State RegulationsMI specificDifficulty 1/5
If a Michigan life insurer becomes insolvent, what is the maximum coverage provided by the Michigan Life and Health Insurance Guaranty Association for the death benefit under an individual 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 caps the Michigan Life and Health Insurance Guaranty Association's coverage of life insurance death benefits at $300,000 per person per insurer insolvency. The cash surrender value of the same policy is separately capped at $100,000. This means a beneficiary whose policy face amount exceeds the cap still has a guaranteed floor of protection from the association when the insurer fails, which is why producers must be careful never to overstate that protection in sales conversations.
Why the other options are wrong
- A) $100,000 is the cap on cash surrender value, not on the death benefit.
- C) $250,000 is the guaranty cap for the present value of annuity benefits, not life death benefits.
- D) $500,000 is the cap for basic hospital, medical, and surgical benefits, not life death benefits.
Memory hook
Death benefit: 300 grand; cash value: 100 grand.