State RegulationsMI specificDifficulty 2/5
Two Michigan applicants present the same class of risk and the same expectation of life for individual life coverage. An insurer charges one applicant a higher premium for reasons unrelated to actuarial risk. Under the Michigan Insurance Code, this practice is:
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
M.C.L. 500.2027 governs insurer selection criteria, and the unfair-discrimination provisions of the Michigan Insurance Code — M.C.L. 500.2019 for life and M.C.L. 500.2020 for accident and health — prohibit discriminating between insureds of the same class and equal expectation of life. Rates and underwriting distinctions must rest on criteria that genuinely relate to the risk; arbitrary premium differences among equally situated insureds are unlawful unfair discrimination.
Why the other options are wrong
- A) Disclosure does not cure discrimination; unequal treatment of equally situated insureds is unlawful regardless of disclosure.
- B) Internal board approval cannot authorize conduct the Michigan Insurance Code declares unlawful.
- D) Director bulletins do not create a duty to discriminate; they interpret and enforce the statute.
Memory hook
Same class, same expectation — one price or face the statute.