Michigan Life Insurance State Licensing
Exam Questions And Well Graded
Solutions With Rationales Updated 2026-
2027
Master your Michigan Life Insurance Producer Exam with this comprehensive study
guide. Features 300+ practice questions, verified answers, and clear rationales
covering the Michigan Insurance Code, policy provisions, annuities, and ethics.
Perfect for students matching the 20-hour pre-licensing education requirements.
Pass your PSI state exam on the first try with these realistic, highly testable
scenarios based directly on the official candidate bulletin.
Question 1: Who heads the Department of Insurance and Financial Services (DIFS)
and is responsible for enforcing Michigan insurance laws?
A) The Governor
B) The State Attorney General
C) The DIFS Director
D) The Insurance Commissioner Emeritus
Answer: C) The DIFS Director
Rationale: The Director of the Department of Insurance and Financial Services
(DIFS) is appointed by the Governor to administer, organize, and enforce state
insurance codes.
Question 2: What is the maximum duration for which a temporary insurance
producer license can be issued in Michigan?
A) 30 days
B) 90 days
C) 180 days
D) 365 days
Answer: C) 180 days
Rationale: Michigan allows a temporary license for up to 180 days without an exam
to a surviving spouse, next of kin, or administrator to wind up the business affairs of
a deceased or disabled producer.
Question 3: If a producer completes 28 hours of continuing education during a single
compliance period, how many excess hours can be carried over to the next period?
A) 0 hours
B) 3 hours
C) 4 hours
D) 12 hours
Answer: C) 4 hours
Rationale: A maximum of 4 credit hours of continuing education may be carried over
to the next compliance period in Michigan.
Question 4: An insurer that is formed under the laws of Canada and licensed to sell
insurance to residents in Michigan is classified as what type of insurer?
,A) Domestic
B) Foreign
C) Alien
D) Mutual
Answer: C) Alien
Rationale: An alien insurer is an insurance company formed and incorporated under
the laws of any country outside the United States.
Question 5: Of the 24 required continuing education hours in Michigan, how many
hours must cover the topic of ethics?
A) 1 hour
B) 2 hours
C) 3 hours
D) 5 hours
Answer: C) 3 hours
Rationale: Out of the 24 hours of continuing education required every two years, at
least 3 hours must specifically focus on insurance ethics.
Question 6: Offering a prospective client a share of the producer's commission or a
gift card worth $100 as an incentive to buy a policy is an illegal practice known as
what?
A) Twisting
B) Rebating
C) Defamation
D) Boycott
Answer: B) Rebating
Rationale: Rebating is offering any inducement, favor, or valuable consideration not
specified in the insurance policy contract to entice a consumer to purchase
insurance.
Question 7: Within how many days must an insurer notify the DIFS Director after
terminating a producer’s appointment?
A) 15 days
B) 30 days
C) 45 days
D) 60 days
Answer: B) 30 days
Rationale: An insurer must file a notice of termination with the DIFS Director within
30 days from the effective date of terminating a producer's appointment.
Question 8: Making oral or written statements that are false, maliciously critical, or
derogatory regarding the financial condition of an competing insurer is called what?
A) Misrepresentation
B) Churning
C) Coercion
D) Defamation
Answer: D) Defamation
Rationale: Defamation involves publishing or circulating false or maliciously critical
statements designed to injure any person or entity engaged in the insurance
business.
,Question 9: If a producer is convicted of a felony, within how many days must they
report this conviction to the DIFS Director?
A) 10 days
B) 30 days
C) 45 days
D) Immediate notification is required
Answer: B) 30 days
Rationale: Producers must report any administrative action or criminal
prosecution/conviction taken against them in any jurisdiction within 30 days of the
final disposition.
Question 10: What is the age requirement to apply for a resident insurance producer
license in the state of Michigan?
A) 16 years old
B) 18 years old
C) 21 years old
D) 25 years old
Answer: B) 18 years old
Rationale: An applicant for a resident insurance producer license in Michigan must
be at least 18 years of age.
Question 11: A domestic insurance company in Michigan is defined as an insurer
that is incorporated under the laws of which jurisdiction?
A) Any state in the US
B) The federal government
C) The State of Michigan
D) A foreign municipality
Answer: C) The State of Michigan
Rationale: A domestic insurer is an insurance company that is formed, incorporated,
and headquartered under the laws of the state of Michigan.
Question 12: If the DIFS Director finds a producer guilty of an intentional violation of
the Insurance Code, what is the maximum civil fine per individual violation?
A) $1,000
B) $2,500
C) $5,000
D) $25,000
Answer: C) $5,000
Rationale: Intentional violations of the Michigan Insurance Code carry a civil fine of
up to $5,000 per violation, up to an aggregate maximum penalty.
Question 13: Under Michigan law, a producer must keep complete records of all
insurance transactions for at least how many years?
