State RegulationsMI specificDifficulty 1/5
A Michigan individual accident and health policy contains the optional change of occupation provision. What does this provision permit the insurer to do when the insured changes occupations?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
M.C.L. 500.3432 lists change of occupation among the optional provisions Michigan permits in individual disability (accident and health) policies. When the provision is included, an occupation change does not void coverage; instead the insurer may equitably adjust the premium charged or the benefit provided so that it matches what the risk of the new occupation justifies. The practical effect is fairness in both directions: a more hazardous job can bring a lower benefit or higher premium, and a less hazardous job can bring better terms.
Why the other options are wrong
- A) The provision exists to keep coverage alive on equitable terms after an occupation change; automatic voiding defeats its purpose and is not what M.C.L. 500.3432 authorizes.
- C) Reapplication is not required; the provision operates by adjusting the existing contract's premium or benefit, not by forcing a new application.
- D) The provision adjusts terms to the new risk; it does not create a permanent exclusion of every loss tied to the new occupation.
Memory hook
New job, new risk: the insurer adjusts premium or benefit, it never just walks away.