Chapter 8: Michigan Insurance Regulation

In Michigan the state's continuing education requirement A. Applies to life, annuity, and accident and health licensees only B. Consists of completing 24 hours of Ce each biennium C. Must be completed by all licensed resident and nonresident producers D. Cannot be extended or waived under any circumstances

B. Consists of completing 24 hours of CE each biennium

An insurance producer did not renew her license when it was due, so the license lapsed. Two months prior to that, the producer sold several insurance policies and was still awaiting commission. Now that the producer is no longer licensed, which of the following is true regarding the commissions from the sale of insurance policies? A. Commissions will be forfeited since the producer is no longer licensed B. Deferred commissions may be paid to the producer for policies sold while the producer was licensed C. Commissions will be prorated for the time between the sales and the license lapse D. Commissions may be paid to another licensed producer who may write a personal check to this producer

B. Deferred commissions may be paid to the producer for policies sold while the producer was licensed

An applicant for a Counselor's license in Michigan must possess all of the following EXCEPT A. A reasonable understanding of the provisions, terms, and conditions of the type of insurance he/she wishes to counsel B. A license to practice law C. A good business reputation and good moral character D. A reasonable understanding of a Michigan insurance code

B. A license to practice law

How much is an agent's appointment fee? A. $5 B. $500 C. $1 D. $500

A. $5

If an insurer terminates a producer, the Commissioner will receive a notification. Within how many days of this notification must the producer be sent a copy? A. 15 B. 30 C. 7 D. 10

A. 15

Licensees who are currently licensed, and have recently become residents of the state of Michigan may not have to complete any relicensing education. To qualify for this exemption, they must apply to become resident licensees within a few days of establishing a legal residence within how many days? A. 90 days B. 30 days C. 60 days D. 7 days

A. 90 days

Which of the following would be an illegal inducement to purchase insurance? A. Confirming future dividends in a life insurance proposal B. Mailing an agency brochure to a prospective client C. Listing the insurance companies the agency represents in a letter D. Inviting prospective clients to the grand opening of the producer's new office

A. Confirming future dividends in a life insurance proposal

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? A. Defamation B. Undercutting C. Twisting D. Slandering

A. Defamation

An insurance company has published a brochure that inaccurately portrays the advantages of a particular insurance policy. What is this an example of? A. False advertising B. Unfair claims C. Twisting D. Defamation

A. False advertising

An insurer who violates the Insurance Code statues on illegal inducement is guilty of a A. Misdemeanor B. Felony C. Class C violation D. Civil violation

A. Misdemeanor

Which of the following, upon conviction, carries a fine of up to $2000 for each violation? A. Misrepresenting the terms of a policy B. Rebating C. False advertising D. Unfair discrimination

A. Misrepresenting the terms of a policy

All of the following are considered unfair trade practices in the business of insurance EXCEPT A. Sharing commissions B. Boycott C. Rebating D. Defamation

A. Sharing commissions

A licensed counselor MAY NOT perform which of the following duties? A. Solicit business as an insurance producer B. Audit or abstract insurance policies or annuities C. Provide opinions concerning benefits, coverage, terms, and advantages and disadvantages of a policy or annuity D. Advertise business as an insurance counselor or consultant

A. Solicit business as an insurance producer

Which of the following is an example of a producer being involved in an unfair trade practice of rebating? A. Telling a client that his first premium will be waived if he purchases the insurance policy today B. Inducing the insured to drop a policy in favor of another one when it is not in the insured's best interest C. Charging a client a higher premium for the same policy as another client in the same insuring class D. Make deceptive statements about a competitor

A. Telling a client that his first premium will be waived if he purchases the insurance policy today

A temporary producer license could be issued without examination to all of the following EXCEPT A. The spouse of a retiring insurance producer B. The spouse of a deceased insurance producer C. The designee of a licensed insurance producer who enters active duty in the US Armed Forces D. The designee of a disabled licensed producer

