Personal Property

In the state of Michigan a person applying for an insurance producer license must fulfill the following criterion EXCEPT:
Submit a completed application indicating the type of license desired
Be at least 18 years of age
Complete a program of study registered with the Commissioner
Pay a nonrefundable application fee of $75
An insurance producer is able to receive licensing in a variety of area, but not:
Credit
Personal Property
Variable Life
Accident and Health or Sickness
For individuals practicing law in Michigan, an insurance adjuster license is not needed to adjust loss or damage under a policy of insurance. In which one of the following scenarios is a license also NOT needed?
Persons adjusting a loss or damage under a policy within his control
Paralegals working for a licensed attorney
Employees of savings and loan banks
Employees of an insurer

Question 4
After obtaining a written agreement from his or her client a licensed insurance counselor is able to perform which of the following acts?
Provide advice with respect to promised benefits, afforded coverage, terms, or advantages of a policy
Advertise himself as an insurance counselor
Audit policies of insurance
All of the above
What is the main function of a managing general agent or MGA?
Reissues binding insurance contracts
Negotiates insurance contracts with an insurer on behalf of a client
Negotiates and binds ceding reinsurance contracts on behalf of an insurer

How does an agent receive a limited license?
By indicating the desired line of insurance to the licensing board after passing all necessary exams
Signifying on his application that he is applying for a limited license

An business entity wishing to act as an insurance producer must first obtain a license by doing all of the following EXCEPT:
Completing the required three month review period

Which of the following is not true when the Commissioner contracts with nongovernmental entities to perform ministerial functions related to producer licensing?
The Commissioner must issue an insurance agency license to an affiliate of a lender
The Commissioner must issue an agent license to an individual who is an employee of the affiliate
The commissioner must provide notice to the Commissioner of the financial institutions bureau of any acquisition of an insurance agency
The Commissioner may issue a temporary insurance producer license for a period not to exceed 180 days without requiring an examination if the Commissioner considers it necessary in order to provide insurance services in all of the following cases EXCEPT:
Any other person in an extenuating circumstance where public interest will be best served by granting a temporary license
To the surviving spouse or adult child of an insurance producer who dies or becomes disabled in order to allow adequate time for the sale of the insurance business, to train another insurance producers, or to allow time for recovery

As long as education requirements for resident individual producers are met by the due date An insurance producer license must remain in effect unless which of the following takes place?
The license is suspended

Licensees must inform the Commissioner by any means acceptable to the Commissioner of a change of legal name or address within how many days of the change?
30 days

An insurer that terminates a contract with an insurance producer must notify the Commissioner
Providing misleading information on license application
Misappropriation of money
Failing to pay taxes
All of the above

With regard to assumed names, which of the following statements is the correct rule?
An insurance producer doing business under any name other than the producers legal name must notify the Commissioner prior to using the assumed name.

An applicant must have completed a program of study within what time frame of the receipt of the application?
4 months
2 years
1 year
6 months

 

 
The Commissioner may require a reinsurance intermediary-manager or a managing general agent to file a bond in an acceptable amount from an acceptable insurer for the protection of the reinsurer or insurer. What is the acceptable amount?
$15,000
$10,000

The Commissioner will serve a formal charge, including his findings and a cease and desist order to a person who has committed any of the following acts EXCEPT:
Violated a regulation
Engaged in methods of unfair competition
Committed a felony

An insurer selling automobile insurance may terminate an insurance producers license for which of the following reasons:
Failure to perform the provided contract terms
Malfeasance
All of the above

The Commissioner may impose any of the following penalties for violations of the rules EXCEPT:
Payment of a civil fine not to exceed $500 for each unknowing violation
Suspension or revocation of license
A refund of any overcharges
Payment of a civil fine up to 3,500 for willful violations
The person whose duties include personally superintending the duties of his office, evaluating and approving applications for licenses and promulgating rules and regulations necessary to further the purposes of the established statutory rules is known by what formal title?
Chief Officer
Secretary of Insurance
Commissioner
An authorized insurer must be issued by the Commissioner a certificate of authority in order to ____________ in Michigan.
Practice
provide insurance
transact insurance

An insurer must maintain unimpaired capital and surplus in an amount not less than ________.
$3,000,000
$5,000,000
$750,000
$7,000,000

Rates are subject to all of the following regulations EXCEPT:
If the insurer has not received notice of disapproval within 10 days, the rates are considered approved.

