Life insurance
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
How long does a temporary producers licenses last without requiring an examination?
180 days
The commissioner has determined that a producer is ineligible for appointment by an insurer. The commissioner must notify the insurer within...
5 days
*Policy loan requests, except for loan requests for payment of due premiums, may be deferred for a period of up to
6 months
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
The spouse of a retiring insurance producer
A temporary producer license could be issued without examination to all of the following EXCEPT
A copy of the original application for insurance
According to the Entire Contract provision, a policy must contain...
Risks with higher probability of loss seeking insurance more often than other risks.
Adverse selection is a concept best described as
Which of the following indicates the person upon whose life the annuity income amount is determined?
Annuitant
Which of the following documents used in the underwriting process contain specific medical details about an applicant?
Attending Physician's Statement (APS)
Which of the following would be TRUE of both the fixed-period and fixed-amount settlement options?
Both guarantee that the principal and interest will be fully paid out
How is a licensee's date of Continuing Education credit review determined
By the licensee's month and date of birth
An insured purchases a nonparticipating whole life policy. This policy includes all the following EXCEPT
Dividends
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
Because of the imposed blackout period, the surviving spouse will not receive social security benefits until
He or she qualifies for retirement benefits
Under which of the following conditions would life insurance proceeds be taxable by the federal government?
If there is a transfer for value
All of the following are true regarding an Ordinary (Straight) Life policy EXCEPT
It does not have a guaranteed death benefit
Which of the following is true regarding pure life and pure life annuity settlement options?
It provides the highest monthly benefit
Guaranteeing future dividends is considered to be an unfair or deceptive act known as
Misrepresentation
An insurance company that is owned by the policyholders is called a...
Mutual insurer
How many hours of CE are required to maintain a counselors license?
None
cash value guarantees in a whole life policy are called
Nonforfeiture values
Which statement best describes agreement as it relates to insurance contracts?
One party accepts the exact terms of the other party's offer
Underwriters use all of these methods to protect the insurer against adverse selection EXCEPT
Only accepting a small percentage of applicants
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
Which dividend option increases the death benefit?
Paid-up additions
Which of the following is consideration on the part of an insurer?
Paying a claim
A married couple purchases a life insurance policy for their newborn baby. They are concerned about what would happen to the policy of either one of them were unable to continue making the premium payments due to death or disability. What rider should their agent recommend?
Payor benefit
Annuities Certain can limit the amount paid by the annuity to a certain fixed..
Period or fixed amount
All of the following statements about mutual insurance companies are correct EXCEPT
Policy dividends issued by mutual companies are guaranteed and not taxable
In a group life policy with a death benefit of more than $50,000
Premium cost above $50,000 is taxable as income to the employee
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 part of its underwriting, when must an applicant be notified of the procedure?
Prior to performance of the test
What affect will the long-term care (LTC) rider have in the death benefit of a life insurance policy if the LTC benefits were paid to the insured?
Reduce the death benefit
Which of the following individuals would be a likely candidate to purchase a deferred annuity?
Someone who wants to grow retirement funds tax deferred
Insurance companies from adverse selection by high risk persons
The Medical Information Bureau (MIB) was created to protect?
Set premium rates
The Ownership provision entitles the policyowner to do all of the following EXCEPT
Which of the following is NOT one of the requirements for obtaining a nonresident license in Michigan?
The applicant must complete pre licensing 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
With Adjustable Life, the owner can change all of the following EXCEPT
The insured
All of the following are considerations under the needs approach planning for life insurance EXCEPT
The insured's income
Who is responsible for the content and form of insurance advertisements?
The insurer whose policies are being advertised
An annuitant dies before the annuity start date, which of the following is true?
The interest is taxable
Reduction of premium
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?
2 years
The validity of coverage under a life insurance policy may not be contested, except for nonpayment of premium, after the policy has been in force for at least how many years?
Reduced Paid-Up
This nonforfeiture option provides coverage for the longest period of time?
A producer's retirement
This state provided for a temporary license for all of the following EXCEPT
Certificate of Authority
To legally transact insurance in this state, an insurer must obtain..
Owner's income
Traditional IRA contributions are tax deductible based on which of the following?
The same face amount as in the whole life policy
Under an extended term nonforfeiture option, the policy cash value is converted to
Which of the following policies can be described as a flexible premium adjustable life policy?
Universal Life
If the policy summary for a life insurance policy is not given when the application is taken, when must the policy summary be given to the policyowner?
When the policy is delivered
Implied
Which authority is NOT stated in an agent's contract but is required for the agent to conduct business?
It may last for the lifetime of the annuitant.
Which of the following is TRUE regarding the annuity period?
The cash value available to the policyowner
Which of the following is an example of liquidity in a life insurance contract?
