State RegulationsMI specificDifficulty 2/5
When an insurer sells a long-term care insurance policy in Michigan, what inflation-protection option must be offered to the applicant at purchase?
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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 Michigan long-term care insurers to offer inflation protection no less favorable than one of three forms: annual compounding at 5% or more, a guaranteed right to increase benefits periodically without evidence of insurability, or a benefit equal to a percentage of actual charges. The summary of coverage must also present a 20-year benefit-comparison graphic so applicants can see the effect of inflation protection over time.
Why the other options are wrong
- B) Conditioning the increase on evidence of insurability defeats the purpose; the guaranteed increase right must be available without it.
- C) The offer must be made at purchase; a post-sale rider application does not satisfy M.C.L. 500.3909.
- D) A cost-rise premium refund is not one of the statutory inflation-protection forms.
Memory hook
Offer 5% compound, a guaranteed buy-up, or a share of actual charges, plus the 20-year picture.