MI LIFE PRODUCER FINAL PAPER 2025/2026 QUESTIONS
AND SOLUTIONS MARKED A+
✔✔Which of the following statements regarding Keogh (HR-10) qualified plans is
correct? - ✔✔The 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: -
✔✔the 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: - ✔✔Life
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.
✔✔Assuming no relation other than that stated, in which of the following situations does
insurable interest exist? - ✔✔Al would like to take out a life insurance policy on his
wife.//Insurable interest in personal relationships is generally limited to the applicant and
a member of the applicant's family.
✔✔John buys a $1 million life insurance policy. He dies two years later and the insurer
pays the $1 million benefit. Even though the premiums never came close to the benefit
amount, the insurer pays the full benefit because the insurance policy is type of
contract? - ✔✔a valued contract//Life insurance policies are valued contracts, which
means they pay a stated amount in the event of a loss. Life insurance contracts, unlike
contracts of indemnity, do not try to judge the actual amount of the loss. Because John
bought a life insurance policy insuring his life for $1 million, that is the amount the policy
paid when he died, regardless of the amount he paid in premiums. A contract of
indemnity, on the other hand, limits the benefit to the amount of the insured's actual
loss.
✔✔At age 49, Caleb took a $20,000 distribution from his deferred annuity, of which
$9,000 represents interest earnings. In addition to paying income tax, what else will
Caleb probably have to pay? - ✔✔a penalty tax of $900//To discourage early
withdrawals, a 10 percent penalty tax is imposed on nonannuitized withdrawals before
age 59'. This tax is assessed to the taxable portion of the withdrawal (in this case,
$9,000).
✔✔If a labor union sponsors a group life insurance plan for its members, which of the
following statements is correct? - ✔✔Premiums must be paid entirely from union funds
,or from a combination of union funds and member funds.//If a labor union buys a group
policy to insure its members, the union is the policyowner.
✔✔Variable universal life combines features of variable life and universal life. Variable
universal life and universal life are alike in all of the following ways EXCEPT: - ✔✔Both
are considered securities products as well as life insurance.//Variable universal life
policies are considered securities products as well as life insurance. Universal life
insurance is not a security; it is a fixed interest flexible premium product.
✔✔As a participant in her employer's group life insurance plan, which of the following
would Mary receive as evidence of her coverage? - ✔✔a certificate of insurance//With a
group life policy, the sponsor of the group plan (e.g., an employer or labor union) is the
policyowner and premium payor. The individual members of the group are the insureds.
The group sponsor receives a master policy, while insured group members receive a
certificate of insurance as evidence of coverage.
✔✔Social Security provides a variety of programs for eligible workers and their families.
What are its two main programs? - ✔✔OASDI and Medicare//Social Security provides a
variety of programs for eligible workers and their families. Its two main programs are the
Old Age, Survivors, and Disability Insurance (OASDI) program and the Medicare
program.
✔✔A variable annuity owner has a subaccount with a current net asset value (NAV) of
$15. If the VA owner makes a $1,000 premium payment, how many accumulation units
will be acquired? - ✔✔66.6 units//The owner would buy additional accumulation units at
$15 per unit, which is now the current value. A $1,000 payment would buy 66.6 units.
✔✔An indexed whole life policy ties death benefits and premiums to which of the
following? - ✔✔the Consumer Price Index (CPI)//Indexed whole life insurance ties its
death benefit and its premiums to a specified index, most commonly the Consumer
Price Index (CPI).
✔✔With a key person life insurance policy, who is the owner of the policy? - ✔✔the
employer//With a key employee life insurance policy, the business applies for, owns,
and is the beneficiary of the policy covering the life of a key employee.
✔✔Which term applies to an insurance company domiciled in one state but operating in
another, from the perspective of the state in which it operates? - ✔✔foreign
company//Any company that does business in a state other than the one in which it is
domiciled is classified as a foreign company in the state where it does business.
✔✔Which of the following is the primary regulator of those who sell variable life
insurance? - ✔✔state insurance departments and Financial Industry Regulatory
Authority (FINRA)//To be properly registered to sell variable insurance contracts,
,producers must hold either a FINRA Series 6 or Series 7 registration, obtained by
passing a FINRA exam. They must also hold a valid life insurance license in the state(s)
where they do business.
