MICHIGAN CREDIT INSURANCE EXAM SCRIPT 2025/2026
QUESTIONS WITH ANSWERS TAGGED A+
✔✔Misrepresentation (unfair insurance trade practices) - ✔✔the illegal act of lying about
benefits advantages or provisions of why any insurance policy or to lie about the
financial condition of any insurance company; punishable by a max fine of 1000
violation or imprisonment
✔✔twisting (unfair insurance trade practices) - ✔✔the act of dropping existing coverage
due to some illegal or unethical persuasion for the purpose of purchasing new insurance
a misdemeanor punishable by license revocation up to 1 year a max fine of 1k/violation
and imprisonment
✔✔defamation (unfair insurance trade practices) - ✔✔the illegal act of making false
malicious or derogatory statements regarding an insurer or any person engaged in the
business of insurance
✔✔boycott coercion and intimidation(unfair insurance trade practices) - ✔✔illegal acts
which intend to result in unreasonable restraint of trade or a monopoly in business of
insurance
✔✔unfair discrimination(unfair insurance trade practices) - ✔✔__ between individuals of
the same class or life expectancy regarding rates dividends or other benefits illegal to
__ because of age color or creed in the issuance and rating of insurance punishable by
max fine of 500/violation
✔✔rebating/illegal inducements(unfair insurance trade practices) - ✔✔any ___ in the
sale of insurance which is not specified in the insurance contract such as sharing in the
producers commissions or providing a service a bribe not offering premium reductions
to policy holders form accumulated surplus or premium adjustments for group insurance
policies a misdemeanor punishable by a max fine of 100/violation or imprisonment
✔✔consumer privacy regulation(unfair insurance trade practices) - ✔✔the state of mi
requires the agent provide an applicant with privacy notice info at the time of application
and in case of policy renewal reinstatement or change of benefits must include:
categories of non public personal financial info collected and disclosed - categories of
affiliates and non affiliated third parties to whom the agent discloses info - explanation of
consumers right to opt out - any disclosures the agent makes under the fair credit
reporting act - the agents policies and practices used to protect confidentiality and
security of non public personal financial info
✔✔fair credit reporting act(unfair insurance trade practices) - ✔✔a federal law which
requires that an applicant for insurance be advised that a consumer report may be
requested designed to protect the privacy of the applicant
, ✔✔risk( risk management key terms) - ✔✔evolves from uncertainty a condition in which
a chance of loss exists the unpredictable chance occurrences of everyday life which
result in financial or economic loss
✔✔exposure( risk management key terms) - ✔✔the state of being subject to the
possibility of loss
✔✔loss( risk management key terms) - ✔✔the injury or damage sustained by the
insured as a result of an accident or misfortune against which the insurer in
consideration of the premium has undertaken to indemnify the insured
✔✔avoidance(methods of handling risk) - ✔✔the act of avoiding or eluding risk
✔✔transfer(methods of handling risk) - ✔✔shifting of risk to another party such as an
insurer
✔✔adverse selection(methods of handling risk) - ✔✔the tendancy of less than average
risks to purchase or cont to be covered by insurance resulting increased claims and
reduced profitability
✔✔law of large numbers(methods of handling risk) - ✔✔a basic principle of insurance
which states that the larger the number similar risks the more reliable the prediction of
possible losses over a period of time
✔✔stock companies (types of insurers) - ✔✔owned by stock holders policy holders do
not participate in dividends
✔✔mutual companies(types of insurers) - ✔✔owned by policy holders participate in
dividends
✔✔risk retention groups(types of insurers) - ✔✔an alternative risk transfer entity created
by the federal liability risk retention act must form as liability insurance companies under
the laws of at least one state
✔✔authorized insurers(types of insurers) - ✔✔an insurer licensed or chartered to
transact insurance in mi a company that is admitted to do business in the state
✔✔unauthorized insurers(types of insurers) - ✔✔an insurer not licensed to transact
insurance in mi one that is not admitted to do business in the state
✔✔financial status -independent rating services (types of insurers) - ✔✔companies
which assess the financial strength of a company based on level of reserves claims
management and investments ex: standard and poor
