State RegulationsMI specificDifficulty 2/5
A producer in Ann Arbor proposes a second Medicare supplement policy to a client who already owns one, and the new policy would duplicate benefits the client already has. What must occur before the new policy is issued?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
M.C.L. 500.3827 prohibits delivering or issuing a Medicare supplement policy that provides duplicate benefits unless the replacement notice requirements are satisfied. The applicant must be told a new policy may duplicate existing coverage so the sale does not pile unnecessary premiums on top of redundant benefits. Michigan regulates this through disclosure rather than banning replacement outright.
Why the other options are wrong
- A) The existing insurer's consent is not a condition of sale; the statute requires replacement disclosure, not competitor approval.
- C) DIFS does not pre-approve individual solicitations; the duty runs through the required replacement notice.
- D) A duplicate-benefit policy is not banned outright; it simply may not be issued without the required replacement notice.
Memory hook
Duplicate Med supp? Replacement notice first, or the policy cannot be issued.