MICHIGAN LIFE INSURANCE EXAM 2025–
2026 COMPLETE PRACTICE TEST BANK
VERIFIED QUESTIONS & CORRECT
ANSWERS (STATE + NATIONAL)
1. 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
2. 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
3. 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
4. Which type of life insurance is normally associated with a Payer Benefit rider?
A. Term rider
B. Family income insurance
C. Juvenile insurance
D. Spouse insurance
CORRECT ANSWER - C. Juvenile insurance
,5. 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
6. 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
7. 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
8. 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
9. 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
10. 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
11. 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
12. 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
13. 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
14. 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
15. 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
16. 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
17. 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
18. The deeds and actions of a producer indicate what kind of authority?
A. Implied
B. Conditional
C. Express
D. Apparent
CORRECT ANSWER - A. Implied
19. Which of the following is NOT a required provision in a life insurance policy
according to Michigan law?
A. Grace period
B. Reinstatement
C. Guaranteed cash value table
D. Free look period of 30 days
CORRECT ANSWER - D. Free look period of 30 days (Michigan requires 10
days, not 30)
20. Under Michigan’s replacement rules, an agent must provide a Notice of
Replacement to the applicant at the time of application submission when?
A. Only if the existing policy is less than 1 year old
B. Only if the applicant requests it
2026 COMPLETE PRACTICE TEST BANK
VERIFIED QUESTIONS & CORRECT
ANSWERS (STATE + NATIONAL)
1. 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
2. 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
3. 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
4. Which type of life insurance is normally associated with a Payer Benefit rider?
A. Term rider
B. Family income insurance
C. Juvenile insurance
D. Spouse insurance
CORRECT ANSWER - C. Juvenile insurance
,5. 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
6. 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
7. 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
8. 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
9. 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
10. 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
11. 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
12. 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
13. 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
14. 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
15. 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
16. 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
17. 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
18. The deeds and actions of a producer indicate what kind of authority?
A. Implied
B. Conditional
C. Express
D. Apparent
CORRECT ANSWER - A. Implied
19. Which of the following is NOT a required provision in a life insurance policy
according to Michigan law?
A. Grace period
B. Reinstatement
C. Guaranteed cash value table
D. Free look period of 30 days
CORRECT ANSWER - D. Free look period of 30 days (Michigan requires 10
days, not 30)
20. Under Michigan’s replacement rules, an agent must provide a Notice of
Replacement to the applicant at the time of application submission when?
A. Only if the existing policy is less than 1 year old
B. Only if the applicant requests it
