MICHIGAN LIFE INSURANCE EXAM 2025–2026 | COMPLETE
PRACTICE TEST BANK | VERIFIED QUESTIONS & CORRECT
ANSWERS (STATE + NATIONAL)
Built specifically for future licensed agents in Michigan, this study guide gives
you the exact material tested on the Michigan Life Insurance Licensing Exam.
You’ll gain mastery over key topics like universal vs. whole life, convertible
term policies, limited-pay life, variable life features, and state rules for
replacements, disclosures, and continuing education. With hundreds of
practice questions and answers aligned with PSI exam standards, this prep tool
ensures full readiness and confidence heading into test day.
When the principal gives the agent authority in writing, it's referred to as?
A. Imposed Authority
B. Express Authority
C. Implied Authority
D. Apparent Authority - CORRECT ANSWER-B. Express Authority
Sharon is the policyowner of a $50,000 life insurance policy. Her son, Mike, is the beneficiary. If
Sharon MUST obtain Mike's signature in order to change the beneficiary, what kind of beneficiary
designation is this?
A. Contingent
B. Tertiary
C. Revocable
D. Irrevocable - CORRECT ANSWER-D. Irrevocable
Insurable interest does NOT occur in which of the following relationships?
A. Sister and brother
B. Parent and children
C. Business partners
D. Business owner and business client - CORRECT ANSWER-D. Business owner and business client
Which type of life insurance is normally associated with a Payor Benefit rider?
,A. Term rider
B. Family income insurance
C. Juvenile insurance
D. Spouse insurance - CORRECT ANSWER-C. Juvenile insurance
Which of the following are the premium payments for a Universal life policy NOT used for?
A. Death benefits
B. Separate account investments
C. Loading costs
D. Cash value - CORRECT ANSWER-B. Separate account investments
Which of these is NOT subject to income taxation under a Modified Endowment Contract (MEC)?
A. Loan against the cash value
B. Death benefit
C. Policy dividend
D. Policy withdrawal - CORRECT ANSWER-B. Death benefit
Tonya has replaced her whole life policy with an annuity without incurring a tax penalty. This
transaction is called a(n)?
A. 1035 Exchange
B. Modified Exchange
C. Endowment Exchange
D. 1040 Exchange - CORRECT ANSWER-A. 1035 Exchange
A limited payment whole life policy provides?
A. Discounted premiums
B. Protection for more than one person
C. Protection for 20 years
D. Lifetime protection - CORRECT ANSWER-D. Lifetime protection
A partial surrender is allowed in which of the following life policies?
,A. Decreasing term life
B. Universal life
C. Adjustable whole life
D. Limited whole life - CORRECT ANSWER-B. Universal life
Which of the following best describes a conditional insurance contract?
A. A contract where one party "adheres" to the terms of the contract
B. A contract where only one party makes any kind of enforceable contract
C. A contract that has the potential for the unequal exchange of consideration for both parties
D. A contract that requires certain conditions or acts by the insured individual - CORRECT ANSWER-
D. A contract that requires certain conditions or acts by the insured individual
A policyowner may change two policy features on what type of life insurance?
A. Decreasing Term Life
B. Adjustable Life
C. Whole Life
D. Modified Whole Life - CORRECT ANSWER-B. Adjustable Life
A permanent life insurance policy where the policyowner pays premiums for a specified number of
years is called a(n)?
A. Adjustable policy
B. Variable universal policy
C. Limited pay policy
D. Level term policy - CORRECT ANSWER-C. Limited pay policy D
Which contract element is insurable interest a component of?
A. Offer and acceptance
B. Competent parties
C. Consideration
D. Legal purpose - CORRECT ANSWER-D. Legal purpose
, A professional liability for which producers can be sued for mistakes of putting a policy into effect is
called?
A. Fiduciary bond
B. Errors and omissions
C. Errors and oversight
D. Fiduciary trust - CORRECT ANSWER-B. Errors and omissions
According to life insurance contract law, insurable interest exists?
A. At the time of death
B. When any business relationship exists
C. At the time of the application
D. Only when determined by a judge - CORRECT ANSWER-C. At the time of the application D
Intentional withholding of material facts that would affect an insurance policy's validity is called
a(n)?
A. Estoppel
B. Adhesion
C. Concealment
D. Misrepresentation - CORRECT ANSWER-C. Concealment
All of these are valid options for an Adjustable Life Policy EXCEPT?
A. The policy's premium can be increased or decreased
B. The policy's death benefit can be increased or decreased
C. The policy's protection period can be modified
D. A nonforfeiture option can be used to increase the death benefit - CORRECT ANSWER-D. A
nonforfeiture option can be used to increase the death benefit
The deeds and actions of a producer indicate what kind of authority?
