Guaranteed Exam Wrong Questions Part 1
Annuities Certain limit the amount paid by the annuity to a certain fixed a. Period Only b. Amount Only c. Period with a certain fixed amount d. Period or fixed amount
Answer- D. Period or fixed amount Annuities Certain limit the amount paid by the annuity to a certain fixed period or until a certain fixed amount is liquidated
How many hours of Continuing Education are required to maintain a Counselor's license? a. 24 b. 30 c. None d. 12
Answer: C. None Continuing Education (CE) requirements do not apply to those with a Counselor's License
The Commissioner has determined that a producer is ineligible for appointment by an insurer. The Commissioner must notify the insurer within... a. 5 days b. 10 days c. 14 days d. 20 days
Answer: 5 days
A licensee fails to earn the required CE credits by the expiration of the 90-day grace period, and the licensee has been terminated for education. How much time does the licensee have to meet the CE requirement to be considered for license reinstatement? a. 1 year b. 3 years c. Once terminated, a license cannot be reinstated d. 6 months
Answer: A. 1 year Reinstatement can occur up to 1 year following the termination as long as the producer has met the CE requirements, submitted an application for licensure, and paid the required fees
According to the agency law, the producer always represent the a. Insurance Company b. Client c. Public d. State of Insurance Department
Answer: A. Insurance Company Under agency law, producers legally represent the insurance company with which they maintain a contract
Which of the following statements is true regarding advertising that the Insurance Guaranty Association would ensure payment of benefits in the event of insurer insolvency? a. It is an unfair trade practice to mention the Association in advertisements b. Insurers may choose whether to mention the Association in advertisements, but if they choose to do so, they must first pay a fee to the Department of Insurance c.If Insureds join the Association, they will be protected financially if their insurers become insolvent d. All advertisements of an insurer must mention coverage by the Association
Answer: A. It is an unfair trade practice to mention the Association in advertisements It is unfair trade practice to make any statement that an insurer's policies are guaranteed by the existence of the Insurance Guaranty Association
Which term describes an individual who is domiciled and licensed as a resident producer in a state other than Michigan? a. Nonresident producer b. Temporary producer c. Alien Producer d. Foreign Producer
Answer: A. Nonresident producer A nonresident producer is an individual who is domiciled and licensed as a resident producer in a state other than Michigan
Which of the following will NOT be included in the buyer's guide? a. Specific information about the policy b. Comparison of policy costs c. Explanation on how to choose the amount and type of insurance d. Basic information about life insurance policies
Answer: A. Specific information about the policy A buyer's guide provides generic information about the life insurance policies and explains how a buyer should go about choosing the amount and type of insurance to buy, and saving money by comparing the cost of similar policies. The policy summary provides specific information about the chosen policy, as well as the agent's name and address.
Which of the following is NOT one of the requirements for obtaining a nonresident license in Michigan? a. The applicant must complete prelicensing education and examination in the nonresident state b. The applicant must be in good standing c. The applicant must be at least 18 years old d. The applicant must hold a current resident insurance license in his/her home state
Answer: A. The applicant must complete prelicensing education and examination in the nonresident state Those individuals who wish to transact insurance in Michigan that are not residents of the state may obtain a nonresident license if they hold a current resident insurance license in their home state and is at least 18 years old. A nonresident is based on the resident license the person holds being in good standing. Anyone who was previously licensed for the same qualifications in another state is not required to complete any pre-licensing education or examination.
All of the Following statements about mutual insurance companies are correct EXCEPT.. a. Mutual Companies issue policies referred to as participating b. Policy dividends issued by mutual companies are guaranteed and not taxable c. Dividends allow policy holders to share in a mutual company's divisible surplus d. Dividends are a return of unused premiums
Answer: B. Policy dividends issued by mutual companies are guaranteed and not taxable Insurance policy dividends are not guaranteed and are not taxable
During the policy solicitation, an insurer exaggerated the financial condition of one of its competitors, and makes it sound worse than it is. This is an example of an unfair trade of practice of... a. Misrepresentation b. Defamation c. Twisting d. False advertising
Answer: B. Defamation It is against the law for any person to make, publish, or circulate any oral or written statement or literature that is false, maliciously critical of or substantially misrepresents the financial condition of any insurer, and which is intended to injure any person engaged in the insurance business.
