MI LIFE PRODUCER FINAL EXAM WITH
CORRECT ACTUAL QUESTIONS AND
CORRECTLY WELL DEFINED ANSWERS
LATEST 2024 – 2025 ALREADY GRADED A+
What is insurable interest? - ANSWERS-Insurable interest is the relationship
between the person applying for life insurance and the person whose life is to be
insured. It is a necessary element in the issuing of a life insurance
contract.//Insurable interest represents the financial impact that would be
incurred by the loss of the insured person or property. Without it, an insurance
policy is a speculative investment and speculative risks are not insurable.
A policyowner repeatedly declines the opportunity to increase her disability
income policy benefits through its benefit increase rider. She suffers a loss that
would have been covered under the rider. May she sue the insurance company to
increase the policy benefit? - ANSWERS-No, because the policyowner waived her
right to exercise the rider benefit when the opportunity to do so was available to
her.//By waiving her right to increase policy benefits when the opportunity to do
so was present, the insured is estopped from exercising the right later on.
Larry, Brian, Susan, and Jennifer just started working for AllPro Insurance
Company in South Carolina. Based on their job descriptions below, which of them
,is NOT acting as a producer? - ANSWERS-Brian, who is a vice president in AllPro's
human resources department and does not receive commissions//An employee
of an insurer who devotes substantially all of his or her time to activities other
than soliciting insurance applications and who does not receive a commission
based on the amount of insurance business transacted is not acting as an agent.
What does a viatical settlement allow? - ANSWERS-It allows a chronically or
terminally ill insured to gain a sum of money that is needed to pay medical
expenses or to enhance the quality of life.//A viatical settlement allows a
chronically or terminally ill insured to gain a sum of money that might be needed
to pay medical expenses or to enhance quality of life.
If an employer/employee group offers group life insurance on a contributory
basis, what percentage of the group must enroll? - ANSWERS-At least 75 percent
of the group must enroll in the plan//If an employer/employee group life
insurance plan is contributory, 75 percent of the group must enroll in the plan. If
the plan is non-contributory, 100 percent of the group must enroll.
Which of the following is NOT a life insurance premium? - ANSWERS-competitors'
rates//Actuaries base life insurance premiums on three basic factors: mortality (a
charge), interest (a credit), and expenses (a charge).
Jane works for a company that allows employee contributions under a 401(k)
plan. When will Jane become fully vested in her plan contributions? - ANSWERS-
immediately//While employer contributions to a qualified plan can be subject to a
vesting schedule, participants are always fully vested in their own contributions.
,Agents must act in the best interests of applicants and insureds. What does this
require them to do? - ANSWERS-give all important information about a proposed
policy//Agents must act in the applicant's or insured's best interests at all times.
This means that agents must give all important information about a proposed
policy. Also, they cannot misrepresent the terms or conditions of a proposed
policy.
In calculating their mortality charges, life insurers today generally use: -
ANSWERS-the 2001 CSO table//The mortality factor is drawn from mortality
statistics compiled by the National Association of Insurance Commissioners (NAIC)
into a set of rates called the Commissioners Standard Ordinary (CSO) table.
Policies issued since 2009 are required to base their mortality charges on the
2001 CSO table.
All of the following are standard life insurance policy nonforfeiture options
EXCEPT: - ANSWERS-accumulate at interest option//This is a policy dividend
option in which declared dividends are left with the insurer to accumulate
interest on the policyowner's behalf.
Which of the following most correctly describes the nonforfeiture option(s)
available with universal life insurance? - ANSWERS-surrender the policy for its
cash value or stop paying premiums and continue coverage as long as the cash
value will support it//Universal life policies do not contain the standard
nonforfeiture options. Instead, the policyowner can either surrender the policy
for its cash value or continue coverage with no further premium payments, in
which case coverage will last for as long as the cash value is able to support the
policy's monthly mortality and expense charge deductions.
, James wants to convert his $150,000 traditional IRA to a Roth IRA. What best
describes the tax treatment for the Roth conversion? - ANSWERS-The converted
funds are taxed, but Roth IRA earnings and distribution will be tax free.//The
$150,000 from the traditional IRA has been deferred so it will be taxed upon
conversion. However, as long as James holds the new Roth IRA for at least five
years and is older than 59', distributions from the Roth IRA will be tax free.
Under variable life insurance plans, policy loans can be as high as what percent of
the cash value? - ANSWERS-75 to 90 percent//Policy loans under traditional
whole life insurance plans can be as high as 100 percent of the cash value, but
with variable life insurance the maximum loan amount is something less than the
full cash value (e.g., 75 to 90 percent of the cash value), less any debt currently
outstanding against the policy.
Under which nonforfeiture option does permanent life insurance continue in
force with no further need for premiums? - ANSWERS-reduced paid-up option//A
paid-up policy under the reduced paid-up option requires no further premiums
(nor can any be paid). The paid-up policy retains a cash value that will continue to
grow throughout the life of the policy. However, it will grow much more slowly
than during the period that premiums were being paid.
Which of the following can be funded with a single premium payment, a series of
fixed premium payments, or flexible premium payments? - ANSWERS-deferred
annuities//Deferred annuities can be funded with a single premium payment, a
series of fixed premium payments, or with flexible premium payments. Moreover,
the owner can make these payments whenever and in whatever amount he or
she wants.
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