MI Life Insurance Policies

Which statement is NOT true regarding a Straight Life policy? AIts premium steadily decreases over time, in response to its growing cash value. BThe face value of the policy is paid to the insured at age 100. CIt usually develops cash value by the end of the third policy year. DIt has the lowest annual premium of the three types of Whole Life policies.

a Straight Life policies charge a level annual premium throughout the insured's lifetime and provide a level, guaranteed death benefit.

All of the following are characteristics of a group life insurance plan EXCEPT AThere is a requirement to prove insurability on the part of the participants. BThe participants receive a Certificate of Insurance as their proof of insurance. CA minimum number of participants is required in order to underwrite the plan. DThe cost of the plan is determined by the average age of the group.

a There is no individual underwriting for group life insurance.

Annually renewable term policies provide a level death benefit for a premium that AFluctuates. BIncreases annually. CDecreases annually. DRemains level.

b Annually renewable term policies provide a level death benefit for a premium that increases each year with the age of the insured.

A flexible premium universal life insurance policy must provide a grace period of A10 days. B30 days. C60 days. D90 days.

b Michigan regulations require universal life insurance policies to provide for a grace period of 30 days

All of the following entities regulate variable life policies EXCEPT AThe Insurance Department. BThe Guaranty Association. CFederal government. DThe SEC.

b Variable life insurance is regulated by both the state and federal government, as well as the Insurance Department, and the SEC.

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? AEnhanced whole life BMinimum deposit whole life CGraded premium whole life DIndeterminate premium whole life

c Premiums charged for a graded premium whole life policy are lower during the preliminary period and then increase each year until leveling off after the preliminary period. The premium rates are actually equivalent to a standard whole life policy.

An insured buys a 5-year level premium term policy with a face amount of $10,000. The policy also contains renewability and convertibility options. When the insured renews the policy in 5 years, what will happen to the premium? AIt will decrease for the new 5-year term since the insured is now a lesser risk to the company. BIt will increase each year during the next 5 years as the face amount increases each year. CIt will increase because the insured will be 5 years older than when the policy was originally purchased. DIt will remain the same for the new 5-year term.

c The premium will remain level during the entire level premium term policy period. If the policy renews at the end of the term, the premium will be based on the insured's attained age at the time of renewal.

At age 30, an applicant wants to start an insurance program, but realizing that his insurance needs will likely change, he wants a policy that can be modified to accommodate those changes as they occur. Which of the following policies would most likely fit his needs? ASingle Premium Whole Life BInterest-sensitive Whole Life CDecreasing Term DAdjustable Life

d Adjustable life policies allow for increases or decreases in the face amount or premium, so long as the premium is sufficient to pay for the mortality. Any increase in face amount requires proof of insurability.

Which of the following best describes annually renewable term insurance? AIt requires proof of insurability at each renewal. BNeither the premium nor the death benefit is affected by the insured's age. CIt provides an annually increasing death benefit. DIt is level term insurance.

d Annually renewable term is a form of level term insurance that offers the most insurance at the lowest cost.

If an employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer may ARequire a higher premium. BProlong the open enrollment period. CIncrease medical requirements on existing members. DRequire evidence of insurability.

d In group underwriting the evidence of insurability is usually not required of each participant unless he or she is enrolling for coverage outside of the normal enrollment period.

Randy owns a universal life policy. He has just received a policy status report. How long will it be until he receives the next report? A2 months B3 months C6 months D12 months

d Michigan regulations require that an insurer provide a policy status report at least annually.

An employee quits his job on May 15 and doesn't convert his Group Life policy to an individual policy for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen? AThe insurer will pay a reduced death benefit to the beneficiary. BThe insurer will pay the death benefit minus one month's premium. CThe insurer will pay nothing because the employee has terminated his group insurance and hasn't started the individual one. DThe insurer will pay the full death benefit from the group policy to the beneficiary.

d The employee usually has a period of 31 days after terminating from the group in order to exercise the conversion option. During this time, the employee is still covered under the original group policy.

Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid AUntil the policyowner reaches age 65. BFor at least 20 years. CUntil the policyowner's age 100, when the policy matures. DFor 20 years or until death, whichever occurs first.

d Under a 20-pay life policy, all of the premiums necessary to cause the policy to endow at the insured's age 100 are paid during the first 20 years; however, if the insured dies before all of the planned premiums are paid, the beneficiary will receive the face amount as a death benefit.

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 AContinue to increase. BReturn to the initial premium amount. CDecrease again. DBe level thereafter.

d When a Graded-Premium Whole Life policy begins, the premium amounts are typically 50% lower than premiums for straight life policies. The premium then gradually increases each year for a period of usually 5 or 10 years and then remains level thereafter.