Exam (elaborations)
Michigan Life, Accident, and Health
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Michigan Life, Accident, and Health
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Retirement income annuity - Answers -Deferred annuity with a decreasing term lifeinsurance rider. A retirement income annuity provides both a death benefit (with a
decreasing term rider) and the annuity's surrender value if the annuitant dies before
retirement.
What type of eligible groups for health insurance consists of 2 or more employers or
labor unions? - Answers -MET and MEWA. Multiple employer trusts and multiplier
employer welfare arrangements consist of 2 or more employers or labor unions seeking
group health insurance coverage.
An underwriter will consider which of the following conditions in making their decision to
approve an application for insurance? - Answers -A condition that occurs prior to
making an application for insurance.
MICHIGAN LIFE, ACCIDENT, AND HEALTH
An underwriter should be informed about any conditions that existed prior to an
application for insurance.
Field underwriting is primarily useful to: - Answers -Make observations that could impact
insurability.
The primary value of field underwriting, is that the agent has the opportunity to view the
applicant in his/her surroundings, in person, and make observations regarding
insurability and perhaps class of risk (i.e. is the applicant obese, does he/she have any
obvious dangerous hobbies, does he/she smoke).
Which of the following is a benefit of a prescription drug policy? - Answers -
Prescriptions are for a set, lower price.
Under a prescription policy, prescription drugs are not only at a set price, but a much
lower price - usually $2, $3, or $5, regardless of the actual cost of the drug.
For a non-contributory plan, how many of the employees must be offered coverage
under the group? - Answers -100%
A non-contributory plan is based on the employer paying the full cost of the program,
which means 100% of the employees are covered.
Any of the following is considered advertising for a health insurance company,
EXCEPT: - Answers -Morbidity tables
Morbidity tables are used to determine rates for health products.
,Which of the following is not an element of the nonforfeiture value of a whole life
insurance policy? - Answers -Cash withdrawn does not reduce the face value of the life
policy.
Cash withdrawn from a whole life policy DOES reduce the face value of the policy as
well as the cash value of the policy.
When the only logical beneficiary is a minor, all of the following options are available,
EXCEPT: - Answers -The benefits can go directly to the estate of the insured.
In the event that the only logical beneficiary for a life policy is a minor, the guardian,
trust and insurance company holding the proceeds are all options available.
Steven currently earns $50,000 annually. He has calculated that he should have
approximately $1,500,000 in life insurance to be sure his family is guaranteed the
lifestyle he would provide if he dies. This approach is called: - Answers -Human life
value.
While there is not specific way to determine the worth of one life, using the income one
may earn over the course of ones life is one approach.
When completing an application for insurance, an agent is allowed to do which of the
following: - Answers -Witness the applicants signature.
The agent must be present to witness signatures. The other actions are either
prohibited or functions for others in the underwriting process.
A person becomes eligible for Medicare when: - Answers -Part A is automatic for all
persons reaching Age 65.
When a person reaches age 65, they become eligible for Medicare part A, even if they
continue to work.
Collin intentionally surrendered a right on his contract known as waiver. What prevented
him from reclaiming the right? - Answers -Estoppel.
Waiver is voluntarily surrendering a right, and estoppel is the legal process preventing
the reclaiming of that right.
Which of the following is usually the owner of the annuity? - Answers -The annuitant.
The annuitant is the insured - or person on whose whole life the annuity contract has
been insured. The annuitant is usually also the owner of the annuity.
Term insurance provides: - Answers -Pure protection and is the least expensive form of
insurance.
, Which of the following is NOT an unfair method of competition or a deceptive act in the
business of insurance? - Answers -Replacement.
No insurance producer may enter into any agreement to commit any act of boycott,
coercion, or intimidation. Replacement is not unfair UNLESS it were to involve twisting
or churning.
Which dividend option may offset some or all of the benefit reduction caused by loans
from a participating whole life plan? - Answers -One-year term option.
The one-year term option will purchase up to the amount of the cash value annually.
Which of the following is NOT a right of the owner of a life insurance policy? - Answers -
Changing the irrevocable beneficiary, implementing a verbally agreed change, and
borrowing funds before cash value exists.
Must have cash value to borrow from policy.
What kind of plan uses designated physicians and hospitals for a nominal co-pay and
other providers subject to a deductible and a co-insurance payment. - Answers -A
Preferred Provider Organization (PPO) plan that allows employees to use other
providers with a higher out-of-pocket expense.
As part of most PPO plans, the insured is allowed to choose providers that do not have
contracts with the network and those deductions and co-insurance amounts are higher.
Elements of insurable risks: - Answers -Loss must be by chance or accident, large
number of homogenous units, loss must be predictable.
NOT "Loss must be catastrophic"
Which of the following is not a characteristic of a group life insurance plan? - Answers -
Individual selection benefits.
Group life insurance is available at lower rates than individual insurance because the
administrative, operational, and selling costs associated with group life insurance are
less than those of individual plans. These savings are passed on to group policyholders
in the form of lower premiums.
When does the waiver of premium ride take effect? - Answers -At the moment of
disability.
The waiver of premium rider will waive premiums retroactively (if necessary) to when
the disability occurred.
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