✔✔A life insurance policy that offers coverage for a specified, limited period with no
cash value building up is called a: - ✔✔term life insurance policy//A term life insurance
policy protects the insured for a specified, limited period and does not build any cash
value. The policy pays death benefits only if the insured dies during the term of
coverage.
✔✔If John buys a new life insurance policy or annuity that amends the coverage of his
existing life insurance policy, the new policy will be considered which of the following? -
✔✔a replacement policy//Replacement occurs when an applicant is about to buy a new
life insurance policy or annuity and, as a result, an existing life insurance policy or
annuity will be lapsed, terminated, amended, or compromised in some way.
✔✔Which one of the following statements about term life insurance is correct? - ✔✔The
policy pays a death benefit only if the insured dies during the term.//Term insurance
pays a death benefit only if the insured dies during the term.
✔✔Nadir Insurance instructs its producers to omit certain information from their records
of insurance transactions for the previous year. This information would give the
Department of Insurance reason to expand any routine examination of Nadir if the
Department knew about it. Which of the following is true about Nadir's instructions? -
✔✔They are prohibited.//No one may make false entries in a book, report, or statement
to deceive anyone who is examining an insurer's financial condition or affairs or omit
information that is relevant to the examination of the insurer's financial condition or
affairs.
✔✔After the Director issued a cease and desist order, Agent Smith continued to offer
illegal inducements to insurance prospects in violation of the order. Which penalty can
the Director impose? - ✔✔a fine of up to $10,000 and license revocation//If a producer
knowingly violates a cease and desist order, the Director can order that the producer be
fined up to $10,000 for each violation (up to $50,000 total), have his or her license
suspended or revoked, or be subject to a combination of these disciplinary measures.
✔✔Jake and five of his friends are self-employed in different fields. They want to form a
group so that they can buy group life insurance. What can they do? - ✔✔Jake and his
friends would probably not be considered an eligible group for insurance purposes.//To
qualify for group life insurance coverage, a group must exist for some reason other than
to get insurance.
✔✔Joan owns a variable universal life insurance policy that now has a $100,000 cash
value and is beyond its surrender charge period. This year, she plans to withdraw
$25,000 from her policy's cash value to buy a new car. Which one of the following
, statements is most correct? - ✔✔Joan's death benefit will be reduced by $25,000.//VUL
policyowners can access their policy's cash value through partial surrenders, not loans.
Amounts taken from the cash value reduce the death benefit.
✔✔When does the free-look period for a variable life insurance policy end? - ✔✔10
days after the policy is delivered, or 45 days after the insurance application is
completed, whichever is later//The free-look period for a variable life policy generally
ends ten days after the policy is delivered, or it can extend for 45 days after the
insurance application is completed, whichever is later. Some states require longer free-
look periods.
✔✔Alan and his wife are expecting their first child. Alan wants the most death protection
that he can get for the smallest amount of premium, at least while he's starting his
family. Ideally, he would like to be able to upgrade his coverage to a whole life policy at
some point. Which of the following products would you recommend? - ✔✔ten-year
convertible term life policy//A 10-year convertible term life policy gives the client
relatively inexpensive insurance to get started and the opportunity to convert to a whole
life policy anytime within the 10-year period.
✔✔Which of the following statements regarding the extended term nonforfeiture option
is correct? - ✔✔The extended term option is not available if the original policy was
issued on a substandard (rated) basis.//The extended term option is not available where
the original policy was issued on a substandard (rated) basis.
✔✔An insurer issues a new life insurance policy that has conditions attached to it, and
instructs the producer to personally deliver it to the policyowner with an explanation of
the conditions. This is an example of what kind of delivery? - ✔✔legal delivery//If any
conditions are attached to the policy requiring the policyowner's immediate attention,
then legal delivery is required. Legal delivery of a policy requires personal delivery to
the client and an explanation of the conditions to be met.
✔✔All the following statements about group life insurance are correct EXCEPT: -
✔✔Employee contributions are not permitted.//The employer may pay the entire
premium. However, employees usually contribute to the premium.
✔✔What is the consideration that an applicant gives an insurance company when
buying life insurance? - ✔✔the application and the first premium//The consideration
policyowners give insurers includes the application with the representations it contains
and the first premium.
