State RegulationsMI specificDifficulty 1/5
A Traverse City professional who depends on an individual disability income policy learns that the issuing Michigan insurer has been declared insolvent. What maximum protection does the Michigan Life and Health Insurance Guaranty Association provide for these disability income benefits?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
M.C.L. 500.7704 protects individual disability income benefits, and long-term care benefits, up to $300,000 under the Michigan Life and Health Insurance Guaranty Association Act. That figure matches the cap for life death benefits, so an insured whose paycheck protection disappears with the insurer's failure has the same $300,000 guaranty ceiling as a family collecting a death benefit, rather than the lower $100,000 cash value cap.
Why the other options are wrong
- B) $100,000 is the cash surrender value cap and the cap for other non-basic health benefits, not for disability income.
- C) $500,000 applies only to basic hospital, medical, and surgical benefits.
- D) $250,000 is the annuity cap, which is unrelated to disability income protection.
Memory hook
Paycheck protection matches the death benefit at $300,000.