A. The spouse of a retiring insurance producer

Articles of merchandise are allowed as gifts to insurance applicants as long as they do not exceed what maximum amount? A. $5 B. $10 C. $25 D. $100

B. $10

What is the minimum civil fine per violation of the Insurance Code of this state? A. $500 B. $1000 C. $2000 D. $5000

B. $1000

Within how many days does a licensee have to inform the Commissioner of a change of address? A. 15 B. 30 C. 45 D. 60

B. 30

All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT A. An offer to share in commission generated by the sale B. Dividends from a mutual insurer C. An offer of employment D. Stocks, securities, or bonds

B. Dividends from a mutual insurer

An insurer publishes intimidating brochures that portray the insurer's competition as financially and professionally unstable. Which of the following best describes the act? A. Legal, provided that the other insurers are paid royalties for the usage of their names B. Illegal under any circumstances C. Legal, provided that the information can be verified D. Illegal until endorsed by the Guaranty Association

B. illegal under any circumstances

In which of the following situations is it legal to limit coverage based on marital status? A. Divorce within the last six months of applying for insurance B. It is never legal to limit coverage based on martial status C. Excessive number of divorces, as defined in Insurance Code D. Legal separation during the application process

B. it is never legal to limit coverage based on martial status

What is the minimum civil fine for violating a cease and desist order of the Commissioner? A. $1000 B. $5000 C. $20,000 D. $50,000

C. $20,000

If an agent's license was revoked for violations of the statues on rebating or illegal inducement, how soon after the date of revocation can the agent apply for a new license? A. 3 months B. 6 months C. 1 year D. 2 years

C. 1 year

Within what time period after completing relicensing education must an applicant file a certificate of education completion with the Commissioner? A. 30 days B. 90 days C. 12 months D. 2 years

C. 12 months

If a licensee does not earn 24 hours of Continuing Education by the license review date, the license will be suspended for up to how many days? A. 30 days B. 60 days C. 90 days D. 120 days

C. 90 days

Licensees who are currently licensed and have recently become residents of the state of Michigan may not have to complete any relicensing education. To qualify for this exemption, they must apply to become resident licensees within a few days of establishing a legal residence within how many days? A. 60 days B. 7 days C. 90 days D. 30 days

C. 90 days

All of the following events will terminate a producer's certificate of appointment EXCEPT A. A termination issued by the appointing insurer B. A producer's license is suspended or revoked by the Department of Insurance C. A new Commissioner or Director is put into office D. A producers license expires and is not renewed

C. A new commissioner or director is put into office

Circulating deceptive sales material to the public is what type of Unfair Trade Practice? A. Coercion B. Misrepresentation C. False advertising D. Defamation

C. False advertising

Which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices: A. Exaggerating the benefits provided in the policy B. Stating that the competitors will arbitrarily increase their premiums each year C. Making comparisons between different policies D. Stating that the insurance policy is a share of stock

C. Making comparisons between different policies

Which of the following. upon conviction, carries a fine of up to $2,000 for each violation? A. False advertising B. Unfair discrimination C. Misrepresenting the terms of a polciy D. Rebating

C. Misrepresenting the terms of a policy

An out-of-state producer wants to start selling insurance in this state. What type of license should the producer obtain? A. Surplus lines B. Temporary C. Nonresident D. Limited lines

C. Nonresident

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? A. 30 days B. 45 days C. 7 days D. 15 days

D. 15 days

If an insurer terminates a producer, the Commissioner must be notified. How many days does the insurer have to deliver this notice? A. 10 days B. 7 days C. 3 days D. 30 days

D. 30 days

Which of the following persons is required to hold a producers license? A. A person who creates insurance advertisements B. A person who takes messages related to claims C. A person who administers employee benefits D. A person who negotiates insurance contracts

D. A person who negotiates insurance contracts

A license may be denied, suspended, or revoked if the licensee does any of the following EXCEPT A. Engages in fraud B. Deals with insurance outside the scope of the license C. Material misrepresents an insurance policy D. Accidentally misspells the name of the insurance policy in a written communication to a customer

