Free General Insurance Concepts Practice Questions
Michigan Life exam (series 16-65) — 77 practice questions.
Subtopics: Contract of adhesion, Aleatory contract, Utmost good faith, Consideration, Concealment, Insurable interest parties, Definition of risk, Hazard, Peril, Handling risk, Retention, Insurable risk, Stock insurer, Mutual insurer, Admitted insurer, Domestic foreign alien, Legal purpose, Competent parties, Offer and acceptance, Express authority, Apparent authority, Indemnity, Representations, Pure vs speculative risk, Law of large numbers, Adverse selection, Moral hazard, Morale hazard, Physical hazard, Implied authority, Fiduciary duty, Unilateral contract, Conditional contract, Warranty, Waiver, Estoppel, Reciprocal insurer, Fraternal benefit society, Reinsurance, Surplus lines insurer, Self-insurance, Exposure, Loss, Risk avoidance, Risk reduction, Risk sharing, Speculative risk, Homogeneous exposure units, Catastrophic loss, Domestic insurer, Alien insurer, Mutual dividends, Assessment mutual, Lloyd's, Government insurers, Insurer ratings, Captive agency system, Independent agency, Direct response, Managing general agent, Insurer as principal, Presumption of agency, Errors and omissions, Insurer consideration, Reasonable expectations, Fraud, Personal contract, Valued contract
Read the General Insurance Concepts study guide
Sample questions & answers
1. Why is an insurance policy described as a contract of adhesion?
The insurer drafts it; the buyer accepts it as is
A contract of adhesion is drafted by one party (the insurer) and accepted by the other on a take-it-or-leave-it basis.
2. An insurance contract is aleatory because:
Values exchanged may be unequal
An aleatory contract involves an exchange of unequal amounts depending on an uncertain event.
3. The principle that both parties to an insurance contract rely on honesty and full disclosure is called:
Utmost good faith
Insurance contracts are based on utmost good faith, requiring honesty and full disclosure by both parties.
4. The consideration given by an insured in an insurance contract is the:
The premium and application statements
The insured's consideration consists of the premium payment and the statements made in the application.
Practice: General Insurance Concepts
Answer choices are shuffled every time, and every question comes with an explanation.
Practice questions are study aids generated for exam preparation and are not actual exam questions. Content is provided for educational purposes and is not legal advice. Verify current statutes, rules, and exam specifications with the Insurance Department and the exam administrator before relying on it.
