Michigan Life Insurance Practice Exam

Life insurance policies often have exclusions or higher premium rates based on certain high-risk activities. Racing cars is a recognized high-risk hobby that can significantly increase the likelihood of accidents and injuries. Therefore, individuals who engage in such activities frequently may find that their life insurance policies exclude coverage for death resulting from these activities. This exclusion exists because insurers assess the risk associated with different activities and may choose not to cover those that present a greater likelihood of causing harm. In this case, racing cars once a month places the individual in a higher risk category, making it more plausible for the insurance policy to have specific clauses that exclude coverage related to racing incidents. Other scenarios, while they may be concerning, do not typically lead to outright exclusions. For instance, a person diagnosed with a chronic illness may face higher premiums or policy limitations, but they are unlikely to be outright denied coverage simply based on their illness. Similarly, smokers may pay more for their premiums without exclusion, and individuals over age 70 can still qualify for life insurance, albeit possibly with limitations or higher rates. In contrast, the activity of racing cars represents a clear and preventable risky behavior that prompts exclusions more directly.