Michigan Life Insurance BUNDLED State Exam Questions and Answers 100% Correct | LATEST 2023-2024

Michigan Life Insurance State Exam | 150
Questions and Answers 100% Correct
Under a traditional IRA, interest is taxed:
Only if withdrawn prior to age 59 1/2
According to the capital gains rate
Upon distribution
During the accumulation phase – Answer Upon distribution
Which of these statements concerning Traditional IRAs is CORRECT?
Earnings are not taxable when withdrawn
Earnings are taxable when withdrawn
Contribution are never tax deductible
Contributions are always made by the employer – Answer Earnings are taxable
when withdrawn
Which of these describes the result of a modified endowment contract that failed
to meet the seven- pay test?
Policy loans are disallowed
The premium payments will be tax deductible
Pre- death distributions are typically taxable
Withdrawals will be prohibited – Answer Pre- death distributions are typically
taxable

In order for a contract to be valid, it must
be filled with the state
be signing and witnessed by an attorney
be in writing
contain offer and acceptance – Answer Contain offer and acceptance
Which of the following actions is REQUIRED by a producer who is replacing an
existing life insurance policy?
Keep replacement records on file for at least 10 years
Notify the existing insurer of the proposed replacement
Submit to the replacing insurer a list of the policies to be replaced
Offer the insured a 60- day free- look period – Answer Submit to the replacing
insurer a list of the policies to be replaced
Who were Keogh plans designed to provide pension benefits for?
Corporate officers
Public school employees
The self-employed
Government employees – Answer The self emplyed
A producer’s fiduciary duty requires that
premiums are maintained in a personal bank account until remittance to insurer
premiums be deposited in an interest bearing account

premiums are forwarded to the insurer on a timely basis
premiums be commingled – Answer Premiums are forwarded on a timely
basis
An individual who removes the risk of losing money in the stock market by never
purchasing stocks is said to be engaging in
Risk reduction
Risk Transference
Risk avoidance
Risk retention – Answer Risk avoidance
A type of group that has a constitution and has been organized for purposes other
than obtaining insurance is called a(n)
employer group
employee group
association or labor group
multiple coalition – Answer association or labor group
Which of the following is NOT a federal requirement of a qualified plan?
Must benefit a broad cross-section of employees
Employee must be able to make unlimited contributions
Vesting schedule must be defined

Employer establishes the plan – Answer Employee must be able to make
unlimited contributions
The acceptance of a credit life application requires the submission of a certificate
of insurance to the insured within __ days.
10
20
30
40 – Answer 30
What does the Group Life underwriting risk selection process help protect
insurance companies from?
Risk aversion
Natural selection
Adverse selection
Risk Management – Answer Adverse Selection
A guaranteed issue insurance policy has no
initial premium requirement
incontestable period
waiting period
medical underwriting – Answer Medical Underwriting
A Universal Life policyowner must receive a notice of cash surrender value at
LEAST every

Michigan life insurance state exam answer
key With Complete Solutions | 100% Correct
Which is TRUE regarding the annuitant, when the annuitant is NOT the policy
owner?

1. The annuitant has the right to name the beneficiary
2. The annuitant is the person paying the premiums
3. The cash value is available to the annuitant for withdrawals
4. Annuity payments will be based on the annuitants life expectancy – Answer
   Annuity payments will be based on the annuitants life expectancy
   Signing an applicants name for insurance is known as…?
5. Concealment
6. Defamation
7. Coercion
8. Forgery – Answer 4. Forgery
   Failure to pay a penalty assessed by the commissioner may result in…?
9. Revoked or suspended license
10. Require the license to retake the examination
11. Complete 5 extra hours of continuing education
12. Pay a late charge of 1.5% – Answer 1. Revoked or suspended license

Two business business partners own life insurance, which or the following allows
the surviving partner to use death benefit to purchase the deceased owners
share?