A) 2 years
B) 3 years
C) 5 years
D) 7 years
Answer: B) 3 years
Rationale: Michigan insurance producers must retain clear and complete transaction
records for at least 3 years following the completion of the transaction.
, Question 14: Which entity pays the claims of a life insurance company that goes
bankrupt and enters liquidation in Michigan?
A) The Federal Deposit Insurance Corporation (FDIC)
B) The Michigan Department of Treasury
C) The Michigan Life and Health Insurance Guaranty Association
D) The National Association of Insurance Commissioners (NAIC)
Answer: C) The Michigan Life and Health Insurance Guaranty Association
Rationale: The Guaranty Association protects policyholders by paying claims and
continuing coverage for insolvent or bankrupt member insurance companies.
Question 15: If an individual holds an insurance license in Ohio and moves to
Michigan, how many days do they have to apply for a resident license without taking
the exam?
A) 30 days
B) 60 days
C) 90 days
D) 120 days
Answer: C) 90 days
Rationale: A person licensed in another state who establishes residency in Michigan
has 90 days from establishing residency to apply for a resident license without
examination.
Question 16: An insurance policy illustration used during a sale to a Michigan
consumer must include which of the following elements?
A) A guarantee of future stock market performance
B) The name of the DIFS Director
C) A statement distinguishing between guaranteed and non-guaranteed values
D) A comparison to the producer's personal financial portfolio
Answer: C) A statement distinguishing between guaranteed and non-
guaranteed values
Rationale: Regulations state that life insurance illustrations must clearly label and
distinguish between guaranteed values and non-guaranteed projections.
Question 17: Which of the following is considered an unfair method of competition
under Michigan's Unfair Trade Practices Act?
A) Denying a claim that is explicitly excluded in the policy contract
B) Charging different premiums based on documented life expectancy data
C) Refusing to insure an applicant solely because of their geographic location
D) Offering a multi-policy discount approved by the state
Answer: C) Refusing to insure an applicant solely because of their geographic
location
Rationale: Refusing to insure an individual based entirely on geographic location
(redlining) or other discriminatory factors without actuarial justification is unfair
discrimination.
Question 18: A person who, for a fee, offers advice and counsel to a consumer
regarding the terms and benefits of an insurance policy must hold which license?
A) Managing General Agent
B) Insurance Counselor
C) Limited Lines Producer
D) Surplus Lines Broker
Answer: B) Insurance Counselor
Exam Questions And Well Graded
Solutions With Rationales Updated 2026-
2027
Master your Michigan Life Insurance Producer Exam with this comprehensive study
guide. Features 300+ practice questions, verified answers, and clear rationales
covering the Michigan Insurance Code, policy provisions, annuities, and ethics.
Perfect for students matching the 20-hour pre-licensing education requirements.
Pass your PSI state exam on the first try with these realistic, highly testable
scenarios based directly on the official candidate bulletin.
Question 1: Who heads the Department of Insurance and Financial Services (DIFS)
and is responsible for enforcing Michigan insurance laws?
A) The Governor
B) The State Attorney General
C) The DIFS Director
D) The Insurance Commissioner Emeritus
Answer: C) The DIFS Director
Rationale: The Director of the Department of Insurance and Financial Services
(DIFS) is appointed by the Governor to administer, organize, and enforce state
insurance codes.
Question 2: What is the maximum duration for which a temporary insurance
producer license can be issued in Michigan?
A) 30 days
B) 90 days
C) 180 days
D) 365 days
Answer: C) 180 days
Rationale: Michigan allows a temporary license for up to 180 days without an exam
to a surviving spouse, next of kin, or administrator to wind up the business affairs of
a deceased or disabled producer.
Question 3: If a producer completes 28 hours of continuing education during a single
compliance period, how many excess hours can be carried over to the next period?
A) 0 hours
B) 3 hours
C) 4 hours
D) 12 hours
Answer: C) 4 hours
Rationale: A maximum of 4 credit hours of continuing education may be carried over
to the next compliance period in Michigan.
Question 4: An insurer that is formed under the laws of Canada and licensed to sell
insurance to residents in Michigan is classified as what type of insurer?
,A) Domestic
B) Foreign
C) Alien
D) Mutual
Answer: C) Alien
Rationale: An alien insurer is an insurance company formed and incorporated under
the laws of any country outside the United States.
Question 5: Of the 24 required continuing education hours in Michigan, how many
hours must cover the topic of ethics?
A) 1 hour
B) 2 hours
C) 3 hours
D) 5 hours
Answer: C) 3 hours
Rationale: Out of the 24 hours of continuing education required every two years, at
least 3 hours must specifically focus on insurance ethics.
Question 6: Offering a prospective client a share of the producer's commission or a
gift card worth $100 as an incentive to buy a policy is an illegal practice known as
what?
