li study

What is the maximum fine for submitting a false or fraudulent claim to the insurer?

$1,000

An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy?

$50,000

Before he died, an annuitant had received $12,500 in monthly benefits from his $25,000 straight life annuity. He was also the insured under a $50,000 paid-up whole life policy that named his wife as primary beneficiary. Considering both contracts, how much will the annuitant's spouse receive in benefits?

$50,000

Which of the following policies would have an IRS required corridor or gap between the cash value and the death benefit?

. Universal Life - Option A

If an agent's license was revoked for violations of the statutes on rebating or illegal inducement, how soon after the date of revocation can the agent apply for a new license?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

Within what time period after completing prelicensing education must an applicant file a certificate of education completion with the Commissioner?

12 months

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?

15 days

A temporary license in this state is valid for a maximum of

180 days.

How long is the required grace period in life insurance policies in this state?

30 days

If an insurer terminates a producer, the Commissioner must be notified. How many days does the insurer have to deliver this notice?

30 days

Within how many days does a licensee have to inform the Commissioner of a change of address?

30 days

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?

90 days

An applicant for a Counselor's license in Michigan must possess all of the following EXCEPT

A license to practice law.

At age 30, an applicant wants to start an insurance program, but realizing that his insurance needs will likely change, he wants a policy that can be modified to accommodate those changes as they occur. Which of the following policies would most likely fit his needs?

Adjustable Life

Which of the following is another term for an authorized insurer?

Admitted Insurer

Which of the following best describes the concept that the insured pays a small amount of premium for a large amount of risk on the part of the insurance company?

Aleatory

Which of the following applicants could the insurer charge a higher rate of premium and not violate regulations regarding unfair discrimination?

An applicant who is a smoker

Who can make a fully deductible contribution to a traditional IRA?

An individual not covered by an employer-sponsored plan who has earned income

Under which of the following circumstances would an insurer pay accelerated benefits?

An insured is diagnosed with cancer and needs help paying for her medical treatment.

The LEAST expensive first-year premium is found in which of the following policies?

Annually Renewable Term

Which of the following is a short-term annuity that limits the amounts paid to a specific fixed period or until a specific fixed amount is liquidated?

Annuity certain

Which concept is associated with "exclusion ratio"?

Annuity payments

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 of the following types of agent authority is also called "perceived authority"?

Apparent

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

The risk management technique that is used to prevent a specific loss by not exposing oneself to that activity is called

Avoidance

Which of the following statements concerning buy-sell agreements is true?

Buy-sell agreements are normally funded with a life insurance policy.

What does "liquidity" refer to in a life insurance policy?

Cash values can be borrowed at any time.

A producer who fails to separate premium monies from his own personal funds is guilty of

Commingling.

An applicant knowingly fails to communicate information that would help an underwriter make a sound decision regarding coverage. This is an example of

Concealment

An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated?

Consideration

Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified as

Contracts of adhesion.

A rider that may be attached to a life insurance policy that will adjust the face amount based upon a specific index, such as the Consumer Price Index, is called

Cost of living rider.

What is another name for interest-sensitive whole life insurance?

Current assumption life

Which of the following is NOT an example of a valid insurable interest?

Debtor in the life of the creditor

If an insured changes the premium payment mode from monthly to annually, what happens to the total premium?

Decreases

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?

Defamation

Which of the following is NOT a term for the period of time during which the annuitant or the beneficiary receives income?

Depreciation period

Which of the following terms is used to name the nontaxed return of unused premiums?

Dividend

Which of the following is true regarding taxation of dividends in participating policies?

Dividends are not taxable.

If a change needs to be made to the application for insurance, the agent may do all of the following EXCEPT

Erase the incorrect answer and record the correct answer.

The authority granted to an agent through the agent's contract is referred to as

Express authority.

What provision in an insurance policy extends coverage beyond the premium due date?

Grace period

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

According to the nonforfeiture law, if the owner decides to surrender a deferred annuity prior to annuitization, the owner is entitled to which of the following?

Guaranteed surrender value

What insurance concept is associated with the names Weiss and Fitch?

Guides describing company financial integrity

An insured purchased a life insurance policy on his life naming his wife as primary beneficiary, and his daughter as contingent beneficiary. Under what circumstances could the daughter collect the death benefit?

If the primary beneficiary predeceased the insured

Which authority is NOT stated in an agent's contract but is required for the agent to conduct business?