1. Buy-sell agreement
2. Key employee life insurance
3. Business continuation
4. Accidental death – Answer 1. Buy-sell agreement
   Policy owner surrenders a policy for its cash value, when is tax liability incurred?
5. The cash value exceeds all premiums paid
6. The cash value is less than premiums paid
7. The policy is exchanged for a policy of equal value
8. The party is transferred to a third party – Answer 1. The cash value exceeds
   all premiums paid
   When is insurable interest required?
9. At time of claim
10. At time of application
11. In event of a policy loan
12. Within the first year of death – Answer 2. At the time of application
    Which of the following best describes a single premium cash policy?
13. It requires only one payment to make the policy paid up
14. It provides for only one premium to be paid without evidence of insurability
15. It waives one future premium of the owner becomes disabled
16. It requires the policy owner to pay one premium annually – Answer 1. It
    requires only one payment to make the policy paid up
    When life insurance is funded by contributions to a qualified retirement…
17. Premiums are taxable
18. Death benefits are taxable
19. The insurance must be incidental to the plan
20. Death benefits are paid to the employer – Answer 1. Premiums are taxable
    How does a graded premium whole life policy differ from a modified premium?
21. It increase the premium annually during the first several years of the policy
22. It increase the premium annually for the duration of the policy
23. It increases the premium once during the duration of the policy
24. It has lower premium for the duration of the policy – Answer 1. It has a
    lower premium for the duration of the policy
    Which of the following is NOT true about converting a group policy into an
    individual policy?
25. The converted policy must be the same amount as the group coverage
26. Group policies must include a guarantee of conversion
27. Coverage continues during the conversion period
28. Proof of insurability must be required – Answer 4. Proof of insurability must
    be required
    Before doing business under an assumed name, who must the producer first
    notify?
29. Insured
30. insurer
31. Commissioner
32. Insurance agency – Answer 3. Commissioner
    Which writer allows you to purchase additional insurance without underwriting or
    specific dates?
33. Guaranteed renewability
34. Guaranteed insurability
35. Cost of living
36. Disability income – Answer 2. Guaranteed insurability
    Which of the following is a life insurance contract written on the life of an
    individual?
37. Insurance
38. Survivorship policy
39. Joint life contract
40. Single life insurance – Answer 4. Single life Insurance

Final Exam-Michigan Life and Health | with
Well Explained Answers 100% correct
What amount will be paid under a policy where the insured misstated his/her
age? – Answer an amount the premium would have purchased at the correct
age
the acceptance of a credit life application requires the submission of a certificate
of insurance to the insured within_____ days – Answer 30 days
which of these is considered to be a Living benefit option in a life insurance policy

• Answer Accelerated death benefit
  loans obtained by a policy owner against the cash value of a life insurance policy –
  Answer would not be treated as taxable income
  A long term care policy typically provides all of the following levels of care EXCEPT
• Answer acute care
  the elimination period under a hospital indemnity plan is – Answer the
  specific # of days an insured must wait before becoming eligible to receive
  benefits for each hospitalization
  what is an insurance policy’s grace period? – Answer Period of time after the
  premium is due but the policy remains in force
  How do interest earnings accumulate in a deferred annuity – Answer On a taxdeferred basis
  a licensee who is required to take continuing education Must include how many
  ethics coursework hours – Answer 3

the automatic premium loan provision authorizes an insurer to withdraw from a
policy’s cash value the amount of – Answer Past due premiums that have not
been paid by the end of the grace period
health insurance involves two perils, accident and __ – Answer sickness
Who is responsible for assembling the policy forms for insureds – Answer
Insurance carriers
a securities license is required for a life insurance producer to sell – Answer
variable life insurance
Which of the following is NOT an illegal inducement – Answer giving the
insured an article of merchandise printed with the producers name costing 5$
Which of the following is NOT a federal requirement of a qualified plan? –
Answer employee must be able to make unlimited contributions
Which dividend option would an insurer invest the policy owner’s money and add
any interest earnings as the dividends accrue? – Answer Accumulation at
interest option
a health insurance policy will typically cover – Answer preventative health
services
a life insurance policy owner was injured in a car accident which results in a total
and permanent disability. which rider would pay a monthly amount because of
this disability? – Answer Disability income rider
in addition to the actual policy, an entire contract includes which of the following?

