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MICHIGAN LIFE INSURANCE STATE EXAM STUDY GUIDE
QUESTIONS EXAM LATEST VERSION QUESTIONS AND
ANSWERS 2026 EDITION
Michigan Life Insurance State Exam: 250 Practice Questions with Rationales
INTRODUCTION: UNDERSTANDING THE MICHIGAN LIFE INSURANCE STATE EXAM
The Michigan Life Insurance State Exam is administered by PSI Services LLC . To
become a licensed life insurance producer in Michigan, you must complete a state-
approved 20-hour pre-licensing education course, pass the PSI exam with a minimum
score of 72-76% (varies by source), and submit a license application . The Life exam
consists of 100 scored questions with a 120-minute time limit .
SECTION 1: INSURANCE REGULATION AND LICENSING (Questions 1-40)
1. Under Michigan insurance law, the Director of the Department of Insurance and
Financial Services (DIFS) has the authority to issue which of the following if a
person is found to be engaging in an unfair method of competition?
A. A summary prison sentence
B. A permanent injunction without a hearing
C. A cease and desist order
D. A public reprimand in local newspapers
Answer: C. A cease and desist order
Rationale: The Director of DIFS has regulatory authority to issue cease and desist orders
to stop unfair or deceptive practices after a hearing. The Director cannot impose
criminal imprisonment .
2. To obtain a resident producer license in Michigan, an applicant must be at least
what age?
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A. 16 years old
B. 18 years old
C. 21 years old
D. 25 years old
Answer: B. 18 years old
Rationale: The minimum statutory age requirement to hold a resident insurance
producer license in Michigan is 18 years old .
3. In Michigan, a temporary producer license may be issued for a maximum period
of how many days without requiring an examination?
A. 30 days
B. 90 days
C. 180 days
D. 365 days
Answer: C. 180 days
Rationale: A temporary license may be issued for up to 180 days to a surviving spouse or
representative under specific circumstances such as the death or disability of the
producer .
4. A producer who shares commissions with an unlicensed person for selling
insurance in Michigan is guilty of:
A. Fraud
B. A violation of the Insurance Code
C. Commingling
D. Coercion
Answer: B. A violation of the Insurance Code
Rationale: Sharing commissions with an unlicensed individual for activities requiring a
license is illegal and violates Michigan's trade and licensing laws .
5. What is the primary purpose of the Michigan Life and Health Insurance Guaranty
Association?
A. To set the minimum premium rates for life insurance policies
B. To protect policyowners against insurer insolvency
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C. To arbitrate disputes between producers and insurers
D. To approve new policy forms before they are marketed
Answer: B. To protect policyowners against insurer insolvency
Rationale: The Guaranty Association protects Michigan residents against financial
losses if their insurance company becomes insolvent .
6. Failure to pay a penalty assessed by the commissioner may result in:
A. Revoked or suspended license
B. Require the license to retake the examination
C. Complete 5 extra hours of continuing education
D. Pay a late charge of 1.5%
Answer: A. Revoked or suspended license
Rationale: Failure to pay a penalty assessed by the commissioner may result in a
revoked or suspended license .
7. Before doing business under an assumed name, who must the producer first
notify?
A. Insured
B. Insurer
C. Commissioner
D. Insurance agency
Answer: C. Commissioner
Rationale: Before doing business under an assumed name, the producer must first
notify the Commissioner .
8. Signing an applicant's name on an insurance application without authorization is
known as:
A. Concealment
B. Defamation
C. Coercion
D. Forgery
Answer: D. Forgery
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Rationale: Signing an applicant's name for insurance without authorization constitutes
forgery .
9. If a producer is found guilty of signing an applicant's name on an application, the
commissioner can do all of the following EXCEPT:
A. Place the producer on probation
B. Levy a civil fine on the producer
C. Suspend or revoke license
D. Require the producer to tell the client
Answer: D. Require the producer to tell the client
Rationale: The commissioner can place the producer on probation, levy a civil fine, or
suspend/revoke the license, but cannot require the producer to tell the client as a
penalty .
10. Which of the following is NOT an example of a producer's duties?
A. Selling insurance
B. Issuing and countersigning policies
C. Collecting premiums
D. Represent the insured
Answer: D. Represent the insured
Rationale: A producer represents the insurer, not the insured. Producers sell insurance,
issue and countersign policies, and collect premiums .
11. What is considered an unfair trade practice of "twisting"?
A. Offering a rebate of premium to induce a sale
B. Making misleading comparisons of policies to induce a policyholder to lapse, forfeit,
or surrender an existing policy
C. Discriminating between individuals of the same class in premium rates
D. Defaming a competing insurer's financial condition
Answer: B. Making misleading comparisons of policies to induce a policyholder to
lapse, forfeit, or surrender an existing policy
Rationale: Twisting is a specific misrepresentation designed to induce a policyholder to
drop an existing policy in favor of a new one to the insured's detriment .
