MICHIGAN, LIFE, ACCIDENT AND HEALTH FINAL TEST EXAM 2025
CURRENTLY TESTING COMPLETE EXAM QUESTIONS WITH DETAILED
VERIFIED ANSWERS (100% CORRECT ANSWERS) /ALREADY GRADED A+
What is considered to be the primary reason for buying life insurance? - ANSWER
Provide death benefits
Karen is a producer who has obtained personal information about a client without
having a legitimate reason to do so. Under the McCarran-Feguson Act, what is the
minimum penalty for this? - ANSWER $10,000 or up to 1 year in jail
A nonparticipating company is sometimes called a(n) - ANSWER Stock insurer,
because policyholders do not participate in dividends resulting from stock
ownership.
The Fair Credit and Reporting Act's main purpose is to - ANSWER Protect
Consumers with guidelines regarding credit reporting and distribution
What is the primary purpose of a rating service such as A.M Best? - ANSWER
Determine financial strength of an insurance company
Fraternal Benefit Society has each of the following characteristics EXCEPT?
- Incorporated
- Without capital stock
- exist for profit
- exist for the benefit of its members - ANSWER Exist for profit, FBS are not for
profit and exist for the benefit of its members.
An insurer's ability to make unpredictable payouts to policyowners is called -
ANSWER Liquidity
The Do Not Call Registry offers exemptions for calls placed from all of the
,following EXCEPT
- Charities
- Political Organizations
- Insurance Sales Calls
- Surveys - ANSWER Insurance Sales Calls
A plan in which an employer pays insurance benefits from a fund derived from the
employer's current revenues is called? - ANSWER A self-funded plan
An insurer's claim settlement practices are regulated by the - ANSWER State
Insurance Departments
What is known as the immediate specific event causing loss and giving risk to risk?
- ANSWER Peril
When a house burns down what would the Peril be? When someone dies what
would the peril be? - ANSWER Fire, Death
How do insurers predict the increase of individual risks? - ANSWER Law of Large
Numbers
Insurance companies determine risk exposure by which of the following? -
ANSWER Law of Large Numbers and Risk Pooling
Insurance represents the process of risk ________________. - ANSWER
Transference
All of the following are examples of pure risk EXCEPT
-Losing Money at a Casino
-Injured while playing football
,-Falling at a casino and breaking a hip
-Jewelry stolen during a home robbery - ANSWER Losing Money at a Casino,
because that is speculative risk. Pure risk means loss is the only possible outcome.
Insurable interest does NOT occur in which of the following relationships? -
ANSWER Business owner and business client
According to life insurance contract law, insurable interest exists - ANSWER at the
time of application
According to the principle of Utmost Good Faith, the insured will answer
questions on the application to the best of their knowledge and pay the required
premium, while the insurer will deal fairly with the insured and it's - ANSWER
promises made
When the principal gives the agent authority in writing, it's referred to as -
ANSWER Express Authority
In an insurance contract, the applicant's "consideration" is the - ANSWER
Statements made in the application and the premium
Which type of clause describes the following statement: "We have issued the
policy in consideration of the representations in your applications and payment of
the first term premium". - ANSWER Consideration Clause
Legal purpose is a term used in contract law meaning - ANSWER there must be
legal reasons for entering into the contract
In an insurance contract, the element that shows each party is giving something of
value is called - ANSWER Consideration
Which of the following is an example of the insured's consideration? - ANSWER A
paid premium
, What is implied authority defined as? - ANSWER Authority that is not specifically
given to an agent in the agency contract, but that an agent can reasonably assume
to carry out his/her duties
All of the following are elements of an insurance policy EXCEPT
- definitions
- other insurance
- claim forms
- conditions - ANSWER Claim forms
Intentional withholding of material facts that would affect an insurance policy's
validity is called a(n)? - ANSWER Concealment
Which of the following is present when an applicant stands to lose value if the
insured dies? - ANSWER Insurable Interest, the applicant is subject to loss upon
death, illness, or disability of the insured.