Implied

The Commissioner may waive prelicensing requirements or examinations for someone who has been a licensed insurance producer

In the preceding 12 months.

Under which of the following annuity options does the annuitant select the time period for the benefits, and the insurer determines how much each payment will be?

Installments for a fixed period

State law specifically prohibits using illegal inducements in the marketing of insurance. All of the following would be considered illegal inducements EXCEPT

Inviting prospective clients to the grand opening of the company's new office.

The mode of premium payment

Is defined as the frequency and the amount of the premium payment.

Which of the following is NOT true regarding a Certificate of Authority?

It is issued to group insurance participants.

Which of the following best describes annually renewable term insurance?

It is level term insurance.

When a reduced paid-up nonforfeiture option is chosen, what happens to the face amount of the policy?

It is reduced to the amount of what the cash value would buy as a single premium.

Which of the following is true about the premium on the children's rider in a life insurance policy?

It remains the same no matter how many children are added to the policy.

For the reported losses of an insured group to become more likely to equal the statistical probability of loss for that particular class, the insured group must become

Larger

When an applicant purchased a life insurance policy, the agent dated the application 4 months prior. When asked by the applicant, the agent said he was allowed to backdate policies up to 6 months if it would

Lower the insured's premium.

Which of the following would provide an underwriter with information concerning an applicant's health history?

MIB Medical Information bureau

Which of the following premium modes would result in the highest annual cost for an insurance policy?

Monthly

After a back injury, an insured is disabled for a year. His insurance policy carries a Disability Income Benefit rider. Which of the following benefits will he receive?

Monthly premium waiver and monthly income

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

An insured has a life insurance policy from a participating company and receives quarterly dividends. He has instructed the company to apply the policy dividends to increase the death benefit. The dividend option that the insured has chosen is called

Paid-up additions.

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

An applicant wants to buy a policy that has a cash value element. Which type should she buy?

Permanent

If someone wants to buy a life insurance policy that will provide lifetime protection against premature death, what type of life insurance policy should that person buy?

Permanent

Who might receive dividends from a mutual insurer?

Policyholders

Which of the following individuals must have insurable interest in the insured?

Policyowner

The following areas are regulated by the Insurance Department EXCEPT

Producer commission schedules.

Which of the following best describes a pure life annuity settlement option?

Pure life provides payments for as long as the annuitant is alive.

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.

A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy

Required a premium increase each renewal.

If an agent fails to obtain an applicant's signature on the application, the agent must

Return the application to the applicant for a signature.

A policyowner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. The policyowner should have her husband named as the

Revocable beneficiary.

o sell variable life insurance policies, an agent must receive all of the following EXCEPT

SEC registration.

It would be considered unfair discrimination to ask an insurance applicant about which of the following and then use that information as a rating factor to determine insurability?

Sexual orientation

An insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the insured, and matures at the insured's age 100 is called

Single premium whole life.

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 risk will result in the highest premium?

Substandard risk

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

Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean?

The beneficiary will only receive payments of the interest earned on the death benefit.

In a case where the primary beneficiary predeceases the insured, in the event of the insured's death, the death benefit proceeds will be paid to

The contingent beneficiary.

The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change?

The death benefit can be increased by providing evidence of insurability.

What method is used to determine the taxable portion of each annuity payment?

The exclusion ratio

Which of the following is NOT a characteristic of an insurable risk?

The loss must be catastrophic.

What is the advantage of reinstating a policy instead of applying for a new one?

The original age is used for premium determination.

Under an extended term nonforfeiture option, the policy cash value is converted to

The same face amount as in the whole life policy.

An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries?

The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive.

For the purpose of insurance, risk is defined as

The uncertainty or chance of loss.

All of the following are true regarding the guaranteed insurability rider EXCEPT

This rider is available to all insureds with no additional premium.

Which of the following is the best reason to purchase life insurance rather than an annuity?

To create an estate

The Waiver of Cost of Insurance rider is found in what type of insurance?

Universal Life

Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?

Warranty

When is the earliest a policy may go into effect?

When the application is signed and a check is given to the agent

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

coercion

Which of the following best describes a misrepresentation?

issuing sales material with exaggerated statements about policy benefits

Upon policy delivery, the producer may be required to obtain any of the following EXCEPT

signed waiver of premium