State RegulationsMI specificDifficulty 2/5
A policyholder in Lansing holds a Michigan long-term care policy with a level daily benefit and worries that her current health would defeat any new underwriting if she tried to grow the benefit. Which policy right addresses her concern?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Her worry is solved by the guaranteed periodic increase right: Michigan law (M.C.L. 500.3909, within M.C.L. 500.3901 to 500.3955) requires that this increase option be offered without evidence of insurability, so her declined health cannot block her from growing the benefit. The practical consequence is that a policyholder can plan for rising care costs even after her health has changed.
Why the other options are wrong
- A) Replacement would require new underwriting of her current health, which is exactly the obstacle she fears.
- B) Converting to nonforfeiture status preserves benefits after lapse; it does not increase the benefit going forward.
- C) The return right applies shortly after delivery of the policy, not to a policyholder seeking to expand benefits years into coverage.
Memory hook
Health changed? The guaranteed increase option still works, no insurability proof needed.