QUESTIONS WITH ANSWERS TAGGED A+
✔✔Misrepresentation (unfair insurance trade practices) - ✔✔the illegal act of lying about
benefits advantages or provisions of why any insurance policy or to lie about the
financial condition of any insurance company; punishable by a max fine of 1000
violation or imprisonment
✔✔twisting (unfair insurance trade practices) - ✔✔the act of dropping existing coverage
due to some illegal or unethical persuasion for the purpose of purchasing new insurance
a misdemeanor punishable by license revocation up to 1 year a max fine of 1k/violation
and imprisonment
✔✔defamation (unfair insurance trade practices) - ✔✔the illegal act of making false
malicious or derogatory statements regarding an insurer or any person engaged in the
business of insurance
✔✔boycott coercion and intimidation(unfair insurance trade practices) - ✔✔illegal acts
which intend to result in unreasonable restraint of trade or a monopoly in business of
insurance
✔✔unfair discrimination(unfair insurance trade practices) - ✔✔__ between individuals of
the same class or life expectancy regarding rates dividends or other benefits illegal to
__ because of age color or creed in the issuance and rating of insurance punishable by
max fine of 500/violation
✔✔rebating/illegal inducements(unfair insurance trade practices) - ✔✔any ___ in the
sale of insurance which is not specified in the insurance contract such as sharing in the
producers commissions or providing a service a bribe not offering premium reductions
to policy holders form accumulated surplus or premium adjustments for group insurance
policies a misdemeanor punishable by a max fine of 100/violation or imprisonment
✔✔consumer privacy regulation(unfair insurance trade practices) - ✔✔the state of mi
requires the agent provide an applicant with privacy notice info at the time of application
and in case of policy renewal reinstatement or change of benefits must include:
categories of non public personal financial info collected and disclosed - categories of
affiliates and non affiliated third parties to whom the agent discloses info - explanation of
consumers right to opt out - any disclosures the agent makes under the fair credit
reporting act - the agents policies and practices used to protect confidentiality and
security of non public personal financial info
✔✔fair credit reporting act(unfair insurance trade practices) - ✔✔a federal law which
requires that an applicant for insurance be advised that a consumer report may be
requested designed to protect the privacy of the applicant
, ✔✔risk( risk management key terms) - ✔✔evolves from uncertainty a condition in which
a chance of loss exists the unpredictable chance occurrences of everyday life which
result in financial or economic loss
✔✔exposure( risk management key terms) - ✔✔the state of being subject to the
possibility of loss
✔✔loss( risk management key terms) - ✔✔the injury or damage sustained by the
insured as a result of an accident or misfortune against which the insurer in
consideration of the premium has undertaken to indemnify the insured
✔✔avoidance(methods of handling risk) - ✔✔the act of avoiding or eluding risk
✔✔transfer(methods of handling risk) - ✔✔shifting of risk to another party such as an
insurer
✔✔adverse selection(methods of handling risk) - ✔✔the tendancy of less than average
risks to purchase or cont to be covered by insurance resulting increased claims and
reduced profitability
✔✔law of large numbers(methods of handling risk) - ✔✔a basic principle of insurance
which states that the larger the number similar risks the more reliable the prediction of
possible losses over a period of time
✔✔stock companies (types of insurers) - ✔✔owned by stock holders policy holders do
not participate in dividends
✔✔mutual companies(types of insurers) - ✔✔owned by policy holders participate in
dividends
✔✔risk retention groups(types of insurers) - ✔✔an alternative risk transfer entity created
by the federal liability risk retention act must form as liability insurance companies under
the laws of at least one state
✔✔authorized insurers(types of insurers) - ✔✔an insurer licensed or chartered to
transact insurance in mi a company that is admitted to do business in the state
✔✔unauthorized insurers(types of insurers) - ✔✔an insurer not licensed to transact
insurance in mi one that is not admitted to do business in the state
✔✔financial status -independent rating services (types of insurers) - ✔✔companies
which assess the financial strength of a company based on level of reserves claims
management and investments ex: standard and poor
