State RegulationsMI specificDifficulty 3/5
Which of the following Michigan sales scenarios involves an unlawful inducement rather than a lawful marketing practice?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
M.C.L. 500.2024 of the Michigan Insurance Code makes it unlawful to give anything of value not specified in the contract as an inducement to purchase insurance. A $500 television vastly exceeds the narrow exception in M.C.L. 500.2024a, which exempts only merchandise with an invoice value not exceeding $5.00 given to each life insurance applicant, so the television offer is a prohibited inducement and rebate.
Why the other options are wrong
- A) Explaining the free-look right that the policy itself provides is a required disclosure duty, not the delivery of outside value as an inducement.
- C) Mailing a statutorily required termination notice is a lawful obligation owed to the policyholder, not an inducement to buy.
- D) Truthfully advertising a benefit the policy actually delivers is accurate marketing, which the advertising rules permit.
Memory hook
Big-ticket gifts cross the line — the statutory carve-out stops at $5.00 merchandise.