A. Implied
B. Conditional
C. Express
D. Apparent - CORRECT ANSWER-D. Apparent
PRACTICE TEST BANK | VERIFIED QUESTIONS & CORRECT
ANSWERS (STATE + NATIONAL)
Built specifically for future licensed agents in Michigan, this study guide gives
you the exact material tested on the Michigan Life Insurance Licensing Exam.
You’ll gain mastery over key topics like universal vs. whole life, convertible
term policies, limited-pay life, variable life features, and state rules for
replacements, disclosures, and continuing education. With hundreds of
practice questions and answers aligned with PSI exam standards, this prep tool
ensures full readiness and confidence heading into test day.
When the principal gives the agent authority in writing, it's referred to as?
A. Imposed Authority
B. Express Authority
C. Implied Authority
D. Apparent Authority - CORRECT ANSWER-B. Express Authority
Sharon is the policyowner of a $50,000 life insurance policy. Her son, Mike, is the beneficiary. If
Sharon MUST obtain Mike's signature in order to change the beneficiary, what kind of beneficiary
designation is this?
A. Contingent
B. Tertiary
C. Revocable
D. Irrevocable - CORRECT ANSWER-D. Irrevocable
Insurable interest does NOT occur in which of the following relationships?
A. Sister and brother
B. Parent and children
C. Business partners
D. Business owner and business client - CORRECT ANSWER-D. Business owner and business client
Which type of life insurance is normally associated with a Payor Benefit rider?
,A. Term rider
B. Family income insurance
C. Juvenile insurance
D. Spouse insurance - CORRECT ANSWER-C. Juvenile insurance
Which of the following are the premium payments for a Universal life policy NOT used for?
A. Death benefits
B. Separate account investments
C. Loading costs
D. Cash value - CORRECT ANSWER-B. Separate account investments
Which of these is NOT subject to income taxation under a Modified Endowment Contract (MEC)?
A. Loan against the cash value
B. Death benefit
C. Policy dividend
D. Policy withdrawal - CORRECT ANSWER-B. Death benefit
Tonya has replaced her whole life policy with an annuity without incurring a tax penalty. This
transaction is called a(n)?
A. 1035 Exchange
B. Modified Exchange
C. Endowment Exchange
D. 1040 Exchange - CORRECT ANSWER-A. 1035 Exchange
A limited payment whole life policy provides?
A. Discounted premiums
B. Protection for more than one person
C. Protection for 20 years
D. Lifetime protection - CORRECT ANSWER-D. Lifetime protection
A partial surrender is allowed in which of the following life policies?
,A. Decreasing term life
B. Universal life
C. Adjustable whole life
D. Limited whole life - CORRECT ANSWER-B. Universal life
Which of the following best describes a conditional insurance contract?
A. A contract where one party "adheres" to the terms of the contract
B. A contract where only one party makes any kind of enforceable contract
C. A contract that has the potential for the unequal exchange of consideration for both parties
D. A contract that requires certain conditions or acts by the insured individual - CORRECT ANSWER-
D. A contract that requires certain conditions or acts by the insured individual
A policyowner may change two policy features on what type of life insurance?
A. Decreasing Term Life
B. Adjustable Life
C. Whole Life
D. Modified Whole Life - CORRECT ANSWER-B. Adjustable Life
A permanent life insurance policy where the policyowner pays premiums for a specified number of
years is called a(n)?
A. Adjustable policy
B. Variable universal policy
C. Limited pay policy
D. Level term policy - CORRECT ANSWER-C. Limited pay policy D
Which contract element is insurable interest a component of?
A. Offer and acceptance
B. Competent parties
C. Consideration
D. Legal purpose - CORRECT ANSWER-D. Legal purpose
, A professional liability for which producers can be sued for mistakes of putting a policy into effect is
called?
A. Fiduciary bond
B. Errors and omissions
C. Errors and oversight
D. Fiduciary trust - CORRECT ANSWER-B. Errors and omissions
According to life insurance contract law, insurable interest exists?
A. At the time of death
B. When any business relationship exists
C. At the time of the application
D. Only when determined by a judge - CORRECT ANSWER-C. At the time of the application D
Intentional withholding of material facts that would affect an insurance policy's validity is called
a(n)?
A. Estoppel
B. Adhesion
C. Concealment
D. Misrepresentation - CORRECT ANSWER-C. Concealment
All of these are valid options for an Adjustable Life Policy EXCEPT?
A. The policy's premium can be increased or decreased
B. The policy's death benefit can be increased or decreased
C. The policy's protection period can be modified
D. A nonforfeiture option can be used to increase the death benefit - CORRECT ANSWER-D. A
nonforfeiture option can be used to increase the death benefit
The deeds and actions of a producer indicate what kind of authority?
A. Implied
B. Conditional
C. Express
D. Apparent - CORRECT ANSWER-D. Apparent
