Guaranteed Exam
Which of the following premium modes would result in the lowest overall premium?
Annual
Which of the following will not be included in the buyer's guide?
Comparison of policy costs
An adjustable life policy can assume the form of
Either term insurance or permanent insurance
The human life value approach to determining life insurance needs is based upon which of the following ideas?
Loss of breadwinner's income
What is the purpose of the agent's report in the application process?
Provide additional information about the applicant to the underwriter
Which of the following statements is true regarding an agents report during the policy application process?
it provides the agents personal observations concerning the proposed insured
Which of the following best describes pure life annuity?
It provides the highest monthly benefits
If an agent follows the rules and terms of his agent contract, he is exercising his
express authority
Which of the following best describes life annuity with period certain option?
It guarantees benefit payments for life of the annuitant and for a specified period for the beneficiary
Variable life insurance is regulated by all of the following entities EXCEPT
US Department of Treasury
How long do temporary producer's licenses last without acquiring an examination?
180 days
Which of the following is not a standard exclusion in life insurance policies?
disability
Which of the following is NOT a personal use of life insurance?
an individual buys insurance to fund a buy-sell agreement
All of the following are ways to handle risk EXCEPT
elimination
An annuitant pays the annuity premium on the 14th of each month. Which best describes the arrangement ?
level
Which term describes an individual who is domiciled and licensed as a resident producer in a state other than Michigan?
NonResident Producer
Applicants for a resident producer license must meet the following requirements EXCEPT?
Be at least 21 years old
In contrasting stock insurers with mutual insurers, which statement is true?
Stock insurers are owned by the shareholders and issue nonparticipating policies
Which dividend option will increase the death benefit?
Paid-up additions
What guarantees that the information explained in the insurance contract is true
warranty
Underwriters use all of these methods to protect the insurer against adverse selection EXCEPT
Only accepting a small percentage of applicants
While completing a life insurance application the applicant realizes that she should have answered an earlier question differently. What should the agent do to make the necessary change?
Cross out the incorrect information, write in the correct answer, and have the applicant initial the change
When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option?
Extended term
If a life insurance company uses HIV testing as a part of its underwriting, when must an applicant be notified of the procedure?
Prior to performance of the test
An individual purchases a life insurance policy and lists his parents as the beneficiaries. He is able to change beneficiaries at any time. What type of beneficiary designation does the policy have?
Revocable
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
In order to reinstate a life insurance policy the insured must do all of the following except
Pay next year's premium in advance
All of the following are true of annually renewable term insurance except
proof of insurability must be provided at each renewal
If an annuity has a guaranteed minimum interest rate, this means
(b) The interest rate will never drop below the guaranteed minimum
The commissioner has determined that a producer is ineligible for appointment by an insurer. The commissioner myst notify the insurer within
5 days
An important fact about the financial status of an insurer was deliberately withheld. Which if the following terms best describes this action?
False financial statement
All of the following statements are true regarding an Ordinary (straight) life policy except
It does not have a guaranteed death benefit
How many hours of continuing education are required to maintain a counselor's license?
None
Once a temporary producer's license has expired its initial period, the person granted the temporary license must
Obtain a permanent license
Partners in a business want to make sure that if one of them were to pass away, their surviving family will receive a fair value for their portion in the business. What life insurance arrangement would be most suited for transitioning the business?
buy-sell agreement
A whole life policy is surrendered for a reduced-paid up policy. The cash value in the new policy will
continue to increase
Agents may be found guilty of defamation if they make a false statement that is intended to?
maliciously criticize another insurance company
Annuities certain limit the amount paid by the annuity to a certain fixed
period or fixed amount
Which of the following elements of an insurance contract requires payment of premium?
consideration
If an insured purchases an insurance policy with a large deductible, what risk management technique is the insured exercising?
retention
An insurance company that is owned by the policyholders is called a
Mutual insurer
Which of the following documents used in the underwriting process contains specific medical details about an applicant?
Attending Physician's Statement (APS)
In this state, what type of violation is rebating?
Misdemeanor
What is the difference between a straight life policy and a 20-pay whole life policy?
Premium payment period
All of the following are true about key-person insurance except
The death benefit is taxable to the business
Premiums collected on behalf of the insurance company by an agent will be held in what capacity?
Fiduciary
A lender who conditions approval of a loan on the condition that the borrower purchase insurance from that lender may be guilty of
coercion
A stock insurer is defined as an insurer
owned by its stockholders
Insurers CANNOT transact insurance in this state without a
Certificate of Authority
Under what circumstances will the contingent beneficiary receive the death benefit?
If the primary beneficiary dies before the insured
How are policy loans calculated?
Policy's cash value minus unpaid loans and accrued interest
Which of the following is not an indicator of a competent party?
business profession
An insured bought an insurance policy that requires him to pay $150 in premiums on the 15th of each month. He then takes an extended vacation and forgets to pay the premium. Ten days later, his policy is still in effect and has not lapsed. Which policy provision allowed for this?
grace period
According to agency law, the producer always represents the
insurance company
How soon must an insurer send a notice of cancellation to an insurers prior to terminating a universal life policy?
