A policyholder in Flint surrenders the cash value of an individual life insurance policy after the issuing Michigan insurer is declared insolvent. What is the maximum amount the Michigan Life and Health Insurance Guaranty Association provides for the cash surrender value?

Why B is correct

M.C.L. 500.7704 caps the Michigan Life and Health Insurance Guaranty Association's protection for the cash surrender value of an individual life insurance policy at $100,000. This cap is deliberately lower than the $300,000 protection for life death benefits, so a policyholder counting on the cash value in an insolvency receives less guaranty protection than a beneficiary receiving a death benefit would.

Why the other options are wrong

• A) $250,000 is the guaranty cap for annuities measured by present value, not for life policy cash surrender values.
• C) $300,000 is the cap for life death benefits and for disability income and long-term care benefits, not for cash surrender value.
• D) $500,000 is the cap for basic hospital, medical, and surgical benefits, the highest cap in the guaranty structure.

Memory hook

Cash surrender tops out at one hundred grand.