Xcel Solutions Final Exam - Michigan Life and Health

To be eligible for small employer group coverage, an employee must work a MINIMUM of _____ hours in a typical week. A.) 17.5 B.) 18 C.) 18.5 D.) 19

A.) 17.5

How many employees must an employer have for a terminated employee to be eligible for COBRA? A.) 20 B.) 30 C.) 40 D.) 50

A.) 20

Which of the following BEST describes a conditional insurance contract? A.) A contract that requires certain conditions or acts by the insured individual B.) A contract that has the potential for the unequal exchange of consideration for both parties C.) A contract where one party "adheres" to the terms of the contract D.) A contract where only one party makes any kind of enforceable contract

A.) A contract that requires certain conditions or acts by the insured individual

Jonas is a whole life insurance policyowner and would like to add coverage for his two children. Which of the following products would allow him to accomplish this? A.) Child term rider B.) Payor rider C.) Family maintenance rider D.) Family income rider

A.) Child term rider

Susan is insured through her Group Health Insurance plan and changed her coverage to an individual plan with the same insurer after her employment was terminated. This change is called a(n) A.) Crossover B.) Conversion C.) Exchange D.) Extension of benefits

A.) Conversion

A life insurance policy normally contains a provision that restricts coverage in the event of death under all of the following situations EXCEPT A.) Fare-paying passenger B.) Pilot of personal airplane C.) Suicide D.) War

A.) Fare-paying passenger

How does one qualify as a fully-insured individual under Social Security disability coverage? A.) Individual has been credited with the appropriate number of quarters of coverage B.) Individual is currently covered under Medicaid C.) Individual is expected to be disabled for 5 months D.) Individual is currently employed

A.) Individual has been credited with the appropriate number of quarters of coverage

Which of these is NOT considered to be a non-forfeiture option in a whole life insurance policy? A.) Interest only B.) Reduced paid-up insurance C.) Extended term insurance D.) Cash surrender

A.) Interest only

Without a Section 125 Plan in place, what would happen to an employee's payroll contribution to an HSA? A.) It would be considered taxable income to the employee B.) The employee would not be allowed to an HSA C.) The employer would pay payroll tax and FICA on the contribution amount D.) the employer would not be allowed to deduct the contribution from the employee's pay

A.) It would be considered taxable income to the employee

Which of the following annuity payout options makes no additional payments regardless of when the annuitant dies? A.) Life only B.) Life with period certain C.) Cash refund D.) Installment refund

A.) Life only

Low frequency diseases can be exclusively covered by what kind of health insurance policies? A.) Limited policies B.) Blanket policies C.) Employer policies D.) Restricted policies

A.) Limited policies

Which of the following is NOT a common exclusion for a medical expense policy? A.) Physical Therapy B.) Act of War C.) On-the-Job Injury D.) Self Inflicted Injury

A.) Physical Therapy

Which situation accurately describes a reduced paid-up nonforfeiture option? A.) Policy has a decreased face amount B.) Face amount of the new policy equals that of the original policy C.) Cash value is surrendered to policy owner D.) Premiums must continue to be paid

A.) Policy has a decrease face amount

What is considered to be the primary reason for buying life insurance? A.) Provide death benefits B.) Provide money for retirement C.) Provide living benefits D.) Provide money for college

A.) Provide death benefits

In a Long-term Care policy, activities of daily living (ADL's) can be each of the following EXCEPT A.) Talking B.) Dressing C.) Transferring D.) Feeding oneself

A.) Talking

Which of the following decisions would a Health Savings Account HSA) owner NOT be able to make? A.) The amount contributed by the employer B.) The amount contributed by the owner C.) The underlying account investments used D.) The medical expenses paid for by the HSA

A.) The amount contributed by the employer

What will the beneficiary receive if an annuitant dies during the accumulation period? A.) The greater of the accumulated cash value or the total premium paid B.) The lesser of the accumulated cash value or the total premium paid C.) The interest earned on the accumulated cash value D.) Nothing

A.) The greater of the accumulated cash value or the total premium paid

Which of the following does a life insurance policy summary normally include? A.) The policy's cash value B.) Agent's report C.) Policy owner's MIB report D.) Stated beneficiary

A.) The policy's cash value

Shawn, Mike, and Dave are brothers who have a $100,000 "first to die" joint life policy covering all three of their lives. If Mike dies first, the policy proceeds A.) Will no longer provide insurance protection B.) Will go to Mike's estate C.) Wwill be divided by probate D.) Will not be paid until the last brother dies