• Answer the application
  field underwriting preformed by the producer involves – Answer completing
  the application and collecting initial premium

Kathy pays a monthly premium on her health insurance policy. How long is her
grace period? – Answer 10 days
Pierre is covered by his employer’s group major medical plan. His employer pays
for 75% of the premium and he pays for 25%. How much would a $10,000 benefit
be taxable as income under this plan? – Answer 0$
-benefits that fall under a major medical plan are considered to be a
reimbursement for a loss, and is not taxable as income
After an insured gives notice of loss, what must he/she do if the insurer does not
furnish forms? – Answer file a written proof of loss
Under long term care insurance, which of the following MUST an insurer offer to
each policy owner at the time of purchase? – Answer An inflation protection
feature
What is the primary factor that determines the benefits paid under a disability
income policy? – Answer Wages
What is the tax liability for employer contributions in Health Savings Accounts
(HSA’s)? – Answer No tax payment needed
-Employer paid contributions to HSA’s are tax free to the employee
In the state of MI, properly filed health claims are not timely paid require the
insurer to pay simple interest from a date 60 days from satisfactory proof of loss
at the rate of? – Answer 12% annum
In MI, legal action can be taken against an insurer for failure to pay HEALTH
insurance claims for a period not to exceed – Answer 3 years
Donald is the primary insured of life insurance policy and adds a children’s term
rider. What is the advantage of adding this rider? – Answer Can be converted
to permanent coverage without evidence of insurability

Michigan Life and Health Final Exam Actual
Questions and Answers {100% Answered
Graded A+}
Making a statement that is false or maliciously critical of the financial condition of
an insurer is known as – Answer defamation
Which type of business insurance is meant to cover the costs of continuing to do
business while the owner is disabled? – Answer Business overhead expense
policy
Dorian exercised a nonforfeiture option by using his life policy’s cash value to
purchase an extended term insurance option. When the term insurance expires, –
Answer the protection ends
To receive proceeds from a death benefit, a minor – Answer must have an
appointed guardian
Under a life insurance policy, what does the insuring clause state? – Answer
The insurer’s obligation to pay a death benefit upon an approved death claim
When can a group health policy renewal be denied according to the Health
Insurance Portability and Accountability Act (HIPAA)? – Answer When
contribution or participation rules have been violated
What is the purpose for having an accelerated death benefit on a life insurance
policy? – Answer It allows for cash advances to be paid against the death
benefit if the insured becomes terminally ill
Which type of life insurance offers flexible premiums, a flexible death benefit, and
the choice of how the cash value will be invested? – Answer Variable universal
policy

An immediate annuity has been purchased with a single premium. When does the
annuitant typically begin receiving benefit payments? – Answer 1 month
Consumer privacy regulations permit the release of an insured’s financial
information when – Answer an authorized agency makes a written request to
the insurer during an insurance fraud investigation
The free-look provision gives the policyowner – Answer the right to return the
policy for a full refund within a specified number of days
Joanne has a $100,000 whole life policy with an accumulated $25,000 of cash
value. She would like to borrow $15,000 against the cash value. Which of the
following statements is TRUE? – Answer Net death benefit will be reduced if
the loan is not repaid
Tara the producer is delivering a specified disease insurance policy to a new
policyowner. Upon delivery, she may be expected to collect all of the following
EXCEPT a(n) – Answer modified application with a new signature
Which of the following is considered to be the period when the accumulated
value in an annuity is paid out? – Answer Annuitization phase
The entity that has the power to revoke a producer’s insurance license is the –
Answer Department of Insurance and Financial Services (DIFS)
The statement which best describes the relationship between the premiums of a
whole life policy and the premium payment period is – Answer The shorter
the payment period, the higher the premium
A life insurance policy that is subject to a contract interest rate is referred to as –
Answer universal life
Which of these factors would an insurer consider when determining whether to
accept a group life plan? – Answer Average age