✔✔Which of the following characteristics of a potential customer would make an
immediate fixed annuity under a straight life income option unsuitable for that person? -
✔✔The customer is age 75 and in questionable health.//While an immediate fixed
annuity under a straight life income option is suitable for someone who wants income
AND SOLUTIONS MARKED A+
✔✔Which of the following statements regarding Keogh (HR-10) qualified plans is
correct? - ✔✔The 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: -
✔✔the 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: - ✔✔Life
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.
✔✔Assuming no relation other than that stated, in which of the following situations does
insurable interest exist? - ✔✔Al would like to take out a life insurance policy on his
wife.//Insurable interest in personal relationships is generally limited to the applicant and
a member of the applicant's family.
✔✔John buys a $1 million life insurance policy. He dies two years later and the insurer
pays the $1 million benefit. Even though the premiums never came close to the benefit
amount, the insurer pays the full benefit because the insurance policy is type of
contract? - ✔✔a valued contract//Life insurance policies are valued contracts, which
means they pay a stated amount in the event of a loss. Life insurance contracts, unlike
contracts of indemnity, do not try to judge the actual amount of the loss. Because John
bought a life insurance policy insuring his life for $1 million, that is the amount the policy
paid when he died, regardless of the amount he paid in premiums. A contract of
indemnity, on the other hand, limits the benefit to the amount of the insured's actual
loss.
✔✔At age 49, Caleb took a $20,000 distribution from his deferred annuity, of which
$9,000 represents interest earnings. In addition to paying income tax, what else will
Caleb probably have to pay? - ✔✔a penalty tax of $900//To discourage early
withdrawals, a 10 percent penalty tax is imposed on nonannuitized withdrawals before
age 59'. This tax is assessed to the taxable portion of the withdrawal (in this case,
$9,000).
✔✔If a labor union sponsors a group life insurance plan for its members, which of the
following statements is correct? - ✔✔Premiums must be paid entirely from union funds
,or from a combination of union funds and member funds.//If a labor union buys a group
policy to insure its members, the union is the policyowner.
✔✔Variable universal life combines features of variable life and universal life. Variable
universal life and universal life are alike in all of the following ways EXCEPT: - ✔✔Both
are considered securities products as well as life insurance.//Variable universal life
policies are considered securities products as well as life insurance. Universal life
insurance is not a security; it is a fixed interest flexible premium product.
✔✔As a participant in her employer's group life insurance plan, which of the following
would Mary receive as evidence of her coverage? - ✔✔a certificate of insurance//With a
group life policy, the sponsor of the group plan (e.g., an employer or labor union) is the
policyowner and premium payor. The individual members of the group are the insureds.
The group sponsor receives a master policy, while insured group members receive a
certificate of insurance as evidence of coverage.
✔✔Social Security provides a variety of programs for eligible workers and their families.
What are its two main programs? - ✔✔OASDI and Medicare//Social Security provides a
variety of programs for eligible workers and their families. Its two main programs are the
Old Age, Survivors, and Disability Insurance (OASDI) program and the Medicare
program.
✔✔A variable annuity owner has a subaccount with a current net asset value (NAV) of
$15. If the VA owner makes a $1,000 premium payment, how many accumulation units
will be acquired? - ✔✔66.6 units//The owner would buy additional accumulation units at
$15 per unit, which is now the current value. A $1,000 payment would buy 66.6 units.
✔✔An indexed whole life policy ties death benefits and premiums to which of the
following? - ✔✔the Consumer Price Index (CPI)//Indexed whole life insurance ties its
death benefit and its premiums to a specified index, most commonly the Consumer
Price Index (CPI).
✔✔With a key person life insurance policy, who is the owner of the policy? - ✔✔the
employer//With a key employee life insurance policy, the business applies for, owns,
and is the beneficiary of the policy covering the life of a key employee.
✔✔Which term applies to an insurance company domiciled in one state but operating in
another, from the perspective of the state in which it operates? - ✔✔foreign
company//Any company that does business in a state other than the one in which it is
domiciled is classified as a foreign company in the state where it does business.
✔✔Which of the following is the primary regulator of those who sell variable life
insurance? - ✔✔state insurance departments and Financial Industry Regulatory
Authority (FINRA)//To be properly registered to sell variable insurance contracts,
,producers must hold either a FINRA Series 6 or Series 7 registration, obtained by
passing a FINRA exam. They must also hold a valid life insurance license in the state(s)
where they do business.