To create an estate
Which of the following is the best reason to purchase life insurance rather than annuities?
Graded Premium Whole Life
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?
Standard risk is representative of the majority of people.
Which of the following statements is correct about a standard risk classification in the same age group and with similar lifestyles?
When an insured terminates membership in the insured group, the insured can convert to..
Whole life without proof of insurability
It has a guaranteed minimum interest rate
Why is an equity Indexed annuity considered to be a fixed annuity?
An IRA contribution can be made from which of the following?
cash
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
All of the following are ways to handle risk EXCEPT
elimination
If a loan request is for payment of due premiums on the policy, how soon must the insurer issue a loan?
immediately
To purchase insurance, the policy owner must face the possibility of losing money or something of value in the event of loss. What is this concept called?
insurable interest
Among the applicants in the same class and life expectancy, which of the following factors can be used to influence premium rates?
occupation
A stock insurer is defined as an insurer
owned by its stockholders
Key person insurance can provide protection for all of the following economic losses to a business EXCEPT
pay the death benefit to the estate of the insured
All of the following are true of annually renewable term insurance EXCEPT
proof of insurability must be provided at each renewal
Automatic Premium Loan
protects the insured from an unintentional policy lapse due to a nonpayment of premium
The Guaranteed Insurability Rider allows the owner to purchase additional amounts of life insurance without proof of insurability at all of the following EXCEPT
purchase of a new home
If an insured purchases an insurance policy with a large deductible, what risk management technique is the insured exercising?
retention
What guarantees that the information explained in the insurance contract is true?
warranty
Collateral Assignment
A business owner was trying to obtain a bank loan to fund the purchase of a new business facility, but the bank required proof of additional assets to secure the loan. The business owner then decided to use her $250,000 life insurance policy to secure the loan. Which provision makes this possible?
The benefit is received tax free
A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then
If the father is disabled for more than 6 months
A father purchases a life insurance policy on his teenage daughter and adds the Payor benefit rider. What must be acceptable in order for the ride to be able to waive the payment of premium?
30 days
A flexible premium universal life insurance policy must provide a grace period of?
Pay dividends to the policyowner
A participating insurance policy may do which of the following?
Automatic Premium Loan
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?
Annually
A policyowner of universal life insurance policy must receive a policy status report from the insurer at least...
Pay the policy proceeds only if it would have issued the policy.
A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will
Cost of living rider
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
Risks with higher probability of loss seeking insurance more often than other risks.
Adverse selection is a concept best described as...
Premiums are determined by the age, sex and occupation of each individual certificate holder.
All of the following are characteristics of group life insurance, EXCEPT
The plan is funded by permanent insurance only
All of the following are true of Key Person insurance EXCEPT
Dividends from a mutual insurer
All the following could be considered rebates if offered to an insured in the sale of insurance except?
Cost of Living Rider
Allows the policy face amount to be adjusted to account for inflation based on the consumer price index.
50% tax on the amount not distributed as required
An IRA uses immediate annuities to pay out benefits; the IRA owner is nearly 75 years old when he decides to collect distributions. What kind of penalty would the IRA owner pay?
When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health
An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. When will coverage begin?
The insured my choose to convert to term or permanent individual coverage
An employee is insured under her employers group life plan. If she terminates coverage which of the following statements is INCORRECT?
Conditional
An insurance contract requires that both the insured and the insurer meet certain conditions in order for the contract to be enforceable
Single Premium Whole Life
An insurance policy that only requires a payment of premium at its inception and no further premiums contributions, and in addition to providing insurance protection for the life of the insured, endows at the insured's age 100, is called
Adjustment in the amount of the death benefit
An insured misstates her age at the time the life insurance application is taken. This misstatement may result in?
Universal Life
An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have?
Mutual
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 receive a check from the insurer. From what type of insurer did the insured purchase the policy?
The insured will need a written consent of the insurer.
An insured wants to transfer his personal insurance policy to a friend. Under what conditions would this be possible?
Inspection Report
An insurer receives a report regarding a potential insured that includes the insured's financial status, hobbies and habits. What type of a report is that?
Attending Physician's Statement (APS)
An underwriter is reviewing the medical questions in the application and needs further information due to a medical situation the applicant had in the past. What will the underwriter require?
Increases annually
Annually Renewable Term policies provide a level death benefit for a premium that?...
Predicted needs of the family after the insured's death.
Based on Human Life Value Approach, which of the following is NOT used to calculate an individual's life value?
A whole life policy is surrendered for a reduced paid-up policy. The cash value in the new policy will...
Continue to increase
Are subject to vesting requirements
Employer contributions made to a qualified plan..
