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Michigan Life Accident & Health Exam with correct Answers
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Michigan Life Accident & Health Exam with correct Answers
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Michigan Life Accident & Health Examwith correct Answers
What is considered to be the primary reason for buying life insurance? - Answer -
Provide death benefits
Karen is a producer who has obtained personal information about a client without
having a legitimate reason to do so. Under the McCarran-Feguson Act, what is the
minimum penalty for this? - Answer -$10,000 or up to 1 year in jail
A nonparticipating company is sometimes called a(n) - Answer -Stock insurer, because
policyholders do not participate in dividends resulting from stock ownership.
The Fair Credit and Reporting Act's main purpose is to - Answer -Protect Consumers
with guidelines regarding credit reporting and distribution
What is the primary purpose of a rating service such as A.M Best? - Answer -Determine
financial strength of an insurance company
Fraternal Benefit Society has each of the following characteristics EXCEPT?
- Incorporated
- Without capital stock
- exist for profit
- exist for the benefit of its members - Answer -Exist for profit, FBS are not for profit and
exist for the benefit of its members.
An insurer's ability to make unpredictable payouts to policyowners is called - Answer -
Liquidity
The Do Not Call Registry offers exemptions for calls placed from all of the following
EXCEPT
- Charities
- Political Organizations
- Insurance Sales Calls
- Surveys - Answer -Insurance Sales Calls
A plan in which an employer pays insurance benefits from a fund derived from the
employer's current revenues is called? - Answer -A self-funded plan
,An insurer's claim settlement practices are regulated by the - Answer -State Insurance
Departments
What is known as the immediate specific event causing loss and giving risk to risk? -
Answer -Peril
When a house burns down what would the Peril be? When someone dies what would
the peril be? - Answer -Fire, Death
How do insurers predict the increase of individual risks? - Answer -Law of Large
Numbers
Insurance companies determine risk exposure by which of the following? - Answer -Law
of Large Numbers and Risk Pooling
Insurance represents the process of risk ________________. - Answer -Transference
All of the following are examples of pure risk EXCEPT
-Losing Money at a Casino
-Injured while playing football
-Falling at a casino and breaking a hip
-Jewelry stolen during a home robbery - Answer -Losing Money at a Casino, because
that is speculative risk. Pure risk means loss is the only possible outcome.
Insurable interest does NOT occur in which of the following relationships? - Answer -
Business owner and business client
According to life insurance contract law, insurable interest exists - Answer -at the time of
application
According to the principle of Utmost Good Faith, the insured will answer questions on
the application to the best of their knowledge and pay the required premium, while the
insurer will deal fairly with the insured and it's - Answer -promises made
When the principal gives the agent authority in writing, it's referred to as - Answer -
Express Authority
In an insurance contract, the applicant's "consideration" is the - Answer -Statements
made in the application and the premium
Which type of clause describes the following statement: "We have issued the policy in
consideration of the representations in your applications and payment of the first term
premium". - Answer -Consideration Clause
Legal purpose is a term used in contract law meaning - Answer -there must be legal
reasons for entering into the contract
, In an insurance contract, the element that shows each party is giving something of
value is called - Answer -Consideration
Which of the following is an example of the insured's consideration? - Answer -A paid
premium
What is implied authority defined as? - Answer -Authority that is not specifically given to
an agent in the agency contract, but that an agent can reasonably assume to carry out
his/her duties
All of the following are elements of an insurance policy EXCEPT
- definitions
- other insurance
- claim forms
- conditions - Answer -Claim forms
Intentional withholding of material facts that would affect an insurance policy's validity is
called a(n)? - Answer -Concealment
Which of the following is present when an applicant stands to lose value if the insured
dies? - Answer -Insurable Interest, the applicant is subject to loss upon death, illness, or
disability of the insured.
The power given to an individual producer that is not specifically addressed in his/her
contract is considered what type of authority? - Answer -Implied
What are an applicant's statements concerning occupation, hobbies, and personal
health history regarded as? - Answer -Representation
How are survivorship life insurance policies helpful in estate planning? - Answer -
Provide funds to help pay taxes
Rob purchased a standard whole life policy with a $500,000 death benefit when he was
age 30. His insurance agent told him the policy would be paid up if he reached age 100.
The present cash value of the policy equals $250,000. Rob recently died at age 60. The
death benefit would be - Answer -$500,000
Term insurance is appropriate for someone who - Answer -seeks temporary protection
and lower premiums
Which of the following policies does NOT build cash value? - Answer -Term
The premium for a modified whole life policy is - Answer -lower than the typical whole
life policy during the first few years and then higher than typical for the remainder
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