MI Life & Health study guide
MI Life & Health · Work through your exam, one topic at a time.
A Michigan life and health insurance producer license authorizes an individual to sell, solicit, and negotiate life insurance, accident and health insurance, and annuity products in the state. Candidates generally complete any required prelicensing coursework, pass a licensing exam, submit fingerprints, and apply for the license through Michigan's licensing system; the exam itself is delivered by a testing vendor that is now branded Pearson Professional Assessments (formerly Pearson VUE), so program pages and links may look different from older study materials. The MI Life & Health study guide has 10 sections and about 3,282 words.
01Insurance Regulation
Insurance is regulated principally by the states; the McCarran-Ferguson Act gives state law priority, with federal antitrust rules filling gaps. Michigan's regulator is the Department of Insurance and Financial Services (DIFS).
339 words, about 2 min02General Insurance Concepts
Risk is the uncertainty of loss; peril is the cause of loss; hazard is a condition that increases the chance or severity of loss. Physical hazards (icy steps), moral hazards (dishonesty, such as faking a claim), and morale hazards (carelessness because insurance exists) are tested constantly - students routinely swap peril and hazard.
317 words, about 2 min03Life Insurance Basics
Life insurance replaces the economic value of a person's future earnings. Need is estimated two ways: human life value (present value of future earnings) and needs analysis (income replacement, debts, education, final expenses, minus existing resources).
320 words, about 2 min04Life Insurance Policies
Term covers a stated period and builds no cash value: level term, decreasing term (mortgage protection), increasing term, annually renewable term (rising premium, renewable to a stated age), and convertible term. Term buys the largest death benefit per premium dollar for a temporary need.
318 words, about 2 min05Life Insurance Policy Provisions, Options and Riders
Entire contract (policy plus application plus attached riders), free look (commonly 10 days), incontestability (after two years the insurer cannot contest for misstatement, though nonpayment of premium still voids coverage), grace period (typically 30 or 31 days), reinstatement (within three years with evidence of insurability and back premiums plus interest), misstatement of age or sex (benefit is adjusted, not the contract rescinded), policy loans (interest accrues and unpaid loans reduce the death benefit), automatic premium loan, assignment (absolute or collateral), and a suicide clause (usually two years; afterward the face amount is paid). On lapse, the owner may take cash surrender value, reduced paid-up insurance, or extended term insurance.
296 words, about 1 min06Annuities
An annuity liquidates a sum of money over time - the reverse of life insurance. During accumulation the contract builds value; during annuitization it pays out.
328 words, about 2 min07Health Insurance Basics
Health insurance pools morbidity (sickness) risk rather than mortality. Underwriting controls adverse selection, though the Affordable Care Act limits it in the individual market with guaranteed issue and no pre-existing-condition exclusions.
335 words, about 2 min08Health Insurance Policy Provisions
Health policies must contain the statutory required provisions, including: entire contract; time limit on certain defenses (after two years only fraud or nonpayment can void the policy); grace period (7 days for weekly, 10 days for monthly, 31 days for other modes); reinstatement (coverage restored on payment, with accidental injury covered immediately); notice of claim (20 days) and claim forms (15 days); proof of loss (90 days, extendable); time of payment of claims (immediately after proof, with periodic payments at least monthly); payment of claims; physical examination; legal actions (not before 60 days after proof of loss and within the statutory limit, commonly three years); change of beneficiary; and misstatement of age. Change of occupation (reduces benefits and returns unearned premium), other insurance in this insurer, insurance with other insurers, relation of earnings to insurance, unpaid premium, cancellation, conformity with state statutes, illegal occupation, and narcotics.
315 words, about 2 min09Disability Income and Related Insurance
DI replaces a portion of income, typically 60-70%, to preserve the incentive to work. Key definitions: total disability (classically own occupation for the first two years, then any occupation); partial disability (some duties, reduced benefit); residual disability (loss of income, paid as a percentage of prior earnings).
343 words, about 2 min10Medical Expense and Group Health Insurance
The employer, union, or association holds the master policy and issues certificates to members. The group, not the individual, is underwritten using group size, industry, average age and sex, location, participation, and the employer's contribution.
371 words, about 2 min