Michigan Life, Accident, and Health

made by lhutson001 2018

The Commissioner of Insurance is appointed by the Governor for a term of

4 years

All of the following are examples of insurance transactions except:

A. soliciting applications for insurance

B. delivering policies

C. licensing of producers

D. collecting premiums

Correct answer: C - licensing of producers

A temporary license issued to close the affairs of a deceased producer may be issued for up to _____ days at the discretion of the Commissioner

180 days

Continuing Education (CE)

______ hours of CE every two years

______ hours must be in Ethics

______ day grace period to complete CE

24 total hours every two years

3 hours in ethics

90 day grace period

Michigan Life and Health Insurance Guaranty Association

Protects policy holders against failure insolvent insurers

Controlled business

It is permitted provided it does not exceed 15% of the premiums written in a 12-month period

To motivate a buyer to sign an application for insurance, a producer promises a gift equal to 50% of the commission. This is an example of __________.

Rebating

Defamation

A written statement that is false and derogatory that is designed to injure someone's reputation.

The maximum fine for knowingly violating a cease and desist order is $________ and __________________.

$10,000 and possible license revocation

Insurance counselor

Provides advice concerning an insurance policy and charges a fee for that advice.

An applicant who has been denied an insurance license has _____ days to request a hearing to protest the denial.

30 days

True / False

A producer may share commissions with another licensed producer

True

True / False

A producer may not share commissions with a licensed nonresident producer

False

If, after a hearing, the Commissioner believes a producer knowingly violated insurance licensing laws, the Commissioner can:

Fine the producer a max of $2,500 per violation

A producer has a fiduciary responsibility to all of the following:

- Insured on cancelled policies

- Insurer, for premiums due

- Prospective purchaser of insurance, when the application is rejected.

Why can't a producer barter or trade an insurance contract for goods and services?

The insurance product is not the producer's to barter; it belongs to the insured.

How often must the Commissioner examine the books, records, and documents of domestic insurers?

At least once every 5 years

A producer has _____ days to respond to charges of violating insurance laws.

30 days.

If a producer is convicted of routinely misrepresenting benefits in insurance policies, he may be fined up to $_______ for all violations.

$25,000

Under what type of policy does an insured have to be notified if current policy values are insufficient to maintain the policy, given guaranteed interest and expense rates?

Universal Life Insurance

An advertisement for a life insurance policy must include all of the following:

- information material to the insurance policy

- a description of the type of policy advertised

- the identity of the insurer

Implying that policy dividends are guaranteed as an inducement for an insured to drop an existing policy and purchase a new policy is an example of _____________.

Twisting

The minimum number of lives that must be covered under a group life insurance policy in Michigan is ______.

2 lives.

The maximum life insurance policy loan interest that may be charged on a fixed interest loan is ______%.

8%

In life insurance, all advertisements must be kept by the insurer for at least ________ months.

48 months

The maximum life insurance policy loan interest that may be charged on an adjustable rate loan is ______%.

18%

True/ False

A long-term care policy can exclude all of the following:

- Alcoholism

- Drug addiction

- Alzheimer's disease

- Self-inflicted injury

False

A long-term care policy can exclude all alcoholism, drug addiction, and self-inflicted injury. Alzheimer's disease cannot be excluded.

True/False

A long-term care application must include questions that reveal when the proposed coverage will replace other existing health or long-term care coverage.

True

True/False

A Medicare supplement policy can indemnify against losses resulting from accidents on a different basis than losses resulting from sickness.

False - Medicare supplements must indemnify the same way for accidents and sickness.

True/False

A Medicare supplement policy must cover intermediate outpatient care for substance abuse.

True - Intermediate care for substance abuse includes inpatient treatment for drug addiction and alcohol abuse

In Michigan, the free-look or trial examination period for a LTC policy is ______ days.

30

True/False

All LTC policy owners must be offered a cost-of-living benefit adjustment option.

True

Health insurance is in force for newborns from birth and notification must be given within _____ days of birth for coverage to extend beyond that point.

31 days

An individual that is continually insured under a group policy for at least ____ months may convert to an individual policy upon policy termination.

3 months

A person becomes eligible for the federal Medicare program at the age of ____. Coverage must be requested within _____ days before or after the applicant's birthday.

65 years old, 90 days

The Medicare maximum preexisting condition exclusion period is ____ months.

6 months

The free-look period for Medicare supplements and LTC policies is ____ days.

30 days

An employee who works at least _____ hours weekly must be considered an eligible employee for small employer medical plans.

30 hours / week

The number of eligible full-time employees for small group health plans is _____ to _____.

2 to 50 employees

A LTC policy must provide coverage for at least ______ consecutive months.

12 consecutive months

An insurance company must file a notice of appointment or give notice of appointment termination to a producer within _____ days.

15 days

A producer has ______ days to notify the Department of Insurance of any name or address changes.

30 days

Peril

Immediate specific event causing a loss

Hazard

A factor that gives rise to a loss.

The five methods of managing risk are:

STARR (sharing, transfer, avoidance, reduction, retention)

Elimination period

Total # of days an insured must be disabled before income benefits will pay out.