According to HIPAA, when an insured individual leaves an employer and
immediately begins working for a new company that offers group health
insurance, the individual – Answer is eligible for coverage upon hire
An insured has a stop-loss limit of $5,000, a deductible of $500, and an 80/20
coinsurance. The insured incurs $25,000 of covered losses. How much will the
insured have to pay? – Answer $5,000
Barbara’s policy includes a rider which allows her to purchase additional insurance
at specific dates or events without evidence of insurability. This rider is called a(n)

• Answer Guaranteed insurability rider
  What is an insurer required to do when faced with an error made under the
  Misstatement of Age provision? – Answer Pay age-corrected benefits
  The unfair trade practice of replacing an insurance policy from one insurer to
  another based on misrepresentation is called – Answer twisting
  Which type of annuity stops all payments upon the death of the annuitant? –
  Answer Life annuity
  An insurer’s ability to make unpredictable payouts to policyowners is called –
  Answer liquidity
  The taxable portion of each annuity payment is calculated using which method? –
  Answer Exclusion Ratio
  Group dental plans will frequently place a limit on annual benefits in order to
  minimize – Answer adverse selection
  An insurer has the right to recover payment made to the insured from the
  negligent party. These rights are called – Answer subrogation
  What will the beneficiary receive if an annuitant dies during the accumulation
  period? – Answer The greater of the accumulated cash value or the total
  premium paid

MI Life Insurance Exam Questions and Answers
With Complete Solutions 2023-2024
In which of the following must a beneficiary change request be filed in writing to
the insurer and is made effective by the insurance company recording the change
in its records?

1. Designation Option
2. Recording method
3. Endorsement method
4. Succession of beneficiaries – Answer recording method
   All of the following are common exclusions from loss found in disability income
   policies EXCEPT for that incurred while
5. serving in the military
6. living overseas
7. committing a misdemeanor
8. piloting a personal aircraft – Answer committing a misdemeanor
   What procedure is used by an insurer to protect itself in the event a dispute arises
   and the applicant and the agent do not recall the changes that were made in a
   completed application?
9. The applicant and possibly the agent initial any changes made.
10. The applicant and the agent sign a document that outlines changes made.
11. An arbitration agreement is signed at the time of the signing of the application.
12. All changes must be approved by the underwriter prior to the submission of the
    application. – Answer The applicant and possibly the agent initial any changes
    made
    How might someone cover the extra expenses of child care and home-related
    costs?
13. adding coverage of a grandparent
14. adding cost of living coverage
15. purchasing family term insurance
16. purchasing a substitute insured rider – Answer purchasing family term
    insurance

Which policy type is backed by equity investments and allows the policyholder to
adjust the death benefit?

1. term life
2. variable life
3. regular whole life
4. variable universal life – Answer variable universal life
   Which policy provision permits the policyowner to take a specified number of
   days to examine the contract, and allows for cancellation and a full refund if the
   policyowner rejects the terms or costs?
5. Exclusions
6. Free look
7. Grace period
8. Insuring Clause – Answer free look
   All life insurance and health insurance contracts contain all of the following
   EXCEPT
9. policy face
10. insuring clause
11. conditions
12. representations – Answer Representations
    How do warranties differ from representations?
13. a warranty is guaranteed to be true, a representation is believed to be true to
    the best of one’s knowledge.
14. a representation is guaranteed to be true, a waranty is believed to be true to
    the best of one’s knowledge.
15. a warranty is issued by the insurer, a representation is a statement provided by
    the applicant.
16. an incorrect representation automatically voids a contract, whereas an
    incorrect waranty must be proven. – Answer a warranty is guaranteed to be
    true, a representation is believed to be true to the best of one’s knowledge.
    Which of the following is the time limit on certain defenses after which the policy
    becomes incontestable?
17. 12 months