MI Life Producer Final Exam Questions
& Answers Correct!!
Which of the following can be funded with a single premium payment, a series of fixed
premium payments, or flexible premium payments? - ANSWERSdeferred
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.
How does the cost of group life insurance generally compare to the cost of individual life
insurance? - ANSWERSGroup life is less expensive.//Per unit of benefits or coverage,
group life insurance is less expensive than individual life insurance because it has lower
administrative and operational costs.
Which of the following statements about the 'accumulate at interest' policy dividend
option is correct? - ANSWERSThe insurer credits a rate of interest to the dividends as
they remain on deposit with the insurer.//The insurer credits a rate of interest to the
dividends as they remain on deposit with the insurer.
When it comes to choosing a financial instrument to fund a qualified retirement account,
which of the following features makes an annuity the most suitable product? -
ANSWERSretirement income that is guaranteed for life//All qualified retirement plan
assets enjoy tax-deferred growth and tax-deductible deposits, and many offer a variety
of investment choices, but only a deferred annuity can be converted to an income
stream that is guaranteed for life.
The term used to describe the voluntarily surrender of a known right is: -
ANSWERSwaiver//Waiver is voluntarily giving up a known right. If an insurer voluntarily
gives up a legal right that it has under an insurance contract, it cannot deny a claim
based on a violation of that right. Estoppel involves giving up a right without intending to
do so. A party surrenders a right that it failed to preserve.
Social Security benefit amounts are most directly based on a worker's: -
ANSWERSaverage indexed monthly earnings//The amount of Social Security OASDI
benefits that a covered worker is entitled to is based on the person's average indexed
monthly earnings, which are the average of a worker's lifetime earnings on which FICA
taxes were imposed.
Producers must inform consumers about the practices that insurance companies will
use in their review and underwriting processes. Typically, these processes include all of
the following, EXCEPT: - ANSWERSusing phone taps//For information about their
applicants, insurance companies look to such sources as an attending physician's
statement (APS), investigative agencies, credit agencies, and the MIB ' but not phone
taps.
, Insurance agents are often called: - ANSWERSproducers//Insurance companies sell
their products through agents or producers who either represent one insurance
company exclusively or are independent and represent several insurers.
Actuaries calculate net single premiums based on which of the following? -
ANSWERSmortality and interest assumptions//The net premium, which is the insurer's
estimated cost to provide the policy's benefits without accounting for its expenses, uses
the factors of mortality and interest but excludes the expense load factor.
Which of the following statements is true for variable life insurance policies? -
ANSWERSThe insurer does not guarantee the policy's cash value.//The insurer does
not guarantee amounts invested in separate subaccounts, so the whole value of the
policy is not guaranteed.
Life insurance policies are generally prohibited from including provisions that would do
any of the following EXCEPT: - ANSWERSrequire the policyowner to notify the insurer if
he or she assigns the policy to a third party//The only provision among these options
that could be included in a policy is one requiring the policyowner to notify the insurer if
he or she assigns the policy to a third party. The other provisions are typically prohibited
by state law.
Jerry names a trust as the beneficiary of his life insurance. When Jerry dies, how will
this trust work? - ANSWERSThe insurer pays the death benefit to the trustee who
manages the assets for the trust's beneficiaries, named by Jerry when the trust was
formed.//A trust can be the beneficiary of a life insurance policy. The insurer pays the
trustee, who manages the assets for the trust's beneficiaries.
Which of the following statements regarding Keogh (HR-10) qualified plans is correct? -
ANSWERSThe plan must comply with the same maximum contribution and benefit
limits applicable to other qualified plans.//Keogh plans today are treated the same way
as corporate plans with respect to maximum contribution and benefit limits, participation
and coverage requirements, and nondiscrimination requirements.
When calculating the surviving family's ongoing cash needs at the death of the
prospective customer, the agent must consider all of the following expenses EXCEPT: -
ANSWERSthe insured's funeral expenses//Paying for the insured's funeral is an
immediate lump-sum cash need, not an ongoing cash need.
Life insurance is commonly used for all the following purposes, EXCEPT: -
ANSWERSLife insurance is used to make up for the financial losses that might occur
with the death of an important customer.//While life insurance serves a number of
important purposes in the business market, making up for the death of a big customer is
not one of them.