An adjustable life policy can assume the form of a. Only permanent insurance b. Either term insurance or permanent insurance c. Neither term insurance or permanent insurance d. Only term insurance
Answer: B. Either term insurance or permanent insurance Adjustable life was developed in an effort to provide the policyowner with the best of both worlds (term and permanent coverage). An adjustable life policy can assume the form of either term insurance or permanent insurance
All of the following are considerations under the needs approach planning for life insurance EXCEPT a. Education fund b. Insured's Income c. Emergency Reserve Funds d. Debt cancellation
Answer: B. Insured's Income The needs approach considers the needs which would exist in the event of the wage earner's death by looking at the family's income-expenditure equation. Some of the factors considered by the needs approach are the amount of debt (including mortgage), paying for unexpected expenses (emergency reserve fund), and for paying children's education. Human Life Value Approach takes into consideration the Insured's wages, inflation, the number of years to retirement, and the time value of money.
All of the following are true about key-person insurance EXCEPT.. a. The business is the beneficiary b. The death benefit is taxable to the business c. The business is the applicant and owner d. The employee must give written consent by signing the application
Answer: B. The death benefit is taxable to the business Key-person life insurance premium is not deductible by the business and the death benefit is not taxable to the business
Which of the following is required in order for a plan to be qualified? a. The plan's contribution formula is allowed to discriminate in favor of officers of the company. b. The plan must be formally written and communicated to the employees c. The plan must not be permanent d. The plan must be for the exclusive benefit of the employer
Answer: B. The plan must be formally written and communicated to the employees The plan must me for the exclusive benefit of the employees and their beneficiaries, formally written and communicated to the employees, and the plan's benefit or contribution formula cannot discriminate in favor of the prohibited group. Participation in a plan may not be geared exclusively to the prohibited group. The plan must be permanent.
All of the following are true regarding the waiver of cost of insurance rider EXCEPT: a. the rider cannot waive the cost of premiums that accumulate cash value b. the rider expires when the insured reaches age 60 c. The rider waives the insurance costs in the event the insured becomes disabled d. The rider is only applicable to universal life policies
Answer: B. the rider expires when the insured reaches age 60 The waiver of cost insurance rider, also known as the waiver of monthly deductions rider, waives the cost of insurance and other expenses in the event the insured becomes disabled. Any premiums necessary to the accumulation of cash values cannot be waived
How long do temporary producer's licenses last without requiring an examination? a. 60 days b. 90 days c. 180 days d. 365 days
Answer: C. 180 days Producers with a temporary license can perform all of the functions of a regularly licensed producer . Temporary producer's licenses are good for 180 days with out requiring an examination
At what point would an automatic premium loan be generated? a. Once the policy is delivered? b. Upon the surrender of the policy c. Following the grace period d. Upon the insured's death
Answer: C. Following the grace period Automatic Premium loans are designated to automatically take a portion of the policy's cash value in order to pay the policy premium, thus preventing the policy from lapsing. Automatic premium loans are initiated after the grace period has ended.
How will life insurance proceeds that are paid as a lump sum received by the beneficiary? a. Taxed as investment income b. As tax-deductible income c. Free of federal Income Taxation d. Taxed as ordinary income
Answer: C. Free of federal Income taxation Life Insurance proceeds paid to a named beneficiary are generally free of federal income taxation if taken as a lump sum
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 policy-owner select? A. Fixed-period installments B. Life income C. Joint and Survivor D. Fixed-amount installments
Answer: C. Joint and Survivor Under the Joint and Survivor settlement option, payments will continue until the death of the last beneficiary
With Adjustable Life, the owner can change all of the following EXCEPT: a. The premium b. The length of time the coverage will last c. The insured d. The death benefit
Answer: C. The insured The mortality charge is determined by the actuary in the home office. The owner of the policy has no control over this mortality cost.
