Life Insurance
What is the minimum civil fine per violation of the Insurance Code of this state?
$1000
If an insurance agent has made a misrepresentation or incomplete comparison of policies for the purpose of inducing a potential client to purchase an insurance policy, the agent may be assessed a fine of up to
$2,000
An insured purchased a 15-year level term life insurance policy with face amount of $100,000. The policy contained an accidental death rider, offering a double indemnity benefit. The insured was severely injured in an auto accident, and after 10 weeks of hospitalization, died from injuries. How much will the beneficiary receive from this policy?
$200,000
if an agent's license was revoked for violations of the statutes on rebating or illegal inducement, how soon after the date of revocation can the agent apply for a new license?
1 year
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?
12 months
within what time period after completing prelicensing education must an applicant file a certificate of education with the Commissioner?
12 months
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?
15
what is the least amount of time a life policy can allow for insureds to take legal action against their insurer for a particular act?
6 years
which of the following named beneficiaries would NOT be able to receive the death benefit directly from the insurer in the event of the insured's death?
A minor son of the insured
In this state, a temporary license may be issued for any of the following reasons EXCEPT
A producer's retirement
All of the following would be considered rebating EXCEPT
An agent misrepresents policy benefits to convince a policy owner to replace policies
which of the following premium payment modes will incur the lowest overall payment?
Annual
Which of the following would describe a legal document which would dictate who can buy a deceased partner's share of a business and for what amount?
Buy-sell agreement
Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process
Buyer's Guide
How are state Insurance Guaranty Associations funded?
By their members - authorized insurers
all of the following are penalties for submitting fraudulent claims to the insurer EXCEPT
Community service
Which of the following is NOT an essential element of an insurance contract?
Counteroffer
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 commissions. Now that the producer is no longer licensed, which of the following is true regarding the commissions from the sale of insurance policies?
Deferred commissions may be paid to the producer for policies sold while the producer was licensed
For a retirement plan to be qualified, it must be designed for whose benefit?
Employees
ABC insurance company receives an incomplete application and issues the policy anyway. Six months later ABC realizes the missing information. What term is used that prevents ABC from forcing the policyowner to answer further questions?
Estoppel
All of the following are dividend options EXCEPT
Fixed-period installments
Which is TRUE about the cash surrender nonforfeiture option?
Funds exceeding the premium are taxable as ordinary income
Life income joint and survivor settlement option guarentees
Income for 2 or more recipients until they die
An insured purchased a Life Insurance policy. The agent told him that depending upon the company's investments and expense factors, the cash values could change from those shown in the policy at issue time. The policy is a/an
Interest-sensitive Whole Life
Which of the following is TRUE about the 10-day free-look period in a Life Insurance policy?
It begins when the application is delivered
Which of the following is TRUE regarding the accumulation period of an annuity?
It is a period during which the payments into the annuity grow tax deferred
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?
It will increase because the insured will be 5 years older than when the policy was originally purchased
Under a pure life annuity, an income is payable by the company
Only for the life of the annuitant
A participating insurance policy may do which of the following?
Pay dividends to the policyowner
Which of the following riders would NOT cause the Death Benefit to increase?
Payor Benefit Rider
Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled?
Payor benefit
The policyowner pays for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would allow her to do this?
Reduction of premium
to sell variable life insurance policies, an agent must receive all of the following EXCEPT
SEC registration
An employee has group life insurance through her employer. After 5 years, she decides to leave the company and work independently. How can she obtain an individual policy?
She can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan
Which of the following statements is correct about a standard risk classification in the same age group and with similar lifestyles?
Standard risk is representative of the majority of people
Which of the following types of insurance policies would provide the greatest amount of protection for a temporary period during which an insured will have limited financial resources?
Term
A father owns a life insurance policy on his 15-year-old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums?
The insured's premiums will be waived until she is 21
All of the following are TRUE statements regarding the accumulation at interest option EXCEPT
The interest is not taxable since it remains inside the insurance policy
An annuitant dies before the effective date of a purchased annuity. Assuming that the annuitant's wife is the beneficiary, what will occur?
The interest will continue to accumulate tax deferred
All of the following are requirements for life insurance illustrations EXCEPT
They must be part of the contract
which of the following persons is required to hold a producer license?
a person who negotiates insurance contracts
An insured pays a $100 premium every month for his insurance coverage, yet the insurer promises to pay $10,000 for a covered loss. What characteristic of an insurance contract does this describe?
aleatory
who can make a fully deductible contribution to a traditional IRA?
an individual not covered by an employer-sponsored plan who has earned income
when an annuity is written, whose life expectancy is taken into account?
annuitant
Partners in a business enter into a buy-sell agreement to purchase life insurance, which states that should one of them die prematurely, the other would be financially able to buy the interest of the deceased partner. What type of insurance policy may be used to fund this agreement?
any form of life insurance
Which is the primary source of information used for insurance underwriting?