Insurance policy forms may not be issued to any person unless a copy of the form is filed with the insurance bureau and is approved by the Commissioner as conforming to which of the following rules?
Forms must obtain a readability score of 30 or more
Issuing a form without the approval of the Commissioner may result in a fine of $25 for each offense, not to exceed $500 total.

Failure to pay claims on a timely basis or to pay interest on late payments constitutes unfair claims settlement practices, unless what takes place?
The Commissioner issues an exemption for extenuating circumstances
The insured dies or no longer seeks payment of due claims
A court of law renders judgment and the person pays the insured all entitled benefits

 

If the insurer terminates the appointment, he must notify the Commissioner within __ days and mail a copy of the notification to the terminated producer within __ days.
45, 15
60, 30
30, 15

A person is forbidden from conducting insurance business without a license, unless the person is:
Acting only for a fraternal benefit society authorized to transact insurance in Michigan
Devoting less than 50% of his time to selling insurance
All of the above

All of the following acts fall under prohibited conduct EXCEPT:
A person maintaining or operating an office transacting insurance business, if they fail to comply to the state regulations
A solicitor failing to, in a timely manner, turn over all money owed
An agent selling insurance not by means of intimidation or threats

 

No insurer may pay a commission to a person who ______________________________.
is not licensed
is not employed by the insurer
is also insured by the insurer
is not, but is required, to be licensed

An agent may not accept payment of a premium for a Medicare supplemental policy in the form of __________________.
a check or money order made payable to the agent instead of the insurer

Which of the following is NOT a penalty the Commissioner may impose for unfair insurance trade practices?
A refund of any overcharges
Charge an insurance producer with criminal negligence

No insurance producer may make a statement which misrepresents the terms of a contract, including the _________ benefits and required premiums, or __________ intended to deceive.
insurance, a claim
required, a promise
necessary, a claim
promised, an estimate

To avoid deception what three criteria must advertisements meet?
Complete, clear, and truthful

No insurance producer may make any misrepresentation for the purpose of inducing a policyholder to ___________________________.
lapse on his current insurance
overpay on his current policy
lapse on his current insurance and take out another policy.

If, after investigation by an independent public accountant, the insurer is found to have misstated his financial condition, the board of directors and the Commissioner must be notified within how many business days?
10
7
30
5

No insurance producer may make an oral or written statement which is false or maliciously critical of the financial condition of any person, and which is calculated to injure. Included in this are advertisements which may not perform which of the following?
disparage competitors
disparage competitors policies
disparage competing methods of marketing business
all of the above

No insurance producer may unfairly discriminate between individuals of the same class, same hazard, and equal expectation of life with regards to what area?
rate charged for the policy
the amount of premium rates
underwriting standards
all of the above

The Commissioner may refuse to grant or renew a license if he determines that it is ________ that the business of the applicant will give rise to indirect rebating of commissions, meaning paying people in order to induce them to buy insurance policies.
possible
definite
probable

In order to assure compliance with insurance regulations the Commissioner may conduct examinations of:
Directors of insurers
Stock brokers
All of the above

Fraudulent insurance acts includes acts committed by any person knowingly and with an intent to ______.
injure, defraud, or deceive

Any person who commits a fraudulent insurance act is guilty of a felony and may be subject to what penalties?
Imprisonment not to exceed 4 years or a fine not to exceed $100,000
A fine not to exceed 25,000
Imprisonment not to exceed 5 years
Imprisonment not to exceed 4 years or a fine not to exceed $50,000, or both
Under what circumstance is an insurer NOT required to give a privacy notice to the insured?
If the insurer does not disclose any nonpublic personal financial information to any nonaffiliated third party and the insurer does not have a customer relationship with the consumer
If a notice has already been provided by an affiliated insurer
All of the above