✔✔A life insurance policy that offers coverage for a specified, limited period with no
cash value building up is called a: - ✔✔term life insurance policy//A term life insurance
policy protects the insured for a specified, limited period and does not build any cash
value. The policy pays death benefits only if the insured dies during the term of
coverage.
✔✔If John buys a new life insurance policy or annuity that amends the coverage of his
existing life insurance policy, the new policy will be considered which of the following? -
✔✔a replacement policy//Replacement occurs when an applicant is about to buy a new
life insurance policy or annuity and, as a result, an existing life insurance policy or
annuity will be lapsed, terminated, amended, or compromised in some way.
✔✔Which one of the following statements about term life insurance is correct? - ✔✔The
policy pays a death benefit only if the insured dies during the term.//Term insurance
pays a death benefit only if the insured dies during the term.
✔✔Nadir Insurance instructs its producers to omit certain information from their records
of insurance transactions for the previous year. This information would give the
Department of Insurance reason to expand any routine examination of Nadir if the
Department knew about it. Which of the following is true about Nadir's instructions? -
✔✔They are prohibited.//No one may make false entries in a book, report, or statement
to deceive anyone who is examining an insurer's financial condition or affairs or omit
information that is relevant to the examination of the insurer's financial condition or
affairs.
✔✔After the Director issued a cease and desist order, Agent Smith continued to offer
illegal inducements to insurance prospects in violation of the order. Which penalty can
the Director impose? - ✔✔a fine of up to $10,000 and license revocation//If a producer
knowingly violates a cease and desist order, the Director can order that the producer be
fined up to $10,000 for each violation (up to $50,000 total), have his or her license
suspended or revoked, or be subject to a combination of these disciplinary measures.
✔✔Jake and five of his friends are self-employed in different fields. They want to form a
group so that they can buy group life insurance. What can they do? - ✔✔Jake and his
friends would probably not be considered an eligible group for insurance purposes.//To
qualify for group life insurance coverage, a group must exist for some reason other than
to get insurance.
✔✔Joan owns a variable universal life insurance policy that now has a $100,000 cash
value and is beyond its surrender charge period. This year, she plans to withdraw
$25,000 from her policy's cash value to buy a new car. Which one of the following
, statements is most correct? - ✔✔Joan's death benefit will be reduced by $25,000.//VUL
policyowners can access their policy's cash value through partial surrenders, not loans.
Amounts taken from the cash value reduce the death benefit.
✔✔When does the free-look period for a variable life insurance policy end? - ✔✔10
days after the policy is delivered, or 45 days after the insurance application is
completed, whichever is later//The free-look period for a variable life policy generally
ends ten days after the policy is delivered, or it can extend for 45 days after the
insurance application is completed, whichever is later. Some states require longer free-
look periods.
✔✔Alan and his wife are expecting their first child. Alan wants the most death protection
that he can get for the smallest amount of premium, at least while he's starting his
family. Ideally, he would like to be able to upgrade his coverage to a whole life policy at
some point. Which of the following products would you recommend? - ✔✔ten-year
convertible term life policy//A 10-year convertible term life policy gives the client
relatively inexpensive insurance to get started and the opportunity to convert to a whole
life policy anytime within the 10-year period.
✔✔Which of the following statements regarding the extended term nonforfeiture option
is correct? - ✔✔The extended term option is not available if the original policy was
issued on a substandard (rated) basis.//The extended term option is not available where
the original policy was issued on a substandard (rated) basis.
✔✔An insurer issues a new life insurance policy that has conditions attached to it, and
instructs the producer to personally deliver it to the policyowner with an explanation of
the conditions. This is an example of what kind of delivery? - ✔✔legal delivery//If any
conditions are attached to the policy requiring the policyowner's immediate attention,
then legal delivery is required. Legal delivery of a policy requires personal delivery to
the client and an explanation of the conditions to be met.
✔✔All the following statements about group life insurance are correct EXCEPT: -
✔✔Employee contributions are not permitted.//The employer may pay the entire
premium. However, employees usually contribute to the premium.
✔✔What is the consideration that an applicant gives an insurance company when
buying life insurance? - ✔✔the application and the first premium//The consideration
policyowners give insurers includes the application with the representations it contains
and the first premium.
✔✔Which of the following characteristics of a potential customer would make an
immediate fixed annuity under a straight life income option unsuitable for that person? -
✔✔The customer is age 75 and in questionable health.//While an immediate fixed
annuity under a straight life income option is suitable for someone who wants income
