State RegulationsMI specificDifficulty 1/5
Under the Michigan Insurance Code's misrepresentation provision, which of the following practices is prohibited?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
M.C.L. 500.2005 of the Michigan Insurance Code (Insurance Code of 1956) makes it unlawful to misrepresent material facts, policy terms, benefits, or advantages, or the financial condition of any person, in connection with the sale of insurance. A producer who overstates what a policy will pay or conceals a limitation is engaging in a prohibited misrepresentation, which exposes the producer and insurer to regulatory action by the director, including fines, suspension, or revocation.
Why the other options are wrong
- B) Comparing premiums using each company's own published rate tables is a lawful sales practice, because the figures are accurate and no material fact is misrepresented.
- C) Disclosing exclusions before the application is signed promotes full disclosure and is exactly the conduct the Insurance Code encourages, not prohibits.
- D) Quoting a guaranteed cash value taken from the insurer's current illustration is an accurate statement of policy terms, not a misrepresentation.
Memory hook
Misrepresentation = misstating the deal; honest comparisons and disclosures never violate M.C.L. 500.2005.