State RegulationsMI specificDifficulty 2/5
To persuade a policyowner in Saginaw to surrender an existing life policy, a producer falsely states that the current policy's values will vanish next year. Which Michigan unfair trade practice has the producer committed?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
M.C.L. 500.2005 makes it unlawful to misrepresent material facts or policy terms, and subsection (f) specifically prohibits misrepresentations made for the purpose of inducing a policyowner to lapse, forfeit, surrender, exchange, or convert a policy — twisting. False statements about an existing policy's values to force a surrender sit squarely in that provision of the Michigan Insurance Code.
Why the other options are wrong
- B) Coercion under the Michigan Insurance Code involves boycotting or intimidating parties in the insurance trade, not misstating policy values to a customer.
- C) Unfair claims settlement practices concern the handling of claims, and no claim is involved in this solicitation.
- D) Defamation requires false written or printed disparagement of a competitor's financial condition; the misstatement here concerns the policyowner's own policy.
Memory hook
Lie to force a surrender = twisting = M.C.L. 500.2005(f).