& Answers Correct!!
Which of the following can be funded with a single premium payment, a series of fixed
premium payments, or flexible premium payments? - ANSWERSdeferred
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.
How does the cost of group life insurance generally compare to the cost of individual life
insurance? - ANSWERSGroup life is less expensive.//Per unit of benefits or coverage,
group life insurance is less expensive than individual life insurance because it has lower
administrative and operational costs.
Which of the following statements about the 'accumulate at interest' policy dividend
option is correct? - ANSWERSThe insurer credits a rate of interest to the dividends as
they remain on deposit with the insurer.//The insurer credits a rate of interest to the
dividends as they remain on deposit with the insurer.
When it comes to choosing a financial instrument to fund a qualified retirement account,
which of the following features makes an annuity the most suitable product? -
ANSWERSretirement income that is guaranteed for life//All qualified retirement plan
assets enjoy tax-deferred growth and tax-deductible deposits, and many offer a variety
of investment choices, but only a deferred annuity can be converted to an income
stream that is guaranteed for life.
The term used to describe the voluntarily surrender of a known right is: -
ANSWERSwaiver//Waiver is voluntarily giving up a known right. If an insurer voluntarily
gives up a legal right that it has under an insurance contract, it cannot deny a claim
based on a violation of that right. Estoppel involves giving up a right without intending to
do so. A party surrenders a right that it failed to preserve.
Social Security benefit amounts are most directly based on a worker's: -
ANSWERSaverage indexed monthly earnings//The amount of Social Security OASDI
benefits that a covered worker is entitled to is based on the person's average indexed
monthly earnings, which are the average of a worker's lifetime earnings on which FICA
taxes were imposed.
Producers must inform consumers about the practices that insurance companies will
use in their review and underwriting processes. Typically, these processes include all of
the following, EXCEPT: - ANSWERSusing phone taps//For information about their
applicants, insurance companies look to such sources as an attending physician's
statement (APS), investigative agencies, credit agencies, and the MIB ' but not phone
taps.
, Insurance agents are often called: - ANSWERSproducers//Insurance companies sell
their products through agents or producers who either represent one insurance
company exclusively or are independent and represent several insurers.
Actuaries calculate net single premiums based on which of the following? -
ANSWERSmortality and interest assumptions//The net premium, which is the insurer's
estimated cost to provide the policy's benefits without accounting for its expenses, uses
the factors of mortality and interest but excludes the expense load factor.
Which of the following statements is true for variable life insurance policies? -
ANSWERSThe insurer does not guarantee the policy's cash value.//The insurer does
not guarantee amounts invested in separate subaccounts, so the whole value of the
policy is not guaranteed.
Life insurance policies are generally prohibited from including provisions that would do
any of the following EXCEPT: - ANSWERSrequire the policyowner to notify the insurer if
he or she assigns the policy to a third party//The only provision among these options
that could be included in a policy is one requiring the policyowner to notify the insurer if
he or she assigns the policy to a third party. The other provisions are typically prohibited
by state law.
Jerry names a trust as the beneficiary of his life insurance. When Jerry dies, how will
this trust work? - ANSWERSThe insurer pays the death benefit to the trustee who
manages the assets for the trust's beneficiaries, named by Jerry when the trust was
formed.//A trust can be the beneficiary of a life insurance policy. The insurer pays the
trustee, who manages the assets for the trust's beneficiaries.
Which of the following statements regarding Keogh (HR-10) qualified plans is correct? -
ANSWERSThe plan must comply with the same maximum contribution and benefit
limits applicable to other qualified plans.//Keogh plans today are treated the same way
as corporate plans with respect to maximum contribution and benefit limits, participation
and coverage requirements, and nondiscrimination requirements.
When calculating the surviving family's ongoing cash needs at the death of the
prospective customer, the agent must consider all of the following expenses EXCEPT: -
ANSWERSthe insured's funeral expenses//Paying for the insured's funeral is an
immediate lump-sum cash need, not an ongoing cash need.
Life insurance is commonly used for all the following purposes, EXCEPT: -
ANSWERSLife insurance is used to make up for the financial losses that might occur
with the death of an important customer.//While life insurance serves a number of
important purposes in the business market, making up for the death of a big customer is
not one of them.
