MI LIFE PRODUCTION FINAL EXAM 2024 WITH
ACTUAL CORRECT QUESTIONS AND VERIFIED
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Elizabeth owns a universal life insurance policy with a $100,000 cash value for which she pays a $1,400
annual premium. If she loses her job and decides not to make a premium payment, which one of the
following is most likely to occur assuming Elizabeth wishes to keep the policy in force?
The policy stays in force as long as the cash value will cover the monthly deductions and
charges.//Elizabeth can decrease or skip premium payments. As long as the policy's cash value covers
the monthly deductions and charges, the policy remains in force.
Fixed annuity death benefits differ from life insurance benefits in what respect?
Annuity benefits are subject to income tax.//Unlike life insurance death benefits, annuity death benefits
are not received tax free. Any amount the beneficiary receives that exceeds the sum of the premiums
paid into the contract is taxable to the beneficiary.
Stacey is a captive agent for Best Rates Insurance Company. Her agency contract gives her permission to
print and use business cards with the company's logo and submit applications for its policies. Which type
of authority does Stacey have to take these actions?
express//The agency contract between Stacey and Best Rates Insurance Company sets forth certain acts
and duties that she is specifically authorized to perform, such as submitting applications and using the
company's logo. This authority is called express authority.
A policy owner of a lapsed policy can take the reduced paid-up nonforfeiture option unless the lapsed
policy was which of the following?
universal life policy//Unlike other permanent policies, universal life policies normally do not contain the
standard nonforfeiture options for policy lapses because universal life insurance remains in force as long
as the cash value allows the insurer to make a monthly deduction to cover the policy's insurance and
operational costs.
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,How can a life insurance policyowner use his policy's cash value to help fund his retirement without
incurring any taxes on the transaction even if the cash value exceeds his basis in the policy?
He can use the cash value to buy an annuity through a 1035 exchange.//He can use the cash value to
buy an annuity and avoid incurring any tax, even if the cash value exceeds the basis in his contract,
through a Section 1035 exchange.
Which of the following statements regarding participating life insurance policies is correct?
They are eligible for policy dividends.//Participating life insurance policies are eligible for policy
dividends when they are declared by the insurer.
Stephanie is a policyowner who pays premiums monthly. How does her insurer cover the cost of sending
her more frequent premium notices?
The insurer charges higher premiums.//For policyowners who choose a premium mode other than
annual, insurance companies add a modest fee to the gross annual premium to reflect lost interest and
increased administrative costs.
Justine leaves her position with her employer on March 1. She wants to convert her employer's group
life insurance coverage to an individual policy. In order to convert her group coverage, she must apply
for an individual policy no later than what date?
March 31//In order to convert group coverage to an individual policy, a person must apply for the
individual policy and pay its first premium within 31 days of leaving the group.
If a policyowner partially surrenders an adjustable life insurance policy, which of the following happens?
The premium goes down.//Adjustable life insurance partial surrenders are a surrendering of a portion of
the policy, with a proportionate reduction of the policy's death benefit and a reduction in the future
premium.
Acme Insurers recently started an advertising campaign in Michigan for its new life insurance policies.
Which statement is TRUE?
Acme can compare its products to competitors only if such comparisons are fair and complete.//An ad
cannot make unfair or incomplete comparisons of policies or benefits offered by other insurers.
Sasha, Kendall, Adam, and Julio are licensed producers in Michigan. The Director would NOT be able to
suspend or revoke which producer's license for engaging in the following acts?
Sasha, who sold insurance policies to family members and friends this year//The Director can revoke or
suspend the licenses of producers who engage in all of the other listed acts but cannot suspend or
revoke a license because a producer sells insurance to family and friends.
For what purpose are annuities used most often?
retirement planning//People use annuities most often for retirement planning purposes: to accumulate
retirement savings and/or to pay out retirement funds on a periodic basis for a period that can be
guaranteed to last as long as they do.
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,Bill owns an indeterminate premium whole life insurance policy. Which one of the following statements
about his policy is most correct?
Bill's premium will never be higher than the maximum level that the insurer guaranteed when it issued
his policy.//Premium adjustments may be made as often as once a year, though this varies by insurer.
