FINAL EXAM-MICHIGAN LIFE AND HEALTH / STUDY GUIDE / LATEST VERSION 2025-2026 /QUESTIONS AND CORRECT ANSWERS / A GRADE
SCORE SOLUTION
defamation ✔️Making a statement that is false or maliciously critical of the financial condition of an insurer is known as
Business overhead expense policy ✔️Which type of business insurance is meant to cover the costs of continuing to do business while the owner
is disabled?
the protection ends ✔️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,
must have an appointed guardian ✔️To receive proceeds from a death benefit, a minor
The insurer's obligation to pay a death benefit upon an approved death claim ✔️Under a life insurance policy, what does the insuring clause
state?
When contribution or participation rules have been violated ✔️When can a group health policy renewal be denied according to the Health
Insurance Portability and Accountability Act (HIPAA)?
It allows for cash advances to be paid against the death benefit if the insured becomes terminally ill ✔️What is the purpose for having an
accelerated death benefit on a life insurance policy?
Variable universal policy ✔️Which type of life insurance offers flexible premiums, a flexible death benefit, and the choice of how the cash value
will be invested?
1 month ✔️An immediate annuity has been purchased with a single premium. When does the annuitant typically begin receiving benefit
payments?
an authorized agency makes a written request to the insurer during an insurance fraud investigation ✔️Consumer privacy regulations permit the
release of an insured's financial information when
the right to return the policy for a full refund within a specified number of days ✔️The free-look provision gives the policyowner
Net death benefit will be reduced if the loan is not repaid ✔️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?
modified application with a new signature ✔️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)
Annuitization phase ✔️Which of the following is considered to be the period when the accumulated value in an annuity is paid out?
Department of Insurance and Financial Services (DIFS) ✔️The entity that has the power to revoke a producer's insurance license is the
The shorter the payment period, the higher the premium ✔️The statement which best describes the relationship between the premiums of a
whole life policy and the premium payment period is
universal life ✔️A life insurance policy that is subject to a contract interest rate is referred to as
Average age ✔️Which of these factors would an insurer consider when determining whether to accept a group life plan?
is eligible for coverage upon hire ✔️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
$5,000 ✔️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?
Guaranteed insurability rider ✔️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)
Pay age-corrected benefits ✔️What is an insurer required to do when faced with an error made under the Misstatement of Age provision?
twisting ✔️The unfair trade practice of replacing an insurance policy from one insurer to another based on misrepresentation is called
,Life annuity ✔️Which type of annuity stops all payments upon the death of the annuitant?
liquidity ✔️An insurer's ability to make unpredictable payouts to policyowners is called
Exclusion Ratio ✔️The taxable portion of each annuity payment is calculated using which method?
adverse selection ✔️Group dental plans will frequently place a limit on annual benefits in order to minimize
subrogation ✔️An insurer has the right to recover payment made to the insured from the negligent party. These rights are called
The greater of the accumulated cash value or the total premium paid ✔️What will the beneficiary receive if an annuitant dies during the
accumulation period?
time deductible ✔️A disability elimination period is best described as a
have a legitimate non-insurance purpose ✔️An association wanting to buy insurance under a group health plan MUST
Talking ✔️In a Long-Term Care policy, activities of daily living (ADL's) can be each of the following EXCEPT
Stock purchase ✔️All of the following are exempt from the 10% tax penalty for early qualified plan withdrawals EXCEPT
represents the insurer ✔️In the state of Michigan, a licensed producer
Giving the insured an article of merchandise printed with the producer's name costing $5 ✔️Which of the following is NOT an illegal
inducement?
100% of his health insurance costs can be deducted from his gross income ✔️Lorenzo is self employed with an S corporation. He is unmarried
and had a net profit for the tax year. What are the tax ramifications of his health insurance premiums paid for the year?
Long Term Care Insurance premiums ✔️The IRS states that a taxpayer's medical expenses that exceed 7.5% of their adjusted gross income is tax
deductible. Which of the following may be considered a medical expense under this rule?
Specified amount of money ✔️What does a life insurance policy guarantee to the stated beneficiary upon the death of the insured?
12% per annum ✔️In the state of Michigan, properly filed health claims that 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
It must include outpatient prescription drug coverage ✔️A Medicare Supplement policy issued in the state of Michigan is required to provide
each of the following EXCEPT
seeks temporary protection and lower premiums ✔️Term insurance is appropriate for someone who
a disease ✔️A fee for service health insurance plan will normally cover
Integrated deductible ✔️Which of the following types of deductibles would apply a single deductible to both medical and dental insurance
coverage?
2 years ✔️When can a life policy no longer be cancelled for nonfraudulent misstatements after its date of issue?
