Michigan State Insurance Exam 6/3/2021
The lending institution
Who is the beneficiary in a credit health policy?
The SIS payment will be reduced dollar-for-dollar by the Social Security benefit payment.
Your client has a Social Insurance Supplement (SIS) rider on his disability policy. After he becomes disabled, he receives payments from the company. Shortly thereafter, he also begins receiving Social Security benefit payments. Which of the following will happen?
Straight Life
A basic policy that charges a level annual premium for the lifetime of the insured and provides a level, guaranteed death benefit.
Adhesion
A contract offered on a "take-it-or-leave-it" basis by an insurer, in which the insured's only option is to accept or reject the contract. Any ambiguities in the contract will be settled infavor of the insured.
Twisting
A form of misrepresentation in which an agent persuades an insured/owner to cancel, lapse, or switch policies, even when it's to the insured's disadvantage.
Medicaid
A medical benefits program jointly administered by the individual states and the federal government.
Premium
A periodic payment to the insurance company to keep the policy in force.
Credit Life Insurance
A special type of coverage written to pay off the balance of a loan in the event of the death of the debtor.
Nonqualified Plan
A type of benefit plan that may discriminate, is not required to be filed with the IRS, and does not provide a current tax deduction for contributions.
Explaining to client the advantages of permanent insurance over term and suggesting changing policies
All of the following actions can be described as twisting EXCEPT
Spouse
An applicant buys a nonqualified annuity, but dies before the starting date. For which of the following beneficiaries would the interest accumulated in the annuity NOT be taxable?
Decrease
As deductible amounts increase, premium amounts change in what way?
Adjustable Life
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?
Waiver of Premium
Continuation of life insurance coverage if the insured becomes totally disabled and is unable to pay the premiums.
Taxable interest will be withdrawn first and the 10% penalty will be imposed if under age 59 ½.
During the accumulation period in a nonqualified annuity, what are the tax consequences of a withdrawal?
Loss of the owner's income.
If a business owner becomes totally disabled, a Business Overhead Expense policy will pay all of the following EXCEPT
Lower than individual policies, but higher than group policies.
In franchise insurance, premiums are usually
All providers will have the same coverage options and conditions for each plan.
In reference to the standard Medicare Supplement benefits plans, what does the term standard mean?
Adhesion
Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. What contract characteristic does this describe?
Adjustable Life
Life insurance which permits changes in the face amount, premium amount, period of protection, and the duration of the premium payment period.
Franchise Insurance
Life or health insurance plan for covering groups of persons with individual policies uniform in provisions, although perhaps different in benefits. Solicitation usually takes place in an employer's business with the employer's consent. Generally written for groups too small to qualify for regular group coverage. May be called wholesale insurance when the policy is life insurance.
Income assistance for work-related injury.
Medicaid provides all of the following benefits EXCEPT
Coinsurance and deductibles.
Most scheduled plans provide first-dollar benefits without
Both are properly licensed for the line of insurance.
Producers are permitted to share or split commissions, providing that
Standard Provisions
Requirements approved by state law that must appear in all insurance policies.
Commission
The payment made by insurers to agents or brokers for the sale and service of policies.
War or military service
What is the name of a clause that is included in a policy that limits or eliminates the death benefit if the insured dies as a result of war or while serving in the military?
6 months
What is the waiting period on a Waiver of Premium rider in life insurance policies?
Interest only
When a beneficiary receives payments consisting of both principal and interest portions, which parts are taxable as income?
Funds exceeding the premium paid are taxable as ordinary income.
Which is TRUE about the cash surrender nonforfeiture option?
The insurer can increase the policy premium on an individual basis.
Which of the following is NOT a feature of a guaranteed renewable provision?
It needs IRS approval.
Which of the following is NOT true regarding a nonqualified retirement plan?
It may last for the lifetime of the annuitant.
Which of the following is TRUE regarding the annuity period?
The trust that a client places in the producer in regard to handling premiums.
Which of the following is an example of a producer's fiduciary duty?
Medicare Part A is automatically provided when an individual qualifies for Social Security benefits at age 65.
Which of the following statements pertaining to Medicare Part A is correct?
Its premium steadily decreases over time, in response to its growing cash value.
Which statement is NOT true regarding a Straight Life policy?