

Law of Large Numbers

Which law is the foundation of the statistical prediction of loss upon which rates for insurance are calculated?

Payor Benefit

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?

Issuing sales material with exaggerated statements about policy benefits

Which of the following best describes a misrepresentation?

Taxes are deferred

Which of the following best describes taxation during the accumulation period of an annuity?

Business Entity

Which of the following could be used when a corporation, association, partnership or limited liability partnership acts as a producer?

Notice Regarding Replacement

Which of the following documents must be provided to the policyowner or applicant during policy replacement?

Medical background

Which of the following information about the applicant is NOT included in the General Information section of the application for insurance?

Reciprocal

Which of the following insurance options would be considered a risk-sharing arrangement?

Any exchange made under Section 1035 of the Internal Revenue Code must be completed within 30 days.

Which of the following is NOT true of Section 1035 Policy Exchanges?

Benefits stop at the annuitant's death.

Which of the following is NOT true regarding an annuity certain?

Substandard Risk

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

The Medical Information Bureau

Which of the following would provide an underwriter with information concerning an applicant's health history?

Family Term Rider

Which rider, when attached to a permanent life insurance policy, provides an amount of insurance on every family member?

Replacement rule

Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance?

Rating the financial strength of insurance companies

Which services are associated with Standard & Poor's and AM Best?

Insurers

Who makes up the Medical Information Bureau?

Straight life

Your client is planning to retire. She has accumulated 100,000 in a retirement annuity, and now wants to select the benefit option that will pay the largest monthly amount for as long as she lives. As her agent you should recommend...