MICHIGAN LIFE INSURANCE STATE EXAM STUDY GUIDE
QUESTIONS EXAM LATEST VERSION QUESTIONS AND
ANSWERS 2026 EDITION
Michigan Life Insurance State Exam: 250 Practice Questions with Rationales
INTRODUCTION: UNDERSTANDING THE MICHIGAN LIFE INSURANCE STATE EXAM
The Michigan Life Insurance State Exam is administered by PSI Services LLC . To
become a licensed life insurance producer in Michigan, you must complete a state-
approved 20-hour pre-licensing education course, pass the PSI exam with a minimum
score of 72-76% (varies by source), and submit a license application . The Life exam
consists of 100 scored questions with a 120-minute time limit .
SECTION 1: INSURANCE REGULATION AND LICENSING (Questions 1-40)
1. Under Michigan insurance law, the Director of the Department of Insurance and
Financial Services (DIFS) has the authority to issue which of the following if a
person is found to be engaging in an unfair method of competition?
A. A summary prison sentence
B. A permanent injunction without a hearing
C. A cease and desist order
D. A public reprimand in local newspapers
Answer: C. A cease and desist order
Rationale: The Director of DIFS has regulatory authority to issue cease and desist orders
to stop unfair or deceptive practices after a hearing. The Director cannot impose
criminal imprisonment .
2. To obtain a resident producer license in Michigan, an applicant must be at least
what age?
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A. 16 years old
B. 18 years old
C. 21 years old
D. 25 years old
Answer: B. 18 years old
Rationale: The minimum statutory age requirement to hold a resident insurance
producer license in Michigan is 18 years old .
3. In Michigan, a temporary producer license may be issued for a maximum period
of how many days without requiring an examination?
A. 30 days
B. 90 days
C. 180 days
D. 365 days
Answer: C. 180 days
Rationale: A temporary license may be issued for up to 180 days to a surviving spouse or
representative under specific circumstances such as the death or disability of the
producer .
4. A producer who shares commissions with an unlicensed person for selling
insurance in Michigan is guilty of:
A. Fraud
B. A violation of the Insurance Code
C. Commingling
D. Coercion
Answer: B. A violation of the Insurance Code
Rationale: Sharing commissions with an unlicensed individual for activities requiring a
license is illegal and violates Michigan's trade and licensing laws .
5. What is the primary purpose of the Michigan Life and Health Insurance Guaranty
Association?
A. To set the minimum premium rates for life insurance policies
B. To protect policyowners against insurer insolvency
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C. To arbitrate disputes between producers and insurers
D. To approve new policy forms before they are marketed
Answer: B. To protect policyowners against insurer insolvency
Rationale: The Guaranty Association protects Michigan residents against financial
losses if their insurance company becomes insolvent .
6. Failure to pay a penalty assessed by the commissioner may result in:
A. Revoked or suspended license
B. Require the license to retake the examination
C. Complete 5 extra hours of continuing education
D. Pay a late charge of 1.5%
Answer: A. Revoked or suspended license
Rationale: Failure to pay a penalty assessed by the commissioner may result in a
revoked or suspended license .
7. Before doing business under an assumed name, who must the producer first
notify?
A. Insured
B. Insurer
C. Commissioner
D. Insurance agency
Answer: C. Commissioner
Rationale: Before doing business under an assumed name, the producer must first
notify the Commissioner .
8. Signing an applicant's name on an insurance application without authorization is
known as:
A. Concealment
B. Defamation
C. Coercion
D. Forgery
Answer: D. Forgery
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Rationale: Signing an applicant's name for insurance without authorization constitutes
forgery .
9. If a producer is found guilty of signing an applicant's name on an application, the
commissioner can do all of the following EXCEPT:
A. Place the producer on probation
B. Levy a civil fine on the producer
C. Suspend or revoke license
D. Require the producer to tell the client
Answer: D. Require the producer to tell the client
Rationale: The commissioner can place the producer on probation, levy a civil fine, or
suspend/revoke the license, but cannot require the producer to tell the client as a
penalty .
10. Which of the following is NOT an example of a producer's duties?
A. Selling insurance
B. Issuing and countersigning policies
C. Collecting premiums
D. Represent the insured
Answer: D. Represent the insured
Rationale: A producer represents the insurer, not the insured. Producers sell insurance,
issue and countersign policies, and collect premiums .
11. What is considered an unfair trade practice of "twisting"?
A. Offering a rebate of premium to induce a sale
B. Making misleading comparisons of policies to induce a policyholder to lapse, forfeit,
or surrender an existing policy
C. Discriminating between individuals of the same class in premium rates
D. Defaming a competing insurer's financial condition
Answer: B. Making misleading comparisons of policies to induce a policyholder to
lapse, forfeit, or surrender an existing policy
Rationale: Twisting is a specific misrepresentation designed to induce a policyholder to
drop an existing policy in favor of a new one to the insured's detriment .