An important fact about the financial status of an insurer was deliberately withheld. Which of the following terms best describes this action? a. Defamation b. Twisting c. Loading d. False financial statement
Answer: D. False financial statement Statements of this kind--when used to put the company into a favorable light--are often called false financial statements.
A whole life policy is surrendered for a reduced-paid up policy. The cash value in the new policy will a. Remain the same b. Decrease over time c. Reduce the pre-surrender value d. Continue to increase
Answer: D. Continue to Increase The new policy continues to build its own cash value and will remain in force until the insured's death or maturity.
In terms of contract law, a waiver is when someone a. Changes their mind on a given topic b. Delegates their right to an attorney c. Opts to modify their contract d. Gives up a known right or privilege
Answer: D. Gives up a known right or privilege A waiver if when one gives up a known right or privilege
The Human Life Value Approach to determining life insurance needs is based upon which of the following ideas? a. Replacement of assets b. Specific needs for college education c. Retirement needs d. Loss of breadwinner's income
Answer: D. Loss of breadwinner's income The Human Life Value Approach is based upon loss of income
What type of insurer uses a formal sharing agreement? a. Stock Insurers b. Mutual Insurers c. Fraternal Benefit Societies d. Reciprocal Insurers
Answer: D. Reciprocal Insurers Sharing is a method of dealing with risk for a group of individual persons or businesses with the same or similar exposure to loss to share the losses that occur within that group. A reciprocal insurance exchange is a formal risk-sharing arrangement. When insurance is obtained through a reciprocal insurer, the insureds are sharing the risk of loss with other subscribers of that reciprocal.
An agent decides to start selling variable life insurance products. What must the agent do before transacting this type of insurance? a. Register with the SEC b. Obtain a separate license c. Obtain the DOI authorization d. Register with FINRA
Answer: D. Register with FINRA Agents performing transactions involving any variable products are required to be registered with the FINRA- Financial Industry Regulatory Authority (formerly NASD - National Association of Securities Dealers)
All of the following are true about Group Life Insurance EXCEPT: a. The employee is the insured b. The employer is the beneficiary c. It is usually written as an annual renewable term insurance d. Evidence of insurability is usually not required
Answer: D. The employer is the beneficiary The employee, as the insured, may designate any beneficiary they so desire, which would usually be either their spouse or children
All of the following statements about indexed whole life insurance are correct EXCEPT a. The premium is fixed b. There is a guaranteed minimum interest rate c. The cash value depends on the performance of the equity index d. The policy face amount remains level throughout the life of the policy
Answer: D. The policy face amount remains level throughout the life of the policy In Indexed whole life policies, the face amount increases annually to keep pace with inflation. All other statements are true.
Which of the following policies can be described as a flexible premium adjustable life policy? a. Whole Life b. Term Life c. Credit Life d. Universal Life
Answer: D. Universal Life Universal Life is known by the generic name of "flexible premium adjustable life." The policyowner has the flexibility to increase the amount of premium going into the policy and to later decrease it again.
How is a licensee's date of Continuing Education credit review determined? a. By the name of the company to which the licensee is appointed b. By the number of years the licensee has been a producer c. By the date on which he/she was initially licensed d. By the licensee's month and date of date of birth
Answer: D. by the licensee's month and date of birth A licensee's date of CE credit review is determined by the month and date of birth, at least 12 months after the issuance of the initial license.
If a loan request is for payment of due premiums on the policy, how soon must the insurer issue the loan? a. Immediately b. Within 10 days c. Within 30 days d. Within 90 days
Answer: Immediately Loan requests for payment of due premiums must be fulfilled immediately. Requests for any other reason may be deferred up to 6 months