Enployees
For a retirement plan to be qualified, it must be designed for the benefit of?
Until the beneficiary's death
How long will the beneficiary receive payments under the single life settlement option?
90 days
If a licensee does not earn 24 hours of CE by the license review date, the license will be suspended for up to how many days?
With the policy
If a policy includes a free-look period of at least 10 days, the Buyer's Guide must be delivered to the applicant no later than?
Require evidence of insurability
If an employee wants to enter the group outside of the open enrollment period, to reduce adverse selection, the insurer may?
An unfair trade practice
If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered
The death benefit will be smaller
If an insured withdraws a portion of the face amount in the form of accelerated benefits because of a terminal illness, how will that affect the payable death benefit from the policy?
Either the amount paid into the annuity or the cash value, whichever is greater
If the annuitant dies before the annuitization period starts, what will the beneficiary receive?
Handling insurer funds in a trust capacity
In insurance transactions, fiduciary responsibility means
The loss may be intentional
Not all losses are insurable, and there are certain requirements that must be met before a risk is proper subject for insurance. These requirements include all of the following EXCEPT
Misrepresentation
On its advertisement, 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?
Any form of life insurance
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?
One-Year Term Option
The dividend option in which the policyowner used dividends to purchase a term policy for one year is referred to as the...
To purchase a smaller amount of the same type of insurance as the original policy
The paid-up addition option uses the dividend...
Interest Only Option
The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. What settlement option should the policyowner choose?
All the following are true regarding the waiver of insurance rider EXCEPT
The rider expires when the insured reaches age 60
Signed waiver of premium
Upon policy delivery, the producer may be required to obtain any of the following EXCEPT
The period of time during which accumulated money is converted into income payments
What describes what an annuity period is?
Guides describing company financial integrity
What insurance concept is associated with the names Weiss and Fitch?
Current assumption life
What is another name for interest-sensitive whole life insurance?
The original age is used for premium determination
What is the advantage of reinstating a policy instead of applying for a new one?
It has the highest amount of insurance protection
What is the benefit of choosing extended term as a nonforfeiture option?
To allow the consumer to compare the costs of different policies
What is the purpose of the buyer's guide?
Group Insurance
What kind of policy issues certificates of insurance to insureds?
Modified life
What type of whole life insurance policy has premiums that are adjusted so that during the first years of the policy, the premiums are lower than those of a straight whole life policy, and in subsequent years the premiums are higher than those of a straight whole life policy?
Option A
What universal life option has a gradually increasing cash value and a level death benefit?
The insurance companies general account
When a fixed annuity owner pays a monthly annuity premium to the insurance company, where is the money placed?
Annuitant
When an annuity is written, whose life expectancy is taken into account?
Transfer
When an individual purchases insurance, what risk management technique is he/she practicing?
False Financial Statement
When an insurance agency published an advertising brochure, it emphasized the company's financial stability and sound business practices. In reality, its financial health is terrible, and the company will soon have to file for bankruptcy. Which of the following terms best describes the advertisement?
Indemnity
Which insurance principle states that if a policy allows for greater compensation than the financial loss incurred, the insured may only receive benefits for the amount lost?
Law of Large Numbers
Which law is the foundation of the statistical prediction of loss upon which rates for insurance are calculated?
Payor Benefit
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?
Issuing sales material with exaggerated statements about policy benefits
Which of the following best describes a misrepresentation?
Taxes are deferred
Which of the following best describes taxation during the accumulation period of an annuity?
Business Entity
Which of the following could be used when a corporation, association, partnership or limited liability partnership acts as a producer?
Notice Regarding Replacement
Which of the following documents must be provided to the policyowner or applicant during policy replacement?
Medical background
Which of the following information about the applicant is NOT included in the General Information section of the application for insurance?
Reciprocal
Which of the following insurance options would be considered a risk-sharing arrangement?
Any exchange made under Section 1035 of the Internal Revenue Code must be completed within 30 days.
Which of the following is NOT true of Section 1035 Policy Exchanges?
Benefits stop at the annuitant's death.
Which of the following is NOT true regarding an annuity certain?
Substandard Risk
Which of the following types of risk will result in the highest premium?
The Medical Information Bureau
Which of the following would provide an underwriter with information concerning an applicant's health history?
Family Term Rider
Which rider, when attached to a permanent life insurance policy, provides an amount of insurance on every family member?
Replacement rule
Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance?
Rating the financial strength of insurance companies
Which services are associated with Standard & Poor's and AM Best?
Insurers
Who makes up the Medical Information Bureau?
Straight life
Your client is planning to retire. She has accumulated 100,000 in a retirement annuity, and now wants to select the benefit option that will pay the largest monthly amount for as long as she lives. As her agent you should recommend...
