State RegulationsMI specificDifficulty 1/5
When an insurer licensed in Michigan becomes insolvent, what is the maximum MLHIGA protection for the cash surrender value of a life insurance policy?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
M.C.L. 500.7704(7) caps MLHIGA protection for the cash surrender value of life insurance policies at $100,000 when a member insurer becomes insolvent. This is lower than the death benefit cap, so a policyowner's protected amount depends on which benefit is at stake at the time of the insolvency.
Why the other options are wrong
- A) $300,000 is the life insurance death benefit cap under M.C.L. 500.7704(6), not the cash surrender value cap.
- C) $250,000 is the annuity present-value cap under M.C.L. 500.7704, not the cash surrender value cap.
- D) $500,000 is the cap for basic hospital, medical, and surgical benefits, not for life policy cash surrender values.
Memory hook
Cash value tops out at one hundred grand, well below the death benefit cap.