Final Exam Unknown Q&A Flashcards
According to the Taft-Hartley Act, group insurance premium payments made by an employer MUST be paid to the
Trust
An insurance applicant with a below average likelihood of loss is typically considered to be a
Preferred risk
Which of these is NOT the responsibility of a producer?
A) represent the insurer
B) forward application to the insurer
C) represent the insured
D) collect initial premiums
C) represent the insured
Which of the following is an example of a producer’s fiduciary duty?
A) recording receipt and remittance of premiums due to the insurance company
B) determine the rate classification of the insured
C) reviewing policy summary of benefits
D) witnessing applicant’s signature
A) recording receipt and remittance of premium due to the insurance company
Which dividend option would an insurer invest the policy owner’s money and add any interest earnings as the dividends accrue?
Accumulation at Interest Option
The principle of insurance interest, in regards to a life insurance contract, is accurately described in which statement?
Insurance interest can be based on the love and affection of individuals related by blood or law
In an insurance contract, the applicant’s “consideration” is the
Statements made in the application and the premium
Under the Michigan Insurance Code, Chapter 45, financial loss can be defined as
Loss of income
Which of the following protects a policy owner from a misrepresentation cause by an innocent mistake?
A) reinstatement clause
B) entire contract clause
C) incontestable clause
D) nonforfeiture clause
C) incontestable clause
Which contract element is insurance interest a component of?
Legal purpose
Before operating under an assumed name, the producer MUST notify the
Commissioner
The statement which best describes the relationship between the premiums of a whole life policy and the premium payment period is
The shorter the payment period, the higher the premium
All of the following activities requires an insurance producer’s license EXCEPT
A) underwriting
B) negotiating
C) selling
D) soliciting
A) underwriting
A policy owner is prohibited from making any changes to the policy without the beneficiary’s written consent under which beneficiary designation?
Irrevocable beneficiary
A life insurance application may be backdated to
Save on premiums
Under Michigan Law, which of the following would NOT be considered an illegal inducement?
A) sharing commissions with insured
B) paying premiums for the insured
C) a promotional item with the producer’s name and address valued at $5.00
D) $100 gift to the insured
C) a promotional item with the producer’s name and address valued at $5.00
Fixed period settlement options are considered to be a form of a(n)
Annuity
A rider that assures premiums will be paid on a juvenile policy until the child reaches a specific age is called a(n)
Payor rider
Which of the following pertains to the analysis of an applicant’s personal information and determining whether insurance should be issued or declined?
A) adverse calculation
B) underwriting
C) risk classification
D) actuarial determination
B) underwriting
A producer has allowed his/her license to lapse by failing to complete the required continuing education credits. The license may be reinstated by completing the requirement by _____ days of the renewal date
90
Which of these riders will pay a death benefit if the insured’s wife dies?
A) guaranteed insurability rider
B) family term insurance rider
C) family whole insurance rider
D) payor benefit rider
B) family term insurance rider
What is the purpose of the Medical Information Bureau (MIB)?
To help underwriters evaluate risk
Which of the following is considered a major tax advantage of life insurance?
A) tax credits are available for life insurance premiums paid
B) annual earnings are tax free
C) premiums are tax deductible by an employee if paid for by an employer
D) income tax is typically not owed on proceeds paid directly to a beneficiary
D) income tax is typically not owed on proceeds paid directly to a beneficiary
In order for a contract to be valid, it must
Contain an offer and acceptance
All of the following are examples of a Business Continuation Plan EXCEPT
A) key person insurance
B) cross-purchase agreement
C) stock redemption plan
D) deferred compensation
D) deferred compensation
What kind of life insurance policy issued by a mutual insurer provides a return of divisible surplus?
Participating life insurance policy
A life insurance claim which involves a per capita distribution of policy proceeds would be payable to the
Named living primary beneficiaries
Kurt is an active duty serviceman who was recently killed in an accident while home on leave. Which military service exclusion clause would pay upon his death?
Results
The free-look provision gives the policy owner
The right to return the policy for a full refund within a specified number of days
Upon receiving a producer complaint, the commissioner may immediately
Issue a cease and desists order
In regards to a life insurance contract, which of the following statements is NOT true regarding the concept of insurable interest?
A) individuals are assumed to have insurable interest in themselves
B) insurable interest is established by a court of law
C) insurable interest can be established sufficiently by sentimental attachment alone
D) insurable interest must exist at the time of the application
C) insurable interest can be established sufficiently by sentimental attachment alone
An individual most likely will have an insurable interest in insuring a person’s life if
An economic interest exists for the continuance of the insured’s life
Which of the following is considered to be an event or condition that increases the probability of an insured’s loss?
A) risk
B) hazard
C) indemnity
D) peril
B) hazard
Ownership of a life insurance policy may be temporarily transferred with a(n)
Collateral assignment
Insurance represents the process of risk
Transference
In Michigan, a person providing insurance advice to a person or business for a fee is required to hold which license?
Counselor
Which of these ensures that proceeds of a life insurance policy will be free from attachment or seizure by the beneficiary’s creditors?
A) spendthrift clause
B) protection clause
C) viatical clause
D) settlement clause
A) spendthrift clause
