Michigan Credit Insurance Test Questions and Correct Answers 2026/2027

Michigan Credit Insurance Test Questions and Correct Answers 2026/2027 Insurance - Correct Answer Practice/Arrangement where a comp./govt. agency gives a guarantee of compensation for specified loss, damage, illness, or death in return for payment of a premium. "transfers risks" doesn't eliminate Law of Large numbers - Correct Answer as # of similar risk exposures increases the accuracy of insurers loss projection increases Pooling of risk - Correct Answer sharing of losses on some fair basis by all members of the group Adverse Selection - Correct Answer an instance in which those in high risk situations try to buy more insurance than those w/ avg or below avg risk Risk - Correct Answer Uncertainty of loss Pure risk - Correct Answer only a chance of loss, never of a gain Speculative risk - Correct Answer chance of either loss or gain loss - Correct Answer unintentional decline or disappearance of value peril - Correct Answer causes a loss. there are 3 kinds human peril - Correct Answer bodily harm economic peril - Correct Answer financial harm