2-50 employees ✔️In Michigan, a small employer is comprised of
Group ✔️A master contract and certificate of coverage can be found in which type of policy?
producing an inadequate amount of new premium ✔️All of the following occurrences may result in license revocation EXCEPT
deductible ✔️Jennifer is required to pay a specific sum out of pocket before any benefits are paid in a year. Her health policy most likely contains
a(n)
mutual ✔️A type of insurer that is owned by its policyowners is called
When the recipient pays the premiums ✔️When are group disability benefits considered to be tax-free to the insured?
No deductible payment is required ✔️When an insured has a major medical plan with first dollar coverage, how does this impact the benefits
paid?
, Entire Contract ✔️What is the name of the provision which states that a copy of the application must be attached to the policy when issued?
intimidation ✔️The unfair trade practice of using threat or force to restrict fair trade in the transaction of insurance is called
Hospital indemnity ✔️Which type of coverage pays an amount per day for hospitalization directly to the insured regardless of the insured's
other health insurance?
Premiums paid plus interest earned is returned to the beneficiary ✔️Andy the annuitant dies before the annuity start date. Which of the
following is a TRUE statement?
Benefits are limited to a specific maximum dollar amount per procedure ✔️With a scheduled dental policy, how are covered expenses paid?
A coinsurance is normally applied to benefits paid
A deductible must be met by the insured before benefits are paid
Benefits are limited to a specific maximum dollar amount per procedure
Covered expenses are fully reimbursed to the insured
1 year ✔️The typical long-term care insurance policy is designed to provide a minimum of __ year(s) of coverage.
1
3
5
7
Noncancellable ✔️Disability Income plans which require that the insurer can NEVER change or alter premium rates are usually considered
Guaranteed Renewable
Optionally Renewable
Conditionally Renewable
Noncancellable
Enroll in a health plan with a prescription drug benefit ✔️All of the following are qualifications for establishing a health savings account (HSA)
EXCEPT
Enrolled in a high deductible health plan
Be under the age of 65 (not enrolled in Medicare)
Enrolled in a health plan with a prescription drug benefit
Enrolled in a health plan that limits out of pocket expenses
Determines what is paid by the primary and secondary insurers in the event of a claim ✔️In group health care, what is the purpose of the
coordination of benefits provision?
Determines where an insured goes to receive treatment
Determines what is paid by the primary and secondary insurers in the event of a claim
Ensures that a health provider receives the proper benefit amount owed
Determines which parent's plan covers a dependent cHild
an unfair claim settlement practice ✔️An insurer, in general business practice, fails to promptly provide a reasonable explanation for the denial
of a claim. This is considered to be
$500 ✔️If an employee contributes 50% toward the disability plan premium provided by an employer, what would be considered the taxable
income of a $1,000 monthly disability benefit?
SCORE SOLUTION
defamation ✔️Making a statement that is false or maliciously critical of the financial condition of an insurer is known as
Business overhead expense policy ✔️Which type of business insurance is meant to cover the costs of continuing to do business while the owner
is disabled?
the protection ends ✔️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,
must have an appointed guardian ✔️To receive proceeds from a death benefit, a minor
The insurer's obligation to pay a death benefit upon an approved death claim ✔️Under a life insurance policy, what does the insuring clause
state?
When contribution or participation rules have been violated ✔️When can a group health policy renewal be denied according to the Health
Insurance Portability and Accountability Act (HIPAA)?
It allows for cash advances to be paid against the death benefit if the insured becomes terminally ill ✔️What is the purpose for having an
accelerated death benefit on a life insurance policy?
Variable universal policy ✔️Which type of life insurance offers flexible premiums, a flexible death benefit, and the choice of how the cash value
will be invested?
1 month ✔️An immediate annuity has been purchased with a single premium. When does the annuitant typically begin receiving benefit
payments?
an authorized agency makes a written request to the insurer during an insurance fraud investigation ✔️Consumer privacy regulations permit the
release of an insured's financial information when
the right to return the policy for a full refund within a specified number of days ✔️The free-look provision gives the policyowner
Net death benefit will be reduced if the loan is not repaid ✔️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?
modified application with a new signature ✔️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)
Annuitization phase ✔️Which of the following is considered to be the period when the accumulated value in an annuity is paid out?
Department of Insurance and Financial Services (DIFS) ✔️The entity that has the power to revoke a producer's insurance license is the
The shorter the payment period, the higher the premium ✔️The statement which best describes the relationship between the premiums of a
whole life policy and the premium payment period is
universal life ✔️A life insurance policy that is subject to a contract interest rate is referred to as
Average age ✔️Which of these factors would an insurer consider when determining whether to accept a group life plan?
is eligible for coverage upon hire ✔️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
$5,000 ✔️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?
