Exam FX Questions Variable
Michigan Questions and Answers
100% Pass
In insurance trasnactions, a fiduciary responsability means? - CORRECT
ANSWER-Handling insurer funds in a trust capacity
If a court ordered payment for a loss that was not covered in the policy even if it
was clearly worded, it would be an example of which legal concept? - CORRECT
ANSWER-Reasonable expectations
Events in which a person has both the chance of winning or losing are classified as
- CORRECT ANSWER-Speculative risk (not insurable)
Which of the following is an example of a producer's fiduciary duty? - CORRECT
ANSWER-The trust that a clent has when
A situation in which a person can only lose or have no change represents -
CORRECT ANSWER-Pure risk
,What is a material misrepresetation? - CORRECT ANSWER-A material
misrepresentation is a statement that, if discovered, would alter the underwriting
decision of the insurance company.
Which of the following is another term for an authorized insurer? - CORRECT
ANSWER-Admitted
The risk of loss may be classified as - CORRECT ANSWER-Pure risk and
speculative risk
An insurer that holds a Certificate of Authority in the state in which it transacts
business is considered a/an - CORRECT ANSWER-Authorized Insurer
An individual applies for a life policy. Two years ago he suffered a head injury
from an accident, so he cannot remember parts of his past, but is otherwise
competent. He has also been hospitalized for drug abuse, but does not remember
this when applying for insurance. The insurer issues the policy and learns of his
history one year later. What will probably happen? - CORRECT ANSWER-The
policy will not be affected.
In what way can an agent demonstrate a high standard of ethics? - CORRECT
ANSWER-Putting the clients best intrests before their own
ABC insurance company receives an incomplete application and issues the policy
anyway. Six months later ABC realizes the missing information. What term is used
that prevents ABC from forcing the policyowner to answer further questions? -
CORRECT ANSWER-Estoppel
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,Which services are associated with Standard & Poor's and AM Best? - CORRECT
ANSWER-Rating the financial strength of insurance companies
A tornado would be an example of which of the following - CORRECT
ANSWER-A peril is the cause of loss insured against in an insurance policy.
If an insurer meets the state's financial requirements and is approved to transact
business in the state, it is considered to be - CORRECT ANSWER-Authorized
What documentation grants express authority to an agent? - CORRECT
ANSWER-Agents contract with the princiapl
All of the following are examples of risk retention EXCEPT - CORRECT
ANSWER-Premiums
An insured wants to transfer his personal insurance policy to a friend. Under what
conditions would this be possible? - CORRECT ANSWER-The insured will a
written consent of the insurer
The risk management technique that is used to prevent a specific loss by not
exposing oneself to that activity is called - CORRECT ANSWER-Avoidance
The authority granted to an agent through the agent's contract is referred to as -
CORRECT ANSWER-Express authority
Which of the following is the basis for a claim against an insurance policy? -
CORRECT ANSWER-Loss
, Which of the following insurers are owned by stockholders? - CORRECT
ANSWER-Stock
A producer who fails to separate premium monies from his own personal funds is
guilty of - CORRECT ANSWER-Commingling
When an individual purchases insurance, what risk management technique is he or
she practicing?