Consumer credit reports with fraud alerts may not be used for credit or insurance applications without what other component?
Permission from the Commissioner
Consent of the consumer

In order to monitor all financial transactions, prohibit correspondent account with foreign shell banks, and report all suspicious activity to the government insurance companies must now use what mechanism?
Suspicious person report
Anti-money laundering program
What is the main function of a managing general agent or MGA?
Reissues binding insurance contracts
Negotiates insurance contracts with an insurer on behalf of a client
Negotiates and binds ceding reinsurance contracts on behalf of an insurer
How does an agent receive a limited license?
By indicating the desired line of insurance to the licensing board after passing all necessary exams
Signifying on his application that he is applying for a limited license
With regard to assumed names, which of the following statements is the correct rule?
An insurance producer doing business under any name other than the producers legal name must notify the Commissioner prior to using the assumed name.

An applicant must have completed a program of study within what time frame of the receipt of the application?
4 months
2 years
1 year
6 months

Failure to pay claims on a timely basis or to pay interest on late payments constitutes unfair claims settlement practices, unless what takes place?
The Commissioner issues an exemption for extenuating circumstances
The insured dies or no longer seeks payment of due claims
A court of law renders judgment and the person pays the insured all entitled benefits

Question 49
If the insurer terminates the appointment, he must notify the Commissioner within __ days and mail a copy of the notification to the terminated producer within __ days.
45, 15
60, 30
30, 15
The person whose duties include personally superintending the duties of his office, evaluating and approving applications for licenses and promulgating rules and regulations necessary to further the purposes of the established statutory rules is known by what formal title?
Chief Officer
Secretary of Insurance
Commissioner
Blanket disability insurance covers all of the following categories EXCEPT:
Students and teachers
Passengers on any carrier

The term preexisting condition may not ___________________.
be used in a way that implies coverage beyond the terms of the policy
be used in a policy being advertised
be used without an appropriate accompanying definition

If an outline of coverage is given to a prospective applicant for life insurance and that outline includes: a description of the benefits provided by the policy, a list of the exclusions and limitations, a statement that the outline is just a summary and the actual policy should also be read, and an explanation of the return policy then what necessary component is the outline missing?
Nothing, all components are present
A timeline of the policy
A credit report
A statement of the continuation terms

Insurers may not require an asymptomatic applicant to undergo genetic testing before issuing a policy, however what may the insurers require of an applicant regarding genetic information?
That the applicant undergoes a physical
That the applicant discloses whether genetic testing has already been conducted
That the applicant answers questions about family history

If a group disability coverage is replaced by a policy which contains a preexisting condition limitation and covers 10 or more employees then the new policy coverage ______________________
may be less than the coverage of the replacement policy without the preexisting condition limitation
may not be less than the coverage of the replacement policy with the preexisting condition limitation
may or may not be less than the coverage of the replacement policy depending on the preexisting condition
may not be less than the coverage of the replacement policy without the preexisting condition limitation

In the state of Michigan the preexisting condition exclusion does not apply to individuals who have had health insurance coverage for at least ___________ and have not had a break in coverage of more than ____ days.
1 year, 30
12 months, 63

In order to void a claim or deny coverage misstatements, with the exception of fraudulent misstatements, must be used within what time period after the policys date of issue?
5 Years
2 years
1 year
3 years

Other than weekly and monthly premium policies what is the grace period entitled to the insured to pay the first premium?
31 days

What is the correct procedure for filing claims? a) Indemnities are paid; b) Insurer must provide the claimant proof of loss forms within 15 days; c) Written notice of claim is given to the insurer within 20 days of the occurrence of a loss covered by the policy; d) Written proof of loss is received by the insurer within 90 days of the end of the liability period.
A, C, B, D
C, B, D, A

