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MI LIFE PRODUCER FINAL EXAM STUDY QUESTIONS AND ANSWERS.
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MI LIFE PRODUCER FINAL EXAM STUDY QUESTIONS AND ANSWERS.
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MI LIFE PRODUCER FINAL EXAM STUDYQUESTIONS AND ANSWERS.
What happens when a universal life insurance policy's cash value no
longer covers the monthly deductions to cover the policy's insurance and
operational costs?
Correct Answer -The policy lapses. //When the cash value no longer
covers those deductions, a universal life insurance policy lapses.
Which of the following parties to a deferred annuity contract is the person
upon whose life the annuity payment amount and duration are based
when the contract is annuitized?
Correct Answer -the annuitant//The annuitant is the person upon whose
life the annuity payment amount and duration are based when the
contract is annuitized. The annuitant and the owner are usually the same
person. However, an owner can choose anyone as the annuitant. The only
restriction is that the annuitant must be a natural person.
In an absolute assignment, what term is used to describe the new
policyowner?
Correct Answer -assignee//The policyowner making the assignment is the
assignor. The person to whom the assignment of rights is made is the
assignee.
The Director will issue a counselor's license to a qualified applicant within
how many days of the application?
Correct Answer -60 days//To be licensed as an insurance counselor, a
person must submit an application to the Director and pass a written
examination. The Director must decide whether to issue the license within
60 days of receiving the application.
,While meeting with her insurance customer, Ben, Ann sees that he is chain
smoking. Yet he notes on his application that he is a nonsmoker. What
should Ann do at this point in the application process?
Correct Answer -insist that Ben be truthful and avoid misrepresentation//A
fraudulent insurance act is committed if a person knowingly and with
intent to defraud misrepresents a material written statement as part of an
application or for any benefit under a policy.
When selling a life insurance policy that replaces an existing policy, the
producer must leave all of the following items with the applicant EXCEPT:
Correct Answer -confirmation that any existing insurers have been notified
of the replacement//The insurer, not the producer, confirms that any
existing insurers are notified of the replacement. However, the insurer is
not required to provide this confirmation to the applicant.
As beneficiary of her husband's life insurance, Beth chooses to receive
payments for life. However, she is guaranteed that the payments will be
made for ten years. Beth has chosen which of the following settlement
options?
Correct Answer -life income with period certain//Under the life income
with period certain, a payee receives income payments for life and
payments are guaranteed to be made for a specified period. If the payee
lives beyond the guarantee period, payments will continue until he or she
dies.
Leslie, Leah, and Lori, each of whom have children, are the daughters of
Bill and have been named primary per stirpes beneficiaries under his life
insurance policy. If Leslie dies before Bill, which of the following will
apply when he dies?
Correct Answer -Leah and Lori will each receive one-third of the death
benefit, and the remaining third will be paid to Leslie's children.//Per
stirpes means that the proceeds of a life insurance policy pass down to the
beneficiary's children if the named beneficiary dies before the insured.
,By submitting a life insurance application without the first premium,
applicant Larry is doing which of the following?
Correct Answer -inviting the insurer to make an offer//When an application
is submitted without a premium, the applicant is effectively inviting the
insurer to make an offer. Accepting delivery of the policy and paying the
first premium is an acceptance of the insurer's offer.
Melanie, a licensed producer, often reminds prospective clients that the
policies she sells are protected by the Michigan Life and Health Insurance
Guaranty Association. Melanie's practice is considered
Correct Answer -Prohibited as an unfair trade practice//It is an unfair trade
practice for anyone to use the existence of the Michigan Life and Health
Insurance Guaranty Association, or the protections the association offers,
for the purpose of selling insurance.
Steve, age 72, owns an IRA. The required minimum distribution (RMD) for
Steve this year was $6,000, but he only withdrew $4,000. Based only on
this information, what penalty tax will Steve have to pay?
Correct Answer -$1000//Because Steve did not take his entire required
minimum distribution for the year, he will have to pay a 50 percent
penalty tax on the shortfall. The amount is determined by taking the
additional amount that he should have received ($2,000) and multiplying
it by 50 percent.
The Director of Insurance may issue a cease and desist order against a
producer for all of the following reasons EXCEPT:
Correct Answer -failing to meet sales quotas//The cease and desist order
must describe the unlawful conduct and direct the person to immediately
stop the conduct. The person may request a hearing within 30 days of the
order. The hearing will then be held within 10 days of the request. The
Director must affirm, deny, or modify the order within five days of the
hearing.
, Most of the combination, or "5th," dividend options involve which of the
following?
Correct Answer -one-year term life insurance//Combination dividend
options involve one-year term insurance.
Billy's parents want to buy a juvenile life insurance policy for their son.
What could they add to the policy to ensure that the insurance stays in
force if a designated parent dies or becomes disabled?
Correct Answer -payor benefit rider//A payor rider ensures that the
insurance stays in force by waiving the premium payment if the premium
payor dies or becomes disabled.
A life insurance policy matures or endows when its guaranteed cash value
equals its face amount. With an endowment contract, when does the policy
endow?
Correct Answer -well before age 120, usually at age 65//Endowment
contracts are a special form of life insurance in which cash values grow
rapidly. As a result, the policy endows well before age 120.
A permanent life insurance policy that requires premiums only to age 65,
at which point the policy is considered paid-up, is basically a:
Correct Answer -limited payment whole life policy//Limited payment
whole life insurance premiums can be paid for 10, 15, or 20 years or, as is
common, to a specified age, such as age 65.
Which of the following is not a potential consequence of replacing a life
insurance policy?
Correct Answer -the possibility of the new insurer cancelling the
replacement policy after it is issued//Though there are several risks
associated with policy replacement, the new insurer canceling the policy is
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