A) Twisting
B) Rebating
C) Defamation
D) Boycott
Answer: B) Rebating
Rationale: Rebating is offering any inducement, favor, or valuable consideration not
specified in the insurance policy contract to entice a consumer to purchase
insurance.
Question 7: Within how many days must an insurer notify the DIFS Director after
terminating a producer’s appointment?
A) 15 days
B) 30 days
C) 45 days
D) 60 days
Answer: B) 30 days
Rationale: An insurer must file a notice of termination with the DIFS Director within
30 days from the effective date of terminating a producer's appointment.
Question 8: Making oral or written statements that are false, maliciously critical, or
derogatory regarding the financial condition of an competing insurer is called what?
A) Misrepresentation
B) Churning
C) Coercion
D) Defamation
Answer: D) Defamation
Rationale: Defamation involves publishing or circulating false or maliciously critical
statements designed to injure any person or entity engaged in the insurance
business.
,Question 9: If a producer is convicted of a felony, within how many days must they
report this conviction to the DIFS Director?
A) 10 days
B) 30 days
C) 45 days
D) Immediate notification is required
Answer: B) 30 days
Rationale: Producers must report any administrative action or criminal
prosecution/conviction taken against them in any jurisdiction within 30 days of the
final disposition.
Question 10: What is the age requirement to apply for a resident insurance producer
license in the state of Michigan?
A) 16 years old
B) 18 years old
C) 21 years old
D) 25 years old
Answer: B) 18 years old
Rationale: An applicant for a resident insurance producer license in Michigan must
be at least 18 years of age.
Question 11: A domestic insurance company in Michigan is defined as an insurer
that is incorporated under the laws of which jurisdiction?
A) Any state in the US
B) The federal government
C) The State of Michigan
D) A foreign municipality
Answer: C) The State of Michigan
Rationale: A domestic insurer is an insurance company that is formed, incorporated,
and headquartered under the laws of the state of Michigan.
Question 12: If the DIFS Director finds a producer guilty of an intentional violation of
the Insurance Code, what is the maximum civil fine per individual violation?
A) $1,000
B) $2,500
C) $5,000
D) $25,000
Answer: C) $5,000
Rationale: Intentional violations of the Michigan Insurance Code carry a civil fine of
up to $5,000 per violation, up to an aggregate maximum penalty.
Question 13: Under Michigan law, a producer must keep complete records of all
insurance transactions for at least how many years?
A) 2 years
B) 3 years
C) 5 years
D) 7 years
Answer: B) 3 years
Rationale: Michigan insurance producers must retain clear and complete transaction
records for at least 3 years following the completion of the transaction.
, Question 14: Which entity pays the claims of a life insurance company that goes
bankrupt and enters liquidation in Michigan?
A) The Federal Deposit Insurance Corporation (FDIC)
B) The Michigan Department of Treasury
C) The Michigan Life and Health Insurance Guaranty Association
D) The National Association of Insurance Commissioners (NAIC)
Answer: C) The Michigan Life and Health Insurance Guaranty Association
Rationale: The Guaranty Association protects policyholders by paying claims and
continuing coverage for insolvent or bankrupt member insurance companies.
Question 15: If an individual holds an insurance license in Ohio and moves to
Michigan, how many days do they have to apply for a resident license without taking
the exam?
A) 30 days
B) 60 days
C) 90 days
D) 120 days
Answer: C) 90 days
Rationale: A person licensed in another state who establishes residency in Michigan
has 90 days from establishing residency to apply for a resident license without
examination.
Question 16: An insurance policy illustration used during a sale to a Michigan
consumer must include which of the following elements?
A) A guarantee of future stock market performance
B) The name of the DIFS Director
C) A statement distinguishing between guaranteed and non-guaranteed values
D) A comparison to the producer's personal financial portfolio
Answer: C) A statement distinguishing between guaranteed and non-
guaranteed values
Rationale: Regulations state that life insurance illustrations must clearly label and
distinguish between guaranteed values and non-guaranteed projections.
Question 17: Which of the following is considered an unfair method of competition
under Michigan's Unfair Trade Practices Act?
A) Denying a claim that is explicitly excluded in the policy contract
B) Charging different premiums based on documented life expectancy data
C) Refusing to insure an applicant solely because of their geographic location
D) Offering a multi-policy discount approved by the state
Answer: C) Refusing to insure an applicant solely because of their geographic
location
Rationale: Refusing to insure an individual based entirely on geographic location
(redlining) or other discriminatory factors without actuarial justification is unfair
discrimination.
Question 18: A person who, for a fee, offers advice and counsel to a consumer
regarding the terms and benefits of an insurance policy must hold which license?
A) Managing General Agent
B) Insurance Counselor
C) Limited Lines Producer
D) Surplus Lines Broker
Answer: B) Insurance Counselor
