INS life

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.

Which of the following best describes a rebate?

A producer returning part of her commission to her client, as an inducement to buy

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

A warranty

Which of the following terms is used to define the period of time during which an annuitant makes payments into an annuity?

Accumulation period

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 caused by an accident as defined in the policy?

An Accidental Death Rider

if an agent follows the rules and terms of his agent contract, he is exercising his

Express authority

When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option?

Extended term

Which of the following could reduce the amount of the death benefit?

Failure to repay a policy loan

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

A married couple wants to include the entire family in their whole life policy under one rider.

Family term

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 learning potential. An appropriate policy would be

Modified Whole Life

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

Policy dividends issued by mutual companies are guaranteed and not taxable

An insured recently, had a new home built and insisted on having smoke detectors installed in multiple, places in the house. What method of handling risk is the insured using?

Reduction

Which type of insurance policies provides pure life insurance protection without a savings element?

Term

Which of the following statements concerning the Medical Information Bureau is correct?

The Medical Information Bureau assists underwriters in evaluating and classifying risks.

All of the following are true about key-person insurance EXCEPT

The death benefit is taxable to the business.

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

The interest is taxable.

If an annuity has a guaranteed minimum interest rate, this means

The interest rate will never drop below the guaranteed minimum

Which of the following best depicts the law of large numbers?

The larger the pool of risks under study, the more accurate the predictions will be.

Which of the following is TRUE regarding premium in a 10-year level premium policy?

The premium will remain level for 10 years.

If an applicant submits the initial premium with an application, which action constitutes acceptance?

The underwriters approve the application.

What is the purpose of the Agent's Report in the application process?

To provide additional information about the applicant to the underwriters

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

Universal Life

How long is the grace period for an individual life insurance policy?

1 month/30 days

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

What is the tax penalty for withdrawing money from an annuity prior to age 59½?

10%

How long do temporary producer's licenses last without requiring an examination?

180 days

The Commissioner has determined that a producer is ineligible for appointment by an insurer.

5 days.

The entire contract includes all of the following EXCEPT

A buyer's guide.

The policyowner has an option to pledge the life insurance policy as collateral for a bank loan. This is called

A collateral assignment

If an insured dies, and it is discovered that the insured misstated his/her age or gender, the life insurance company will

Adjust the death benefit to what the premium would have purchased at the actual age or gender.

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

All of the following are true regarding

Which of the following premium modes result in the lowest overall premium?

Annual

When agents, brokers, or solicitors handle premiums for an insurer, they are acting in which capacity?

As a fiduciary

Which provision may be added to a permanent life policy, at no cost, that insures that the policy will not lapse so long as there is cash value?

Automatic Premium Loan option

Applicants for a resident producer license must meet the following requirements EXCEPT

Be at least 21 years old.

Which of the following would NOT trigger the payment of Accelerated Death Benefits?

Being permanently disabled

Which of the following is NOT an indicator of a competent party?

Business profession

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

By the licensee's month and date of birth

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

Cash

Which of the following would be an example of an insurer participating in the unfair

Charging the insured higher premiums based on her race

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

Continue to increase.

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

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

Dividends.

An adjustable life policy can assume the form of

Either term insurance or permanent insurance.

All of the following are ways to handle risk EXCEPT

Elimination

Which type of authority is found in the agent's contract?

Express

J is receiving fixed amount benefit payments from his late wife's insurance policy. He was told that if he dies before all of the benefits are paid, the remaining amount will go to the contingent beneficiary. Which settlement option did J choose?

Fixed Amount

During the accumulation phase of a fixed annuity, the annuitant's interest rate is based on a minimum rate as specified in the contract, or the current interest rate, whichever is

Higher

Under what circumstances will the contingent beneficiary receive the death benefit?

If the primary beneficiary dies before the insured

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

Insurable interest

According to agency law, the producer always represents the

Insurance Company.

84. Which of the following is the primary source of information that an insurer uses to evaluate an insured's risk for life insurance?

Insurance application

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

Insured's income.

What does the Guaranty Association guard against?

Insurer insolvency

Which of the following statements describes one of the reasons individuals purchase life insurance?

It creates an immediate estate.

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

It does not have a guaranteed death benefit.

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.

All of the following are true of a nonqualified deferred, or compensation plan EXCEPT

It is a contractual agreement whereby the employee agrees to defer receipt of a portion of his compensation until retirement, disability or death.

Which of the following is TRUE of level term insurance?

It is temporary protection.

Which of the following statements is TRUE regarding an Agent's Report during the policy application process?

It provides the agent's personal observations concerning the proposed insured.

Statistical probabilities of loss for a particular class of insureds is best predicted when the insured group is...

Larger

The Human Life Value approach to determining Life Insurance needs is based upon which of the following ideas?

Loss of the breadwinner's income

An insurance agent visits a potential client and explains various types of policies. The customer displays a lack of interest, so the agent guarantees higher dividends than he knows would be possible. Which term describes what the agent has done?

Misrepresentation

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

Misrepresentation

What type of insurer uses a formal sharing agreement?

Mutual insurers

Which of the following is NOT one of the independent rating services that publishes guides to insurance companies' financial integrity?

NAIC

How many hours of Continuing Education are required to maintain a Counselor's license?

None

Cash Value guarantees in a whole life policy are called

Nonforfeiture values.

All of the following are allowed practices regarding producer's commissions EXCEPT

Offering a financial reward to an unlicensed individual for providing a sales lead.

Insurance contracts are unilateral in nature. What does that mean?

Only one party makes a promise.

A stock insurer is defined as an insurer

Owned by its stockholders.

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 manner and/or frequency that the policyowner pays the policy premium is called

Premium mode.

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 a part of its underwriting, when must an applicant be notified of the procedure?

Prior to performance of the test

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

Proof of insurability must be provided at each renewal.

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

Reduced the death benefit.

What does the application of contract of adhesion mean?

Since the insured does not participate in preparing the contract, any ambiguities would be resolved in favor of the insured

The family term rider incorporates

Spouse term and children's term.

Which risk classification is representative of the majority of people in a certain age group and with similar lifestyles?

Standard

In contrasting stock insurers with mutual insurers, which statement is true?

Stock insurers are owned by the shareholders and issue nonparticipating policies.

If an applicant's health is poorer than that of an average applicant, the policy may be issued...

Substandard

Upon the surrender of a life insurance policy, any cash value accumulated in excess of the premium payments is

Taxed as ordinary income.

What is the exclusion ratio used to determine?

The annuity benefit to be excluded from taxes.

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

The applicant must complete prelicensing 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

Life insurance creates an immediate estate. Which of the following best explains this statement?

The face value of the policy is payable to the beneficiary upon the death of the insured.

In a life insurance application, all of the following signatures will be required EXCEPT

The home office underwriter.

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

The insured.

All of the following are true of group life insurance EXCEPT

The insureds each own their own contract.

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

The insurer whose policies are being advertised

Which of the following would NOT be eligible for coverage under key person?

The owner of a shop

Which of the following is true regarding a joint life annuity?

The payments.stop at the first death.

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

Because of an injury, an insured has been unable to work for 7 months. When his life insurance premium came due, he was unable to pay, yet the policy remained in force. The policy includes...

Waiver of premium rider.

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

Whole life without proof of insurability.