How many times does the insurer have the right to examine the person of the insured?
None
Only as many as a licensed medical doctor deems necessary
As often as required within reason
No action at law or in equity may be brought to recover on this policy prior to the expiration of 60 days after what has taken place?
The insurer has received written proof of loss

If after changing to a more hazardous occupation the insured is injured what is the outcome?
The insured is still required to pay the premiums of the current policy
The insured would be required to pay higher premiums as a result of changing to the more hazardous occupation

What is the insurer liable for if the insured has taken out a second policy with another insurer which covers the same loss on a provision of service basis or on an expense incurred basis, and the insured has not given written notice to the insurer of the first policy?
Nothing
The half of the dollar amount the first insurer would have been liable for had the insured not taken out a second policy
The proportion of the loss which would otherwise have been payable plus the total of the like amounts under all such other valid coverages

If a provision of an individual health insurance policy conflicts with the laws of Michigan what then is the status of the provision?
The policy provision takes precedence over the Michigan statute
It is void and has no legal standing
It is amended to conform with the minimum statutory requirements of Michigan law
Insurers providing expense-incurred medical policies typically must renew the policy at the option of the individual, however there is no guarantee for renewal if any of the following acts take place EXCEPT for:
Lack of payment
Failure to qualify for the policy

With regards to Disability income and related insurance policies an insurer is not liable to pay the total monthly amount of loss of time benefits promised for the same loss if it is more than the monthly earnings of the insured. But the insurer may not reduce benefit amounts below what sum?
$100
$500
$350
$200

If an insurance policy which provides hospital care for the insured and his dependents contains a provision for termination of a dependent of a certain age from the policy then what, if any, is a possible option for the dependent on that policy?
The dependent may not remain on the policy as a dependent
If the dependent is incapable of self-support then the policy holder can submit proof within 31 days after the child has reached the termination age in which case the dependent will remain on the policy

If a group disability coverage is replaced by a policy which contains a preexisting condition limitation and covers _____ or more employees, the new policy coverage may not be less than the coverage of the replacement policy without the preexisting condition limitation.
10

To what percentage of those approved must the premium rates for individuals who purchase a comparable group conversion policy be limited to?
200%
150%
120%
What is the range of employees any person, firm, corporation, partnership, limited liability company, or association actively engaged in business must have on at least 50% of its working days during the preceding and current calendar years in order to fit the definition of a small business?
5-100
30-Jan
Feb-50

All insurers must have a policy containing all of the following benefits EXCEPT:
Coverage under Medicare Parts A and B for the cost of the first 3 pints of blood
Upon exhaustion of Medicare hospital inpatient coverage, coverage of 50% of the Medicare Part A expenses
If an insurer providing Medicare supplement insurance wishes to use any written, radio, or television advertisement they must first file a copy with the Commissioner how many days prior to the advertisements desired publication date?
60 days
30 days
50 days
45 days

When recommending the purchase of a Medicare supplement policy, the insurer must ___________________________.
make every effort to ensure the policy fits the needs of the consumer
make reasonable efforts to determined whether or not it is appropriate for the consumer

Each Medicare supplement policy must contain an outline of coverage, a description of limitations on referrals to restricted network providers, a description of the Medicare select insurers quality assurance program and grievance procedure as well as which of the following?
A list of local medical providers
Description of preexisting conditions not covered
Description of restricted network provisions

Applications for Medicare supplement policies contain questions on received disability or Medicare benefits. What is the purpose of this practice?
To ensure the consumer receives the most comprehensive policy
To understand the consumers complete medical history
To discover if the consumer qualifies for an insurance policy
To ensure the policy does not duplicate benefits already offered to the person by Medicare

 
A unilateral contract is:
A contract that makes a promise or promises in exchange for a performance
An individual medical plan is usually a:
A contract of adhesion

A one-sided agreement whereby you promise to do (or refrain from doing) something in return for a performance (not a promise) is what type of contract?
A conditional contract
A contract of adhesion
A unilateral contract