ARetention - CORRECT ANSWER-Transfer
In insurance, an offer is usually made when - CORRECT ANSWER-An applicant
submits an application to the insurer
What is a definition of a unilateral contract? - CORRECT ANSWER-One sided,
one party makes an enforceable promise
An applicant knowingly fails to communicate information that would help an
underwriter make a sound decision regarding coverage. This is an example of -
CORRECT ANSWER-Concealment
An insurance company receives an application with some information missing and
issues the policy anyway. What is this called? - CORRECT ANSWER-Waiver
Which authority is NOT stated in an agent's contract but is required for the agent
to conduct business? - CORRECT ANSWER-Implied authority
COPYRIGHT ALL RIGHTS RESERVED ©️ 2025
Michigan Questions and Answers
100% Pass
In insurance trasnactions, a fiduciary responsability means? - CORRECT
ANSWER-Handling insurer funds in a trust capacity
If a court ordered payment for a loss that was not covered in the policy even if it
was clearly worded, it would be an example of which legal concept? - CORRECT
ANSWER-Reasonable expectations
Events in which a person has both the chance of winning or losing are classified as
- CORRECT ANSWER-Speculative risk (not insurable)
Which of the following is an example of a producer's fiduciary duty? - CORRECT
ANSWER-The trust that a clent has when
A situation in which a person can only lose or have no change represents -
CORRECT ANSWER-Pure risk
,What is a material misrepresetation? - CORRECT ANSWER-A material
misrepresentation is a statement that, if discovered, would alter the underwriting
decision of the insurance company.
Which of the following is another term for an authorized insurer? - CORRECT
ANSWER-Admitted
The risk of loss may be classified as - CORRECT ANSWER-Pure risk and
speculative risk
An insurer that holds a Certificate of Authority in the state in which it transacts
business is considered a/an - CORRECT ANSWER-Authorized Insurer
An individual applies for a life policy. Two years ago he suffered a head injury
from an accident, so he cannot remember parts of his past, but is otherwise
competent. He has also been hospitalized for drug abuse, but does not remember
this when applying for insurance. The insurer issues the policy and learns of his
history one year later. What will probably happen? - CORRECT ANSWER-The
policy will not be affected.
In what way can an agent demonstrate a high standard of ethics? - CORRECT
ANSWER-Putting the clients best intrests before their own
ABC insurance company receives an incomplete application and issues the policy
anyway. Six months later ABC realizes the missing information. What term is used
that prevents ABC from forcing the policyowner to answer further questions? -
CORRECT ANSWER-Estoppel
COPYRIGHT ALL RIGHTS RESERVED ©️ 2025
,Which services are associated with Standard & Poor's and AM Best? - CORRECT
ANSWER-Rating the financial strength of insurance companies
A tornado would be an example of which of the following - CORRECT
ANSWER-A peril is the cause of loss insured against in an insurance policy.
If an insurer meets the state's financial requirements and is approved to transact
business in the state, it is considered to be - CORRECT ANSWER-Authorized
What documentation grants express authority to an agent? - CORRECT
ANSWER-Agents contract with the princiapl
All of the following are examples of risk retention EXCEPT - CORRECT
ANSWER-Premiums
An insured wants to transfer his personal insurance policy to a friend. Under what
conditions would this be possible? - CORRECT ANSWER-The insured will a
written consent of the insurer
The risk management technique that is used to prevent a specific loss by not
exposing oneself to that activity is called - CORRECT ANSWER-Avoidance
The authority granted to an agent through the agent's contract is referred to as -
CORRECT ANSWER-Express authority
Which of the following is the basis for a claim against an insurance policy? -
CORRECT ANSWER-Loss
, Which of the following insurers are owned by stockholders? - CORRECT
ANSWER-Stock
A producer who fails to separate premium monies from his own personal funds is
guilty of - CORRECT ANSWER-Commingling
When an individual purchases insurance, what risk management technique is he or
she practicing?
ARetention - CORRECT ANSWER-Transfer
In insurance, an offer is usually made when - CORRECT ANSWER-An applicant
submits an application to the insurer
What is a definition of a unilateral contract? - CORRECT ANSWER-One sided,
one party makes an enforceable promise
An applicant knowingly fails to communicate information that would help an
underwriter make a sound decision regarding coverage. This is an example of -
CORRECT ANSWER-Concealment
An insurance company receives an application with some information missing and
issues the policy anyway. What is this called? - CORRECT ANSWER-Waiver
Which authority is NOT stated in an agent's contract but is required for the agent
to conduct business? - CORRECT ANSWER-Implied authority
COPYRIGHT ALL RIGHTS RESERVED ©️ 2025