Guaranteed insurability rider ✔️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)
Pay age-corrected benefits ✔️What is an insurer required to do when faced with an error made under the Misstatement of Age provision?
twisting ✔️The unfair trade practice of replacing an insurance policy from one insurer to another based on misrepresentation is called
,Life annuity ✔️Which type of annuity stops all payments upon the death of the annuitant?
liquidity ✔️An insurer's ability to make unpredictable payouts to policyowners is called
Exclusion Ratio ✔️The taxable portion of each annuity payment is calculated using which method?
adverse selection ✔️Group dental plans will frequently place a limit on annual benefits in order to minimize
subrogation ✔️An insurer has the right to recover payment made to the insured from the negligent party. These rights are called
The greater of the accumulated cash value or the total premium paid ✔️What will the beneficiary receive if an annuitant dies during the
accumulation period?
time deductible ✔️A disability elimination period is best described as a
have a legitimate non-insurance purpose ✔️An association wanting to buy insurance under a group health plan MUST
Talking ✔️In a Long-Term Care policy, activities of daily living (ADL's) can be each of the following EXCEPT
Stock purchase ✔️All of the following are exempt from the 10% tax penalty for early qualified plan withdrawals EXCEPT
represents the insurer ✔️In the state of Michigan, a licensed producer
Giving the insured an article of merchandise printed with the producer's name costing $5 ✔️Which of the following is NOT an illegal
inducement?
100% of his health insurance costs can be deducted from his gross income ✔️Lorenzo is self employed with an S corporation. He is unmarried
and had a net profit for the tax year. What are the tax ramifications of his health insurance premiums paid for the year?
Long Term Care Insurance premiums ✔️The IRS states that a taxpayer's medical expenses that exceed 7.5% of their adjusted gross income is tax
deductible. Which of the following may be considered a medical expense under this rule?
Specified amount of money ✔️What does a life insurance policy guarantee to the stated beneficiary upon the death of the insured?
12% per annum ✔️In the state of Michigan, properly filed health claims that 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
It must include outpatient prescription drug coverage ✔️A Medicare Supplement policy issued in the state of Michigan is required to provide
each of the following EXCEPT
seeks temporary protection and lower premiums ✔️Term insurance is appropriate for someone who
a disease ✔️A fee for service health insurance plan will normally cover
Integrated deductible ✔️Which of the following types of deductibles would apply a single deductible to both medical and dental insurance
coverage?
2 years ✔️When can a life policy no longer be cancelled for nonfraudulent misstatements after its date of issue?
2-50 employees ✔️In Michigan, a small employer is comprised of
Group ✔️A master contract and certificate of coverage can be found in which type of policy?
producing an inadequate amount of new premium ✔️All of the following occurrences may result in license revocation EXCEPT
deductible ✔️Jennifer is required to pay a specific sum out of pocket before any benefits are paid in a year. Her health policy most likely contains
a(n)
mutual ✔️A type of insurer that is owned by its policyowners is called
When the recipient pays the premiums ✔️When are group disability benefits considered to be tax-free to the insured?
No deductible payment is required ✔️When an insured has a major medical plan with first dollar coverage, how does this impact the benefits
paid?
, Entire Contract ✔️What is the name of the provision which states that a copy of the application must be attached to the policy when issued?
intimidation ✔️The unfair trade practice of using threat or force to restrict fair trade in the transaction of insurance is called
Hospital indemnity ✔️Which type of coverage pays an amount per day for hospitalization directly to the insured regardless of the insured's
other health insurance?
Premiums paid plus interest earned is returned to the beneficiary ✔️Andy the annuitant dies before the annuity start date. Which of the
following is a TRUE statement?
Benefits are limited to a specific maximum dollar amount per procedure ✔️With a scheduled dental policy, how are covered expenses paid?
A coinsurance is normally applied to benefits paid
A deductible must be met by the insured before benefits are paid
Benefits are limited to a specific maximum dollar amount per procedure
Covered expenses are fully reimbursed to the insured
1 year ✔️The typical long-term care insurance policy is designed to provide a minimum of __ year(s) of coverage.
1
3
5
7
Noncancellable ✔️Disability Income plans which require that the insurer can NEVER change or alter premium rates are usually considered
Guaranteed Renewable
Optionally Renewable
Conditionally Renewable
Noncancellable
Enroll in a health plan with a prescription drug benefit ✔️All of the following are qualifications for establishing a health savings account (HSA)
EXCEPT
Enrolled in a high deductible health plan
Be under the age of 65 (not enrolled in Medicare)
Enrolled in a health plan with a prescription drug benefit
Enrolled in a health plan that limits out of pocket expenses
Determines what is paid by the primary and secondary insurers in the event of a claim ✔️In group health care, what is the purpose of the
coordination of benefits provision?
Determines where an insured goes to receive treatment
Determines what is paid by the primary and secondary insurers in the event of a claim
Ensures that a health provider receives the proper benefit amount owed
Determines which parent's plan covers a dependent cHild
an unfair claim settlement practice ✔️An insurer, in general business practice, fails to promptly provide a reasonable explanation for the denial
of a claim. This is considered to be
$500 ✔️If an employee contributes 50% toward the disability plan premium provided by an employer, what would be considered the taxable
income of a $1,000 monthly disability benefit?