A contract that heavily restricts one party while leaving the other free (as some standard form printed contracts), and implies inequality in bargaining power is:
A unilateral contract
A conditional contract
An aleatory contract
A contract of adhesion

An insurance policy is a legal contract, based on contract law. It is a contract where _____________ is exchanged for valuable consideration (i.e. premiums).
An expectation
A promise of benefits

Kathy is filling out an insurance application. Her broker has explained to her that the statements made in the application are held to a principle of _______________, which means they are not guaranteed to be true.
Rescission
Subrogation
Warranties
Representation

What gives the insurance company the right to assume rights of the insured in order to sue a responsible third party when damages are inflicted on the insured?
Concealment
Warranties
Subrogation

Simon has applied for insurance by completing an application and paying the initial premium. This is considered which of the following?
A completed contract
An acceptance
A conditioned contract
A consideration and an offer to buy

Ben is making application for a health insurance policy. He has been treated for heart problems in the past, but he answers no to” Have you ever had heart problems”. Ben is guilty of:
Breach of contract
Fraud
Concealment

In an insurance contract, which concept refers to the fact that the value given by the two parties is unequal?
Aleatory contract

Which of the following concepts refers to the option that one party can set aside a contract:
Aleatory
Unilateral
Voidable
Both Unilateral and Voidable

What essential element of the contract is violated by an agent who solicits to sell to an individual who has difficulty understanding what the agent is selling?
Competent parties

Sometimes the values given by two parties are unequal. This is called which of the following?
Reimbursement
Indemnity
Aleatory

What happens when you combine the principles of waiver and estoppel?
Nothing, waiver and estoppel are real estate terms
Another form of a waiver is created
A known right is voluntarily relinquished
Insurance policies are legal contracts. How do life and/or health insurance contracts differ from other insurance contracts?
They are contestable for up to two years
The producer does not have the authority to bind the insurer
Both of the above

Because insurance policies are legal contracts, they are subject to the general law of contracts. Which of the following elements is not necessary for the formation of a valid contract under the law?
Agreement
Consideration
Insuring Clause

Certain rules of construction are used to interpret a contract. All of the following are among the five main areas commonly used by the court when reviewing contracts EXCEPT:
Conditions

When looking at insurance contract characteristics, it is important to know that an exchange of a promise for a promise is called –
Unilateral
Bilateral

Because she gets paid on the 15th, Julia routinely pays her insurance premium (due on the 5th) late. Her policy was cancelled for nonpayment of premium. Does Julia have a legal leg to stand on to contest the decision by the insurer to cancel her policy?
No – the premiums should be paid on time
Yes – if she has a good lawyer
Yes – because the insurer accepted late payments previously

Which of the following is not true about the Utmost Good Faith characteristic of an insurance contract?
Both parties are entitled to rely on the representations of each other to conceal and deceive

Unlike other types of insurance contracts, life insurance is not –
A transferable contract
A conditional
A voidable
A personal contract

Mark was afraid that he might fail the physical exam that was required for his insurance policy, so he had his brother Robert, a marathon runner, take the exam for him. This is an example of –
False pretenses

If an insurance matter goes to court for interpretation, health insurance contracts are held to the principle of indemnity. This means –
They pay fixed periodic income to policyholders that become disabled.
They reimburse the insured for the amount of financial loss, but the insured cannot profit from the loss.

Which of the following could result in an insurance contract being voided?
Concealment
Fraud
Recission
All of the above

All of the following statements are true regarding the Parol (oral) Evidence Rule EXCEPT:
It limits the impact of waiver and estoppel by disallowing oral evidence made before the contract was created.
Oral evidence is not admissible in court to change or contradict an existing contract
Oral evidence is never admitted

Sally sees her policy has no maximum benefit for life, but she will not receive more that $100,000 in benefits in any one calendar year. This is known as:
Lifetime maximum
Annual maximum