Coinsurance

Shared expenses between the insured and the insurer. The insurer always has the higher %.

Participating insurance company

Pays dividends

Unauthorized/non-admitted

Cannot transact insurance within the state.

Express authority

Explicit authority that an agent has per the written contract

Implied authority

Authority that is not expressly granted in the contract but is necessary in order to conduct business

Apparent authority

Authority the agent seems to have to the general public based on actions undertaken by the agent.

Waiver

Intentional giving up of a right

Aleatory contract

Dependent on an uncertain event

Contract of adhesion

The insurance company drafts the contract wording and the insured simply follows it.

Unilateral contract

The insured makes the premium payments only one party has the responsibility.

Loss Ratio % =

operating expenses / premiums

Contributory

The insured contributes $ to their group plan

____% of eligible employees must participate in a contributory plan.

75%

Non-contributory

Premium is paid entirely by the employer.

____% of eligible employees must participate in a non-contributory plan.

100%

Enrollment period

Time in which you can enroll in benefits without having to undergo medical underwriting. (No evidence of insurability)

Probationary period

The period of time before an employee is eligible to enroll in benefits.

The human life value approach to selling life insurance focuses on an individual's _______________.

An individual's future stream of income. (Annual salary, expenses, years remaining until retirement, future value of current dollars)

The needs approach to selling life insurance focuses on ___________________.

The needs of the survivors. (Funeral expenses, final illness, continuing family income, education)

Blackout period

The pre-retirement period (the time before the insured/spouse is eligible for Social Security)

Fiduciary

Person of financial trust

Reentry Term Insurance

Allows the insured to provide evidence of insurability to qualify for a lower rate.

Level Term Insurance

Fixed face amount, premium may increase over time.

Whole Life - Cash Value

Guaranteed cash value, little cash value in the beginning but increases over time.

Universal life Insurance

Has death protection that resembles 1 year renewable term and cash value that is based on interest rates (current annual rate and contract rate)

Variable Life Insurance

Cash values are not guaranteed and are backed by equity investments. They are regulated as securities by the SEC and FINRA.

Equity Indexed Life Insurance

Policies with face amounts that are linked to an equity index such as S&P 500.

With credit life insurance, the creditor is both the ________ and the _________.

Owner & beneficiary.

Individuals with terminal illnesses are able to sell their life insurance policies to __________.

Viatical companies

Entire contract clause

The policy and copy of the application make up the entire insurance contract.

Life insurance coverage is granted in consideration of the __________ and the payment of the ______________.

Application, initial premium

Payment of premium provision

Specifies when and how premiums are to be paid. The more frequently the premium mode, the more the policy will cost over time.

A life insurance policy contract will permit reinstatement within _____ years of a policy lapsing. Proof of insurability may be required. Reinstatement application must be filed.

3 years

True/False

When calculating the death benefit for a life insurance policy, any outstanding loans and loan interest must be deducted from the face amount.

True

Policy loans may be taken from _____% of the total cash value from whole life policies and ____% to ____% of the total cash value from variable life policies.

90%, 70-90%

A life policy's incontestability period is ___ years. After this time, the insurer CANNOT dispute the validity of the contract

2 years

If the insured dies within the first ___ policy years, there is no coverage. However, premiums that have been paid are refunded to the beneficiary.

2 years (Suicide clause)

The death benefit is adjusted to the amount that the premium would have been in the instance of ________ __ _____.

Misstatement of sex

Revocable beneficiary

Can be changed by the insured at any time without notifying the beneficiary.

Irrevocable beneficiary

Cannot be change without the consent and signature of the beneficiary.

Per Capita

Per person, death benefit is only paid to the people listed in the policy

Per Stirpes

(By way of branches), the death benefit is passed down to the beneficiary's living children.

With a ___________ clause, the death benefit is not distributed in a lump sum and cannot go to a creditor when the funds are held by the insurance company.

Spendthrift clause

The ____________ rider ( _____ ________ rider) pays double the face amount if the insured dies due to an accident. (Within 90 days)

Accidental death, double indemnity

Waiver of premium rider

Premium is waived if the insured becomes permanently and totally disabled. Subject to a waiting period. Does not change the face amount of cash value.

The __________ __________ rider waives premium payments while the inured is disabled and pays a monthly income.

Disability Income Rider

The _______ rider for juvenile policies waives premium payments if the person who pays the premium dies or becomes disabled until the insured is of a certain age.

Payor rider

Annuities are ___________ during the accumulation period, but benefit payments are _________ as income.

Taxed, not taxed

True/False

The basic function of an annuity is to liquidate funds over a specific period of time in order to protect against living too long.

True

A ___________ is given to each covered person under a group life insurance policy.

Certificate of Insurance

Social security excludes:

Railroad workers, federal employees hired before 1984, and employees of state and local government.

To be considered fully insured by Social Security, you must have earned ____ quarters of coverage which is equal to _____ years

40 quarters, 10 years

The elimination period of disability benefits is ____ months and the disability must be expected to result in death or continue for at least 12 months.

5 month elimination period

Up to _____% of Social Security benefits are included in a worker's adjusted gross income for taxes.

85%