A.) Will no longer provide insurance protection

Medical Expense Insurance would cover A.) an injury occurring at the insured's residence B.) an injury occurring at work C.) an injury caused by war D.) elective surgeries

A.) an injury occurring at the insured's residence

A newborn must be covered under and existing health policy A.) at the moment of birth B.) within 7 days of birth C.) within 10 days of birth D.) when initial premium is paid for newborn

A.) at the moment of birth

The purpose of the Coordination of Benefits provision in group accident and health plans is to A.) avoid overpayment of claims B.) reduce out-of-pocket costs C.) reduce adverse selection D.) lower the cost of premiums

A.) avoid overpayment of claims

A foreign insurance company doing business in Michigan A.) is a company domiciled under the laws of another state B.) is not subject to Michigan insurance laws C.) is a company that was formed under the laws of another country D.) is only authorized to write business outside the United States

A.) is a company domiciled under the laws of another state

Under Michigan Insurance Code, Chapter 45, financial loss can be defined as A.) loss of income B.) restrictive fees C.) punitive penalties D.) additional fines

A.) loss of income

In most dental plans, a deductible typically is NOT applied to A.) preventative and diagnostic services B.) restorative dentistry C.) orthodontics D.) oral surgery

A.) preventative and diagnostic services

In the state of Michigan, a licensed producer A.) represents the insurer B.) may modify insurance contracts C.) approves insurance contracts D.) represents the insured

A.) represents the insurer

Under the subrogation clause, legal action can be taken by the insurer against the A.) responsible third party B.) beneficiary C.) Policy owner D.) State

A.) responsible third party

According to the Taft-Hartley Act, group insurance premium payments made by and employer MUST be paid to the A.) trust B.) state C.) insurance company D.) administrator

A.) trust

The act of using misrepresentation to induce an insured person to terminate an existing policy and purchase a new policy is referred to as A.) twisting B.) subrogation C.) defamation D.) intimidation

A.) twisting

An insured under a Major Medical expense plan with a zero deductible and 80/20 coinsurance provision files a $1,000 claim. How much of this claim is the insured responsible for? A.) $160 B.) $200 C.) $600 D.) $800

B.) $200

An insured has a stop-loss limit of $5,000, a deductible of $500, and an 80/20 coinsurance. The insured incurs $25,000 of covered losses. How much will the insured have to pay? A.)$ 500 B.) $5,000 C.) $5,400 D.) $5,600

B.) $5,000

A producer is hired to sell insurance for an insurer. Upon submission of the agency contract application, the producer MUST be appointed by the insurer within _____ days. A.) 7 B.) 15 C.) 21 D.) 30

B.) 15

Which policy feature makes a universal life policy different from a whole life policy? A.) A fixed cash value B.) A flexible premium schedule C.) A fixed death benefit D.) The ability to take out a policy loan

B.) A flexible premium schedule

Kathy's annuity is currently experiencing tax-deferred growth until she retires. Which phase is this annuity in? A.) Payout period B.) Accumulation period C.) Deferred period D.) Growth period

B.) Accumulation period

Which scenario would most life insurance policies excluded coverage for? A.) A tourist traveling abroad on a major airline carrier B.) An individual who has a hobby racing cars once a month C.) An airline pilot who flies for a commercial carrier D.) A soldier on leave at home

B.) An individual who has a hobby racing cars once a month

Which type of clause describes the following statement: "We have issued the policy in consideration of the representations in your applications and payment of the first-term premium". A.) Premium Cluase B.) Consideration Clause C.) Adhesion Clause D.) Contestability Clause

B.) Consideration Clause

Which of these statements concerning Traditional IRAs in CORRECT? A.) Earnings are not taxable when withdrawn B.) Earnings are taxable when withdrawn C.) Contributions are never tax-deductible D.) Contributions are always made by the employer

B.) Earnings are taxable when withdrawn

The _____ reserves the right to renew a small employer health plan A.) Employees B.) Employer C.) Commissioner D.) NAIC

B.) Employer

The policy holder for a group health benefit plan is considered to be the A.) Employee B.) Employer C.) Liaison D.) Insurer

B.) Employer

Which of the following statements regarding Group Disability Income insurance is TRUE? A.) It pays 100% or more of an insured's income in the event of disability B.) It provides benefits for non-occupational illnesses and injuries C.) It is generally more expensive than individual policies D.) It usually pays for occupation-related disabilities

B.) It provides benefits for non-occupational illnesses and injuries

Which of the following is an example of the illegal act of defamation? A.) Offering a premium rebate, gift, or a special advatage of any kind to consumers as an inducement to purchase a contract of insurance B.) Making a statement that is false or maliciously critical of the financial condition of an insurer C.) Replacing an insurance policy from one insurer to another based on misrepresentation D.) Using threat or force to restrict fair trade in the transaction of insurance

