State RegulationsMI specificDifficulty 2/5
An insured in Dearborn owns an individual accident and health policy that is noncancelable. She stops paying the required premiums. What may the insurer do?
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Noncancelable status under Michigan's renewability framework, including classifications under M.C.L. 500.2213b, protects the insured from cancellation and premium increases, but it does not relieve the insured of the obligation to pay the premium. Nonpayment of premium remains a ground on which coverage may end even for a noncancelable policy. The guarantee is against the insurer's discretionary cancellation and repricing, not against the consequences of the insured's own failure to pay.
Why the other options are wrong
- A) The noncancelable promise bars discretionary cancellation, not termination for the insured's nonpayment of premium.
- B) Noncancelable coverage cannot be dropped at the insurer's discretion for other reasons; only nonpayment applies here.
- C) A noncancelable premium is locked; the insurer cannot reprice the policy to recoup arrears, and premium increases are not the remedy for nonpayment.
Memory hook
Noncancelable locks the price, not the bill: stop paying and coverage can stop.