State RegulationsMI specificDifficulty 1/5
Under the Michigan life insurance replacement rules, which transaction is EXEMPT from the replacement requirements?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
R 500.603, with context in DIFS Bulletin 84-06, exempts transactions with the same insurer or an affiliate of the existing insurer from the replacement-rule requirements. Internal exchanges within one insurance group do not involve a competing insurer, so the notice, signed-statement, and proposal-filing machinery aimed at inter-company replacements does not apply to them.
Why the other options are wrong
- B) Replacing coverage from an unrelated insurer is the core transaction the replacement rules were written to cover.
- C) Crossing to a different insurer, even through conversion of group coverage, is a replacement subject to the rules.
- D) Pledging or borrowing more than 25% of the policy's loan value is expressly a replacement trigger under R 500.601(c), not an exemption.
Memory hook
Same family, no fight: internal swaps with the same insurer or affiliate are exempt.