B.) Making a statement that is false or maliciously critical of the financial condition of an insurer

Which of the following is NOT covered under Workers' Compensation? A.) Medical bills B.) Pain and suffering C.) Occupation-related sickness D.) Disability

B.) Pain and suffering

Coordination of Benefits regulation applies to all of the following plans EXCEPT A.) Group vision plan B.) Preferred Provider Organization plan C.) Self-funded group health plan D.) Group health plan

B.) Preferred Provider Organization plan

All of these statements concerning whole life insurance are false EXCEPT A.) Policy owner can take out a policy loan up to the face amount B.) When a whole life policy is surrendered, income taxes may be owned C.) Coverage is normally temporary D.) The death benefit is not affected by outstanding loans

B.) When a whole life policy is surrendered, income taxes may be owned

In the Michigan Insurance Code, Chapter 45, insurance fraud defines financial loss as all of the following EXCEPT A.) loss of earnings B.) additional premiums C.) out-of-pocket expenses D.) repair and replacement costs

B.) additional premiums

An example of a presumptive disability would be A.) a stroke B.) deafness C.) diabetes D.) cancer

B.) deafness

The least expensive option to pay off a 30-year mortgage balance would be A.) convertible term life B.) decreasing term life C.) adjustable term life D.) increasing term life

B.) decreasing term life

A clause that allows an insurer the right to terminate coverage at any anniversary date is called a(n) A.) conditionally renewability clause B.) optional renewability clause C.) selective renewability clause D.) cancelable clause

B.) optional renewability clause

The two major actions require for a policy holder to comply with the Reinstatement Clause are A.) provide evidence of insurability, agree to a new incontestable period B.) provide evidence of insurability, pay past due premiums C.) pay past due premiums, agree to a new incontestable period D.) pay past due premiums, agree to a reduction in coverage

B.) provide evidence of insurability, pay past due premiums

An indemnity plan A.) pays both the insured and health care provider B.) provides the insured a specific dollar amount for services C.) pays the health care provider directly for service rendered D.) is typically issued as a group plan

B.) provides the insured a specific dollar amount for services

This MANDATORY health policy provision states that the policy, including endorsements and attached papers, constitutes A.) the partial insurance contract between the parties B.) the entire insurance contract between the parties C.) the conformity of state statues D.) the legal purpose of the contract

B.) the entire insurance contract between the parties

A life insurance policy sold in Michigan may be contested by the insurer ONLY during the first _____ year(s) of the contract. A.) one B.) two C.) three D.) four

B.) two

Loans obtained by a policy owner against the cash value of a life insurance policy A.) are treated as taxable income B.) would not be treated as taxable income C.) are limited by the face amount of the policy D.) would be subject to a Federal estate tax

B.) would not be treated as taxable income

A Universal Life policy owner must receive a notice of cash surrender value at LEAST every A.) 6 months B.) year C.) 2 years D.) 5 years

B.) year

Karen is a producer who has obtained personal information about a client without having a legitimate reason to do so. Under the McCarran-Ferguson Act, what is the minimum penalty for this? A.) $0 B.) $5,000 C.) $10,000 D.) $15,000

C.) $10,000

The acceptance of a credit life application requires the submission fo a certificate of insurance to the insured within _____ days. A.) 10 B.) 20 C.) 30 D.) 40

C.) 30

A life insurance applicant in Michigan may backdate the application for up to _____ month(s). A.) 4 B.) 5 C.) 6 D.) 7

C.) 6

Which of the following employers is required to follow ERISA regulations? A.) A local government with 150 employees B.) A church with 30 employees C.) A local electrical supply company with 12 employees D.) a Canadian company with 300 employees working in the US

C.) A local electrical supply company with 12 employees

All of these are valid options for an Adjustable Life Policy EXCEPT A.) The policy's premium can be increased or decreased B.) The policy's death benefit can be increased or decreased C.) A nonforfeiture option can be used to increase the death benefit D.) The policy's protection period can be modified

C.) A nonforfeiture option can be used to increase the death benefit

A long-term care policy typically provides all of the following levels of care EXCEPT A.) Skilled care B.) Intermediate Care C.) Acute Care D.) Custodial Care

C.) Acute Care

Newborn coverage under health insurance policies MUST include coverage for A.) private hospital room for mother B.) Delivery costs C.) Birth abnormalities D.) Mother's last income

