State RegulationsMI specificDifficulty 3/5
After receiving the replacing insurer's information statement, an existing insurer's agent contacts the policyowner, urges her to keep her current policy in force, and also offers to reinstate coverage that lapsed last week for a missed premium. Under Michigan Administrative Code R 500.601, which statement is correct?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Michigan Administrative Code R 500.601 defines conservation as attempts by the existing insurer or its agent to keep existing life coverage in force after the existing insurer receives the replacing insurer's information statement. The definition expressly excludes routine late-payment or reinstatement offers. Conservation sales proposals must be filed with the existing insurer, so conservation is a regulated activity that must follow Michigan Administrative Code procedures rather than outright misconduct.
Why the other options are wrong
- A) Conservation is not unlawful; it is a defined, regulated activity that must comply with the filing and procedure rules of R 500.601.
- B) Reinstatement offers for a late payment are excluded from conservation, so the reinstatement offer is not the filed item; conservation sales proposals are what get filed.
- C) Conservation does not require DIFS approval; it requires compliance with Michigan Administrative Code R 500.601's definition and filing duties.
Memory hook
Conservation = keep it in force; routine reinstatement = excluded.