D. Accidentally misspells the name of the insurance policy in a written communication to a customer

Producers are permitted to share or split commissions, providing that A. The insured knows and agrees to the arrangement B. The Insurance Department knows of the arrangement C. There is a written agreement between the producers D. Both are property licensed for the line of insurance

D. Both are property licensed for the line of insurance

Which of the following would require an individual to stop participating in a specific activity if the Commissioner believes to be violating the Insurance Code? A. Stop action order B. Restriction of authority C. Suspension of authority D. Cease and desist order

D. Cease and desist order

M, who is not licensed as an insurance agent, works part-time in her father's insurance agency. M may perform all of the following duties EXCEPT A. Make appointments with clients and prospective clients to meet with her father B. Assist her father in completing applications for insurance C. Call prospects and collect expiration dates of their existing policies for her father D. Collect premium for in-force policies and explain coverages to clients that have existing policies written by her father

D. Collet premium for in-force policies and explain coverages to clients that have existing policies written by her father

Which of the following best scribes a misrepresentation? A. Making a deceptive or untrue statement about a person engaged in the insurance business B. Making a maliciously critical statement that is intended to injure another person C. Discriminating among individuals of the same insuring class D. Issuing sales material with exaggerated statements about policy benefits

D. Issuing sales material with exaggerated statements about policy benefits

Which is NOT required of an applicant for an insurance license in Michigan? A. The passing of a written examination B. Applicant must be 18 years old C. A Certificate of Completion from the required pre-licensing study course D. Two letters of recommendation attesting to trustworthiness, reliability, and good reputation

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

Which of the following would be required to be licensed as an insurance producer? A. A salaried employee who advertises and solicits insurance B. A person whose activities are limited to producing insurance advertisements C. A salaried full-time employee who furnishes information for group insurance D. An insurance company direction who performs executive, administrative, and managerial duties

A. A salaried employee who advertises and solicits insurance

All of the following would be considered rebating EXCEPT A. An agent misrepresents policy benefits to convince a policy owner to replace policies B. An agent offers the use of his lake house to a client as an inducement to bu an insurance policy from him C. An agent offers to share his commission with a policyholder D. An agent offers tickets to a baseball game as an inducement to buy insurance

A. An agent misrepresents policy benefits to convince a policy owner to replace policies

Which of the following could be used when a corporation, association, partnership, or limited liability partnerships acts as a producer? A. Business Entity B. Natural Group C. Stock Company D. Mutual Company

A. Business Entity

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 an insurance policy from the bank in the amount of the loan. This is an example of A. Coercion B. Loading C. Defamation D. Twisting

A. Coercion

Which of the following would NOT be considered rebating? A. Collecting a lower premium than what's specified in a policy as a token of client appreciation B. Giving an applicant a $5 pen with the insurer's logo during the insurance application process C. Sending a $20 gift certificate to the insured's employee after the insurance has been effected as a thank you for the referral D. Sharing commission with the insured

B. Giving an applicant a $5 pen with the insurer's logo during the insurance application process

An insurer devises an intimidation strategy in order to corner a large portion of the insurance market. Which of the following best describes this practice? A. Defamation B. Illegal C. A legal advertising strategy D. Unfair Discrimination

B. Illegal

Michigan's continuing education requirement has each of the following characteristics EXCEPT: A. Other than the 3 hours of ethics, licensees may take courses in any line B. It allows for up to 15 excess credit hours to be carried forward to the next reporting period C. At least 3 hours must cover ethics D. It requires satisfactory completion of at least 24 hours of approved training every biennium

B. It allows for up to 15 excess credit hours to be carried forward to the next reporting period

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 A. Rebating B. Misrepresentation C. Concealment D. Unfair claim practice

B. Misrepresentation

The following areas are regulated by the Insurance Department EXCPET A. Policyowner rights and disclosures B. Producer commission schedules C. Producer regulations and testing requirements D. Insurer financial requirements

B. Producer commission schedules