The new rate is guaranteed to never increase beyond a maximum rate specified in the contract.
Harry is diagnosed with a cognitive disorder. To become eligible for payments under his policy's long-
term care rider, which condition must he meet?
within the past 12 months, a physician-certified that his health or safety would be at risk without
supervision//To qualify for a cognitive reason, the insured must be physician-certified, within the
previous 12 months, that his or her health or safety would be at risk without supervision.
What is the main disadvantage of designating the insured's estate as the beneficiary of a life insurance
policy?
It places the policy benefits into the estate where they are subject to creditors and estate taxes.//The
main disadvantage to a trust designation is that it places the policy proceeds into the estate, making
them subject to the claims of creditors and estate taxes.
Emily postpones buying a life insurance policy, believing that her family will use its savings to pay her
final expenses if she dies prematurely. Which method is she using to deal with risk?
retention//Rather than taking measures to reduce the risk to her family, such as buying life insurance,
Emily has chosen to accept the exposure to the risk. This method of handling risk is known as risk
retention.
Astrid, a licensed producer, meets with a prospective client to review his insurance needs. When Astrid
senses that he is reluctant to buy the policy she recommends, she reminds him that the policy is
protected by the Michigan Life and Health Insurance Guaranty Association. Which statement is true
about Astrid's conduct?
It is prohibited in all cases.//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.
Which of the following may receive dividends on his life insurance policy?
David, who owns a participating whole life policy issued by ABC Mutual Insurance Company//Mutual
companies are owned by their policyowners. Shares of mutual companies are not publicly traded, and
when mutual companies declare dividends, they are paid to the policyowners.
Frank, an insurance counselor, is about to meet with a new client to review the client's insurance
coverage. Before the meeting begins, Frank is required to do all of the following EXCEPT:
Assure the client that he will receive the lowest premium rate possible//Before rendering any
counseling services, a counselor must prepare a written agreement to be signed by both the counselor
and the client. This agreement outlines the work to be performed and the fee to be paid. It must also
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, state that the fee cannot be waived and that the counselor will earn a commission from the insurer for
placing insurance. A counselor must keep a copy of an agreement for at least two years.
When completing an application for life insurance, Andrew states that he is 39 years old, though he is
actually 45. When the insurer discovers this, what will it probably do?
adjust the benefits//If the insured misstates his or her age on the life insurance application and the
premium was based on the misstatement, the insurer will adjust the benefits to reflect what the
premium would have purchased for the correct age.
The basic purpose for two-tiered fixed annuities is to encourage contract owners to:
annuitize their contract at retirement//A two-tiered deferred annuity creates an incentive to annuitize
the contract by crediting a higher rate of interest on contracts that are annuitized than on those that are
surrendered or depleted through periodic withdrawals.
A life insurance policy cannot be backdated more than how long before the original application was
made?
six months//A life insurance policy cannot be backdated more than six months before the original
application was made.
Mary has a life insurance policy with a rider that will let her stop paying premiums should she become
totally disabled. Which of the following policy riders makes this possible?
waiver of premium rider//Under the waiver of premium rider, the policy's premiums are waived if the
insured becomes totally disabled for a period stated in the rider.
Which of the following statements regarding third-party ownership of a life insurance policy is correct?
The insured has no rights in the policy.//In a third-party arrangement, all rights are held by the
policyowner (which is someone other than the insured).
During the underwriting period, an insurance company can provide the applicant with limited,
temporary coverage through either a conditional receipt or:
a temporary insurance receipt//An alternative to the conditional receipt that insurers sometimes use in
their application process is a temporary insurance receipt.
The life insurance Buyer's Guide helps prospective buyers determine all of the following EXCEPT:
most qualified insurer//The life insurance Buyer's Guide helps prospective buyers determine what kind
of insurance they need, how much insurance they should buy, and how to find a suitable policy that best
suits their needs and objectives.
As the policyowner, Mark can pledge or transfer ownership of his life insurance policy through which of
the following means?
assignment//The method Mark uses to pledge or transfer ownership is called assignment.
Agent Tom just sold a Medicare supplement policy to his client, Matilda. Which of the following acts
would violate his fiduciary duties?
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