MICHIGAN LIFE INSURANCE COMPLETE STUDY SHEET QUESTIONS WITH FULL SOLUTIONS

MICHIGAN LIFE INSURANCE COMPLETE
STUDY SHEET QUESTIONS WITH FULL
SOLUTIONS

●● Liquidity
Answer: An insurer's ability to make unpredictable payouts


●● Participating policy
Answer: A policy that may pay dividends


●● Nonparticipating policy
Answer: A policy that does not pay dividends


●● Domestic insurer
Answer: An insurer formed in Michigan


●● Foreign insurer
Answer: An insurer formed in another state


●● Alien insurer
Answer: An insurer formed in another country

,●● Pure risk
Answer: A risk with only a chance of loss or no loss


●● Speculative risk
Answer: A risk with a chance of loss, no loss, or gain


●● Peril
Answer: The cause of a loss


●● Hazard
Answer: Something that increases the chance of loss


●● Risk transfer
Answer: Shifting risk from one party to another


●● Law of large numbers
Answer: The larger the group, the more predictable the losses


●● Adverse selection
Answer: High-risk people are more likely to buy insurance

, ●● Consideration
Answer: The value each party gives in a contract


●● Express authority
Answer: Authority written in the producer's contract


●● Implied authority
Answer: Authority needed to perform the job


●● Apparent authority
Answer: Authority the public believes the producer has


●● Aleatory contract
Answer: A contract where values exchanged may be unequal


●● Unilateral contract
Answer: Only one party is legally bound


●● Contract of adhesion
Answer: One party writes the contract and the other accepts it as-is


●● Insurable interest