An annual maximum benefit will provide the following:
A lifetime benefit of $3,000,000
No specified life time amount but a limited benefit for each year
Horace owns a health insurance policy that will not pay benefits unless he is confined to the hospital. This type of contract is known as a:
Non-cancellable contract
A unilateral contract
A contract of adhesion
A conditional contract

A participating policy (par) usually pays dividends. Most health insurance policies:
Pays dividends until claims are paid
Do not pay any dividends

A health policy has an outline of coverage. All of the following would be included in the outline of coverage EXCEPT:
Contractual provisions

Cafeteria plans may offer which of the following?
Flexible spending accounts
Tax shelter for premiums paid on chosen coverage
Options to choose coverage that meets the individual’s needs
All of the above

Ajax Manufacturing has a self-funded group health plan and believes it can lower administrative costs from those charged by an insurance company for processing claims. Which type of organization should Ajax use to process claims?
Third Party Administrator (TPA)

An outline of coverage will include all of the following EXCEPT:
Exclusions and limitations
Renewal and cancellation provisions
Calculation of premium

All of the following are correct concerning Blue Cross and Blue Shield plans EXCEPT:
Blue Cross and Blue Shield Plans are exempt from state insurance regulations

Eddie has an accidental death and dismemberment policy for $100,000 principal amount. He is involved in a logging accident and his hand is severed. What benefit should he expect?
$100,000 since this a complete loss of the hand
Nothing since logging is an excluded industry
$50,000 since this is the benefit for losing a hand

James is in an auto accident and breaks his arm and has blurred vision for a short period of time. He has a $100,000 Accidental Death and Dismemberment policy. What benefit can he expect from this accident?
$50,000 for a broken arm
$25,000 for temporary loss of vision
$0 since he did not die or lose a limb, and his vision loss was temporary

The outline of coverage in a policy contains all of the following EXCEPT:
Policy benefits
Limitations and exclusions
Conditions of renewability
Future value of the policy

Jennifer’s employer offers her the opportunity to choose from a variety of group benefits. She can choose the plans that best meet her needs while declining to participate in components of the plan. The type of plan she is being offered is called which of the following?
HMO
PPO
Free lunch program
Cafeteria Plan

Which of the following best describes a TPA?
An organization that processes claims for a self-funded group plan

An accidental death and dismemberment policy will cover all of the following EXCEPT:
Hospital expense

Final Rest Mutual is an insurance company that processes and pays claims for ABC Company’s self-funded health plan. This arrangement is know as:
Third Party Administration (TPA)
Cost plus benefits (CPB)
Exclusive Provider Organization (EPO)
Administrative Services Only (ASO)

Jack has an accidental death and dismemberment policy. He can expect benefits for all of the following EXCEPT:
An emergency appendectomy

Health insurance will provide benefits for all the following EXCEPT:
Living too long

Larry is in an accident and he loses one hand and one eye. He has an Accidental Death and Dismemberment policy for $200,000 principal sum. What should he expect for his benefit?
$50,00 for each loss
$100,000 total
$400,000 since this is a double dismemberment
$200,000 since this is the principal sum

Leon has decided to self-insure his medical plan through an insurance company. This will pay his claims and administer the other features of the plan for a set fee plus claims paid. This arrangement is known as which of the following?
Third Party Administration (TPA)
Administrative Services Only (ASO)

Health insurance may be sold on a participating or a non-participating basis. Which of the following is true about participating policies?
Dividends amounts are guaranteed
Dividends will always be the same as the projected schedule
The insured has a choice of whether his policy will be participating or not
Dividends are paid year to year and the amount of the payment is not guaranteed

Statistics indicate that women under age 55:
Have a greater frequency of disability than men

All of the following are true about health insurance deductibles EXCEPT:
Higher deductibles limit smaller claims
Higher deductibles tend to lower premiums
Deductibles continue to increase as the cost of healthcare services increase
Deductibles vary on a employer group plan depending on the risk of the individual employee
State University will offer what kind of plan to enrolled students?
Blanket health plan
A representation is
A guarantee that all statements