30 days
A life insurance policy can be backdated to affect a lower premium for up to a maximum of how many months?
6 months
What is the cost of coverage based on for group life insurance?
The average age and the ratio of men to women
Which of the following is not true of the agents implied authority?
It is specifically stated in the contract
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
Because of an injury, an insured has been unable to work for 7 months. He wasn't able to pay his life insurance policy premium, yet the policy remained in force. The policy includes
Waiver of premium rider
An IRA contribution can be made from which of the following?
cash
Which if the following statements concerning the medical information bureau is correct?
The MIB assists underwriters in evaluating & classifying risks
What is the exclusion ratio used to determine?
The annuity benefit to be excluded from taxes
With Adjustable Life, the owner can change all of the following EXCEPT
insured
A married couple wants to include the entire family in their whole life policy under one rider. Which of the following riders will help them achieve that goal?
Family term
In life insurance underwriting, all of the following are true regarding HIV testing EXCEPT
The person may be denied coverage based solely on the presence of HIV
Which if the following is TRUE of level term insurance?
The premium will increase or decrease based on current interest rates
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
How long do temporary producer's licenses last without requiring an examination?
180 days
The entire contract includes all of the following EXCEPT
Buyer's Guide
Which of the following statements describes one of the reasons individuals purchase life insurance?
it creates an immediate estate
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
If the insured does not receive the statement of policy information at least 5 days prior to the policy delivery, the free look period is extended to
31 days
Which of the following would NOT trigger the payment of Accelerated Death Benefits?
Being permanently disabled
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
An insured and his spouse recently had a child. Which of the following riders would allow the couple to insure the child for a limited period of time at a specified amount?
Children's term rider
Which of the following losses would likely be covered under the accidental death rider?
Death caused by a head-on collision
Your client wants to provide a retirement income for his elderly parents in case something happens to him. He wants to make sure that both beneficiaries are guaranteed an income for life. Which settlement option should this policyowner select?
Joint and survivor
An insured decides to surrender his Whole Life insurance policy. The cash value at surrender is higher than the premiums paid into the policy, due to interest. What part of the surrender value would be income taxable?
The difference between the premiums paid and the cash value
All of the following are general requirements of a qualified plan except
The plan must be temporary
When an insured terminates membership in the insured group, the insured can convert to
Whole life without proof of insurability
Which of the following would be required to become licensed as an insurance producer?
a customer service representative who solicits no more than one policy a year
An insured intentionally did not disclose a material fact on an application for insurance. This would be considered
concealment
Which of the following is true regarding pure life annuity settlement option?
It provides the highest monthly benefit
The reduction of premium option uses the dividend to reduce
Next year's premium
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 could reduce the amount of the death benefit?
Failure to repay a policy loan
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
The frequency and the amount of the premium payment are known as what?
Premium Mode
Which of the following is TRUE regarding premium in a 10-year level premium policy?
The premium will remain level for 10 years
When an agent delivered an insurance policy to the insured, he collected the initial premium, as well as a document verifying that the insured has not had any injuries or illness since the application date. What is this document called?
Statement of Good Health
Which of the following riders pays a beneficiary a death benefit that is double or triple the face amount if the insured's death was cause by an accident as defined in the policy?
An Accidental Death Rider
There is a 10% penalty on the taxable portion of a deferred annuity when it is surrendered prior to what age?
59 1/2
Among the applicants in the same class and life expectancy, which of the following factors can be used to influence premium rates?
Occupation
An insured recently had a new home built and insisted in having smoke detectors installed in multiple places in the house. What method of handling risk is the insured using?
Reduction
An applicant for a disability insurance policy has a heart condition of which they are unaware and therefore they answer no to the question pertaining to heart problems on their application. Their answer is considered to be a
Representation
When agents, brokers, or solicitors handle premiums for an insurer, they are acting in which capacity?
As a fiduciary
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
All of the following are true regarding the waiver of cost of insurance rider except
The rider expires when the insured reaches age 60
Answers to questions in an insurance application are called representations and, as such, they are
believed to be true to the best of the applicant's knowledge
Upon the surrender of a life insurance policy, any cash value accumulated in excess of the premium payments is
taxed as ordinary income
In life insurance, which of the following is NOT required to have insurable interest in the insured?
The beneficiary
A college student will graduate next year. His studies have limited his ability to work, so he has borrowed funds to pay for his education. He would like to start a permanent life insurance program that would cover his debt and still be affordable during the period he is establishing his earning potential. An appropriate policy would be
Modified whole life
Which of the following does NOT constitute false advertising?
Stating that dividends are not guaranteed
Two individuals of the same age, health status, and life expectancy apply for individual insurance coverage. When policies are issued by the same insurer, the premium rates are different based on the insured's race. What practice does this describe?
Unfair discrimination
Which risk classification is representative of the majority of people in a certain age group and with similar lifestyles?
standard