State RegulationsMI specificDifficulty 3/5
At the time an individual long-term care policy is sold in Michigan, which of the following satisfies the statutory inflation-protection offer requirement?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
M.C.L. 500.3909 requires the insurer to offer inflation protection no less favorable than annual compounding at 5% or more, or a guaranteed right to periodic benefit increases without evidence of insurability, or a benefit expressed as a percentage of actual charges. The summary of coverage must also include a 20-year benefit-comparison graphic so buyers can see the effect of the choices. Option A matches the statutory compounding standard.
Why the other options are wrong
- B) The statute measures increases against the benefit level, not premiums paid to date, and requires compounding at 5% or more.
- C) The guaranteed-increase alternative must be available WITHOUT evidence of insurability, which is the opposite of this option.
- D) A never-increasing benefit fails the offer requirement entirely and would leave benefits eroded by rising care costs.
Memory hook
Michigan LTC must offer 5% compound or better — think 'grow or show,' M.C.L. 500.3909.