The power given to an individual producer that is not specifically addressed in
his/her contract is considered what type of authority? - ANSWER Implied
What are an applicant's statements concerning occupation, hobbies, and personal
health history regarded as? - ANSWER Representation
How are survivorship life insurance policies helpful in estate planning? - ANSWER
Provide funds to help pay taxes
Rob purchased a standard whole life policy with a $500,000 death benefit when
he was age 30. His insurance agent told him the policy would be paid up if he
reached age 100. The present cash value of the policy equals $250,000. Rob
recently died at age 60. The death benefit would be - ANSWER $500,000
CURRENTLY TESTING COMPLETE EXAM QUESTIONS WITH DETAILED
VERIFIED ANSWERS (100% CORRECT ANSWERS) /ALREADY GRADED A+
What is considered to be the primary reason for buying life insurance? - ANSWER
Provide death benefits
Karen is a producer who has obtained personal information about a client without
having a legitimate reason to do so. Under the McCarran-Feguson Act, what is the
minimum penalty for this? - ANSWER $10,000 or up to 1 year in jail
A nonparticipating company is sometimes called a(n) - ANSWER Stock insurer,
because policyholders do not participate in dividends resulting from stock
ownership.
The Fair Credit and Reporting Act's main purpose is to - ANSWER Protect
Consumers with guidelines regarding credit reporting and distribution
What is the primary purpose of a rating service such as A.M Best? - ANSWER
Determine financial strength of an insurance company
Fraternal Benefit Society has each of the following characteristics EXCEPT?
- Incorporated
- Without capital stock
- exist for profit
- exist for the benefit of its members - ANSWER Exist for profit, FBS are not for
profit and exist for the benefit of its members.
An insurer's ability to make unpredictable payouts to policyowners is called -
ANSWER Liquidity
The Do Not Call Registry offers exemptions for calls placed from all of the
,following EXCEPT
- Charities
- Political Organizations
- Insurance Sales Calls
- Surveys - ANSWER Insurance Sales Calls
A plan in which an employer pays insurance benefits from a fund derived from the
employer's current revenues is called? - ANSWER A self-funded plan
An insurer's claim settlement practices are regulated by the - ANSWER State
Insurance Departments
What is known as the immediate specific event causing loss and giving risk to risk?
- ANSWER Peril
When a house burns down what would the Peril be? When someone dies what
would the peril be? - ANSWER Fire, Death
How do insurers predict the increase of individual risks? - ANSWER Law of Large
Numbers
Insurance companies determine risk exposure by which of the following? -
ANSWER Law of Large Numbers and Risk Pooling
Insurance represents the process of risk ________________. - ANSWER
Transference
All of the following are examples of pure risk EXCEPT
-Losing Money at a Casino
-Injured while playing football
,-Falling at a casino and breaking a hip
-Jewelry stolen during a home robbery - ANSWER Losing Money at a Casino,
because that is speculative risk. Pure risk means loss is the only possible outcome.
Insurable interest does NOT occur in which of the following relationships? -
ANSWER Business owner and business client
According to life insurance contract law, insurable interest exists - ANSWER at the
time of application
According to the principle of Utmost Good Faith, the insured will answer
questions on the application to the best of their knowledge and pay the required
premium, while the insurer will deal fairly with the insured and it's - ANSWER
promises made
When the principal gives the agent authority in writing, it's referred to as -
ANSWER Express Authority
In an insurance contract, the applicant's "consideration" is the - ANSWER
Statements made in the application and the premium
Which type of clause describes the following statement: "We have issued the
policy in consideration of the representations in your applications and payment of
the first term premium". - ANSWER Consideration Clause
Legal purpose is a term used in contract law meaning - ANSWER there must be
legal reasons for entering into the contract
In an insurance contract, the element that shows each party is giving something of
value is called - ANSWER Consideration
Which of the following is an example of the insured's consideration? - ANSWER A
paid premium
, What is implied authority defined as? - ANSWER Authority that is not specifically
given to an agent in the agency contract, but that an agent can reasonably assume
to carry out his/her duties
All of the following are elements of an insurance policy EXCEPT
- definitions
- other insurance
- claim forms
- conditions - ANSWER Claim forms
Intentional withholding of material facts that would affect an insurance policy's
validity is called a(n)? - ANSWER Concealment
Which of the following is present when an applicant stands to lose value if the
insured dies? - ANSWER Insurable Interest, the applicant is subject to loss upon
death, illness, or disability of the insured.
The power given to an individual producer that is not specifically addressed in
his/her contract is considered what type of authority? - ANSWER Implied
What are an applicant's statements concerning occupation, hobbies, and personal
health history regarded as? - ANSWER Representation
How are survivorship life insurance policies helpful in estate planning? - ANSWER
Provide funds to help pay taxes
Rob purchased a standard whole life policy with a $500,000 death benefit when
he was age 30. His insurance agent told him the policy would be paid up if he
reached age 100. The present cash value of the policy equals $250,000. Rob
recently died at age 60. The death benefit would be - ANSWER $500,000