C.) Birth abnormalities

A producer's insurance license may ONLY be revoked by the A.) appointing insurance company B.) Governor C.) Department of Insurance and Financial Services (DIFS) D.) National Association of Insurance Commissioners (NAIC)

C.) Department of Insurance and Financial Services (DIFS)

What type of policy would only provide coverage for specific types of illnesses (cancer, stroke, etc)? A.) MEWA B.) Blanket insurance C.) Dread disease insurance D.) disability insurance

C.) Dread disease insurance

Which type of life insurance policy pays the face amount at the end of the specified period if the insured is still alive? A.) Adjustable life policy B.) Modified life policy C.) Endowment policy D.) Universal life policy

C.) Endowment policy

A master contract and certificate of coverage can be found in which type of policy? A.) Long-term B.) Medicaid C.) Group D.) Medicare

C.) Group

Which of the following is NOT included under a health benefit plan? A.) Major medical policy B.) Basic hospital policy C.) Hospital indemnity plan D.) Surgical expense policy

C.) Hospital indemnity plan

Which of the following types of deductibles would apply a single deductible to both medical and dental insurance coverage? A.) Standard deductible B.) Combined deductible C.) Integrated deductible D.) Blended deductible

C.) Integrated deductible

A Medicare Supplement policy issued in the state of Michigan is required to provide each of the following EXCEPT A.) It must cover intermediate and outpatient care for substance abuse B.) It must be gauranteed renewable C.) It must include outpatient prescription drug coverage D.) It must have a free-look period of 30 days

C.) It must include outpatient prescription drug coverage

What is the tax liability for employer contributions in Health Savings Accounts (HSA's)? A.) Taxable as regular income to the employee B.) Tax-deductible expense to the employee C.) No tax payment needed D.) Taxable to the employee when they exceed 7 1/2% AGI

C.) No tax payment needed

Joe is a Medicare participant who receives his benefits through a Managed Health Care Plan. Which Medicare plan does he have? A.) Part A B.) Part B C.) Part C D.) Part D

C.) Part C

Which of these describe the result of a modified endowment contract that failed to meet the seven-pay test? A.) Policy loans are disallowed B.) The premium payments will be tax deductible C.) Pre-death distributions are typically taxable D.) Withdrawals will be prohibited

C.) Pre-death distributions are typically taxable

Which of the following does Medicare Part D cover? A.) intensive care coverage B.) Doctor visits C.) Prescription drugs D.) Hospital coverage

C.) Prescription drugs

Claims payable to a Disability Income insured, even when the insured can continue to work, are the result of a A.) Total Disability B.) Recurrent disability C.) Presumptive disability D.) Lengthy elimination period

C.) Presumptive disability

All of the following are functions of an insuring clause EXCEPT A.) States the conditions under which the policy will pay B.) Outlines the kind of benefits provided C.) Primarily describes the free-look period D.) Provides the policy's scope and limits of coverage

C.) Primarily describes the free-look period

Premiums paid that exceed 7 1/2% of an insured's Adjusted Gross Income (AGI) are tax-deductible when paid for which of the following plans? A.) Accidental Death and Dismemberment B.) Personal Disability Income Plan C.) Qualified long-Term Care Plan D.) Group disability income plan

C.) Qualified long-Term Care Plan

Which of the following actions is REQUIRED by a producer who is replacing an existing life insurance policy? A.) Keep replacement records on file for at least 10 years B.) Notify the existing insurer of the proposed replacement C.) Submit to the replacing insurer a list of policies to be replaced D.) Offer the insured a 60-day free-look period

C.) Submit to the replacing insurer a list of policies to be replaced

How is a health provider reimbursed if they do NOT have an agreement in place with the insurance company? A.) With a contingent fee B.) With a scheduled fee C.) With a usual, customary, and reasonable fee D.) With a reasonably appropriate fee

C.) With a usual, customary, and reasonable fee

An indemnity plan limitation that will pay the dental bills after a small amount is paid by the insured is called A.) a managed plan B.) stop loss C.) coinsurance D.) a deductible

C.) coinsurance

In Michigan, a person providing advice to a person or business for a fee is required to hold which license? A.) adjuster B.) producer C.) counselor D.) limited lines

C.) counselor

Premium mode is a term used to describe the: A.) premium past due B.) method of payment C.) frequency of the premium payment D.) premium paid

C.) frequency of the premium payment

A whole life policy option where extended term insurance is selected is called a(n) A.) dividend option B.) settlement option C.) nonforfeiture option D.) interest-only option

C.) nonforfeiture option

A producer's fiduciary duty requires that A.) premiums are maintained in a personal bank account until remittance to insurer B.) premiums be deposited in an interest-bearing account C.) premiums are forwarded to the insurer on a timely basis D.) premiums be commingled with personal funds

