Final Exam Unknown Q&A

Question 1

According to the Taft-Hartley Act, group insurance premium payments made by an employer MUST be paid to the

Answer 1

Trust

Question 2

An insurance applicant with a below average likelihood of loss is typically considered to be a

Answer 2

Preferred risk

Question 3

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

Answer 3

C) represent the insured

Question 4

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

Answer 4

A) recording receipt and remittance of premium due to the insurance company

Question 5

Which dividend option would an insurer invest the policy owner’s money and add any interest earnings as the dividends accrue?

Answer 5

Accumulation at Interest Option

Question 6

The principle of insurance interest, in regards to a life insurance contract, is accurately described in which statement?

Answer 6

Insurance interest can be based on the love and affection of individuals related by blood or law

Question 7

In an insurance contract, the applicant’s “consideration” is the

Answer 7

Statements made in the application and the premium

Question 8

Under the Michigan Insurance Code, Chapter 45, financial loss can be defined as

Answer 8

Loss of income

Question 9

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

Answer 9

C) incontestable clause

Question 10

Which contract element is insurance interest a component of?

Answer 10

Legal purpose

Question 11

Before operating under an assumed name, the producer MUST notify the

Answer 11

Commissioner

Question 12

The statement which best describes the relationship between the premiums of a whole life policy and the premium payment period is

Answer 12

The shorter the payment period, the higher the premium

Question 13

All of the following activities requires an insurance producer’s license EXCEPT
A) underwriting
B) negotiating
C) selling
D) soliciting

Answer 13

A) underwriting

Question 14

A policy owner is prohibited from making any changes to the policy without the beneficiary’s written consent under which beneficiary designation?

Answer 14

Irrevocable beneficiary

Question 15

A life insurance application may be backdated to

Answer 15

Save on premiums

Question 16

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

Answer 16

C) a promotional item with the producer’s name and address valued at $5.00

Question 17

Fixed period settlement options are considered to be a form of a(n)

Answer 17

Annuity

Question 18

A rider that assures premiums will be paid on a juvenile policy until the child reaches a specific age is called a(n)

Answer 18

Payor rider

Question 19

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

Answer 19

B) underwriting

Question 20

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

Answer 20

90

Question 21

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

Answer 21

B) family term insurance rider

Question 22

What is the purpose of the Medical Information Bureau (MIB)?

Answer 22

To help underwriters evaluate risk

Question 23

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

Answer 23

D) income tax is typically not owed on proceeds paid directly to a beneficiary

Question 24

In order for a contract to be valid, it must

Answer 24

Contain an offer and acceptance

Question 25

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

Answer 25

D) deferred compensation

Question 26

What kind of life insurance policy issued by a mutual insurer provides a return of divisible surplus?

Answer 26

Participating life insurance policy

Question 27

A life insurance claim which involves a per capita distribution of policy proceeds would be payable to the

Answer 27

Named living primary beneficiaries

Question 28

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?

Answer 28

Results

Question 29

The free-look provision gives the policy owner

Answer 29

The right to return the policy for a full refund within a specified number of days

Question 30

Upon receiving a producer complaint, the commissioner may immediately

Answer 30

Issue a cease and desists order

Question 31

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

Answer 31

C) insurable interest can be established sufficiently by sentimental attachment alone

Question 32

An individual most likely will have an insurable interest in insuring a person’s life if

Answer 32

An economic interest exists for the continuance of the insured’s life

Question 33

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

Answer 33

B) hazard

Question 34

Ownership of a life insurance policy may be temporarily transferred with a(n)

Answer 34

Collateral assignment

Question 35

Insurance represents the process of risk

Answer 35

Transference

Question 36

In Michigan, a person providing insurance advice to a person or business for a fee is required to hold which license?

Answer 36

Counselor

Question 37

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

Answer 37

A) spendthrift clause