State RegulationsMI specificDifficulty 3/5
After an accelerated death benefit is paid under a Michigan living benefit rider, the policy:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
The acceleration design of Michigan's living benefit provisions (M.C.L. 500.3928, M.C.L. 500.3949) reduces the remaining death benefit — and typically the cash value — by the amount advanced, but the policy itself continues in force. The policyowner keeps whatever coverage remains, and the beneficiary receives the reduced benefit at death. This continuation-with-reduction structure is the core effect-on-death-benefit rule that distinguishes acceleration from surrender.
Why the other options are wrong
- B) There is no automatic surrender or term replacement; the same policy continues with a reduced benefit.
- C) Continuing at the same face amount would make the advance additive, which contradicts the reduction principle of M.C.L. 500.3928 and M.C.L. 500.3949.
- D) A repayment requirement is not part of the acceleration framework — the advance permanently reduces the benefit rather than creating a 30-day repayment obligation.
Memory hook
The rider spends the death benefit down, not out.