application
When must insurable interest exist in a life insurance policy?
at the time of application
a policyowner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. this is due to what provision?
automatic premium loan
an insurance contract must contain all of the following to be considered legally binding EXCEPT
beneficiary's consent
what is the time period called during which the surviving spouse of the insured does not receive Social Security income benefits?
blackout period
which of the following features of the indexed whole life policy is NOT fixed?
cash value growth
the commissioner finds that a producer is violating the insurance code by frequently using rebates as an incentive for clients to purchase policies. what may the commissioner issue after a hearing confirms the producer's guilt?
cease and desist order
when a policyowner designates a group of individuals as the beneficiary of a life insurance death benefit without specifically naming the individuals, this is called
class designation
An applicant knowingly fails to communicate information that would help an underwriter make a sound decision regarding coverage. This is an example of
concealment
What term best describes the act of withholding material information that would be crucial to an underwriting decision?
concealment
when both parties to a contract must perform certain duties and follow rules of conduct to make the contract enforceable, the contract is
conditional
which of the following would be considered an illegal inducement to purchase insurance?
confirming future dividends in a life insurance proposal
In Michigan the state's continuing education requirement
consists of completing 24 hours of CE each biennium
When twin brothers applied for life insurance from Company A, the company found that while neither of them smoked and both had a very similar lifestyle, one of the twins was in a much stronger financial position than the other. Because of this, the company charged him a higher rate for his insurance. This practice is considered
discrimination
which of the following is true regarding taxation of dividends in participating policies?
dividends are not taxable
Which nonforfeiture option has the highest amount of insurance protection?
extended term
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?
graded premium whole life
which of the following terms best describe the coverage provided by the term policies, as compared to any form of protection?
greatest
What kind of policy issues certificates of insurance to insureds?
group insurance
in insurance transactions, fiduciary responsibility means
handling insurer funds in a trust capacity
Which of the following statements regarding HIV testing for life insurance purposes is NOT true?
insurers are barred from requesting HIV testing
all of the following actions by a person could be described as risk avoidance EXCEPT
investing in the stock market
Which of the following is usually true of a participating life insurance policy?
it may pay dividends to policyowners
which of the following is NOT true regarding a nonqualified retirement plan?
it needs IRS approval
The form of life annuity which pays benefits throughout the lifetime of the annuitant and also guarantees payment for a minimum number of years is called
life income with period certain
insurance is a contract by which one seeks to protect another from
loss
when an applicant purchased a life insurance policy, the agent dated the application 4 months prior. When asked by the policies up to 6 months if it would
lower the insured's premium
Which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices?
making comparisons between different policies
Which part of an insurance application would contain information regarding the cause of death of the applicant's deceased relatives?
medical information
On its advertisements, 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
misrepresentation
An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy?
mutual
all of the following are factors that an underwriter could use to select and classify risk EXCEPT
national origin
An out-of-state producer wants to start selling insurance in this state. What type of license should the producer obtain?
nonresident
which of the following documents must be provided to the policyowner or applicant during policy replacement?
notice regarding replacement
When calculating the amount a policyowner may borrow from a variable life policy, what must be subtracted from the policy's cash value?
outstanding loans and interest
who might receive dividends from a mutual insurer?
policyholders
which of the following will be included in a policy summary?
premium amounts and surrender values
which of the following insurance options would be considered a risk-sharing arrangement
reciprocal
Following a career change, an insured is no longer required to perform many physical activities, so he has implemented a program where he walks and jogs for 45 minutes each morning. The insured has also eliminated most fatty foods from his diet. Which method of dealing with risk does this scenario describe?
reduction
If an employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer may
require evidence of insurability
The Ownership provision entitles the policy owner to do all of the following EXCEPT
set premium rates
Which two terms are associated directly with the way an annuity is funded?
single payment or periodic payments
The interest earned on policy dividends is
taxable
In a group life insurance policy, the employer may select all of the following EXCEPT
the beneficiary
If a life insurance policy has an irrevocable beneficiary designation,
the beneficiary can only be changed with written permission of the beneficiary
An adjustable Life policyowner can change which of the following policy features?
the coverage period
an individual applied for an insurance policy and paid the initial premium. the insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date?
the date of the medical exam
Who is the owner and who is the beneficiary on a Key Person Life Insurance Policy?
the employer is the owner and beneficiary
Which of the following would NOT fall into the category of costs associated with death?
the expense of a vacation for surviving family members
which of the following is true regarding a market value adjusted annuity?
the owner is guaranteed a fixed interest rate for a specific period of time
which of the following is an example of a producer's fiduciary duty?
the trust that a client places in the producer in regard to handling premiums
which of the following is the best reason to purchase life insurance rather than an annuity?
to create an estate
an absolute assignment is a
transfer of all ownership rights in a policy
An insurance company receives an application with some information missing and issues the policy anyway. What is this called?
waiver
Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?
warranty