C.) premiums are forwarded to the insurer on a timely basis

An endorsement found in an insurance plan which modifies the provisions of the policy is called a(n) A.) attachment B.) add-on C.) rider D.) supplement

C.) rider

A(n) _____ company is owned exclusively by shareholders. A.) mutual B.) mixed C.) stock D.) interactive

C.) stock

Who assumes the investment risk with a fixed annuity contract? A.) the owner B.) the annuitant C.) the insurer D.) the beneficiary

C.) the insurer

Under which circumstances do consumers privacy regulations allow an insured's financial information be released? A.) An insured has missed a premium payment and is beyond the grace period B.) A government agency would like personal information on an insurer's policy owners C.) An insured has requested a full refund beyond the policy's free-look period D.) An authorized agency makes a written request to the insurer during an insurance fraud investigation

D.) An authorized agency makes a written request to the insurer during an insurance fraud investigation

Insurable interest does NOT occur in which of the following relationships? A.) Sister and brother B.) Parent and children C.) Business partners D.) Business owner and business client

D.) Business owner and business client

An insurer is REQUIRED to offer which of the following to each long-term care applicant at the time of purchase? A.) Lifetime level premiums B.) Conditional renewability C.) Deflation protection D.) Inflation protection

D.) Inflation protection

What is involved when a life insurance policy has been backdated? A.) Setting a policy's effective date prior to a preexisting condition B.) Redating a policy after it has been issued C.) Reinstating a lapsed policy D.) Making the policy effective on an earlier date than the present

D.) Making the policy effective on an earlier date than the present

All of these are considered key factors in underwriting life insurance EXCEPT A.) Tobacco use B.) Health history C.) Age D.) Marital status

D.) Marital status

Sonya applied for a health insurance policy on April 1. Her agent submitted the information to the insurance company on April 6. She paid the premium on May 15 with the policy indicating the effective date being May 30. On which date would Sonya have coverage? A.) April 1 B.) April 6 C.) May 15 D.) May 30

D.) May 30

All of these are considered sources of information that can assist an underwriter in determining whether or not to accept a risk EXCEPT A.) Agent's report B.) MIB C.) Inspection reports D.) National Association of insurance underwriters

D.) National Association of insurance underwriters

All of the following are considered appropriate uses of life insurance for business purposes EXCEPT A.) Attracting quality employees by offering a group life plan B.) Funding an entity buy-sell agreement C.) Protecting the business by covering key employees with life insurance D.) Protecting the business by covering entry level employees with life insurance

D.) Protecting the business by covering entry level employees with life insurance

Which of these is the BEST example of misrepresentation? A.) Making a public advertisement that contains false or malicious information about an insurance company B.) Unfairly discriminating against a person in any way on an insurance-related matter C.) Publishing a false financial statement regarding an entity D.) Providing incorrect, misleading, incomplete, or materially untrue information in license application

D.) Providing incorrect, misleading, incomplete, or materially untrue information in license application

Krissa purchases a 10-year level term life insurance policy that has a death benefit of $200,000. Which of these statements is true? A.) The policy automatically converts to whole life after the 10-year period B.) The face amount will remain constant and the premium will increase over the 10-year period C.) The premium will remain constant and the face amount will increase over the 10-year period D.) The face amount and premium will remain constant over the 10-year period

D.) The face amount and premium will remain constant over the 10-year period

If an insured's unmarried child is incapable of self support because of a mental handicap, how long must this child be provided health coverage under the parent's policy? A.) Until age 18 B.) Until age 21 C.) Until policy termination with NO proof of incapacity D.) Until policy termination with proof of incapacity

D.) Until policy termination with proof of incapacity

Under a non-qualified annuity, interest is taxed after the A.) deposits have been made B.) death of the annuitant C.) distribution of payments D.) exclusion ratio has been calculated

D.) exclusion ratio has been calculated

A guaranteed issue insurance policy has no A.) initial premium requirement B.) incontestable period C.) waiting period D.) medical underwriting

D.) medical underwriting

A life insurance claim which involves a per capita distribution of policy proceeds would be payable to the A.) estate of the insured only B.) estate of the deceased beneficiaries only C.) named contingent beneficiaries only D.) named living primary beneficiaries

D.) named living primary beneficiaries

Which type of rider will waive the premium on a child's life insurance policy if the parent paying the premium dies? A.) waiver of premium B.) juvenile waiver C.) Guaranteed insurability D.) payor benefit

D.) payor benefit