State RegulationsMI specificDifficulty 1/5
Which statement accurately describes how a living benefit rider operates under Michigan law?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
The living benefit framework reflected in M.C.L. 500.3928 and M.C.L. 500.3949 is an acceleration device: qualifying events let the policyowner draw a portion of the death benefit early, and the remaining death benefit is correspondingly reduced. Michigan law treats these provisions as a way to re-time the existing benefit, not as a second pool of coverage. Candidates should keep this distinct from riders that add new benefits on top of the base policy.
Why the other options are wrong
- B) Additive payment would increase the insurer's total obligation; the acceleration design of M.C.L. 500.3928 and M.C.L. 500.3949 does no such thing.
- C) Conversion into an annuity is a separate exchange transaction, not the function of a living benefit rider.
- D) Living benefit riders do not alter the cash-value accumulation schedule; they advance death benefit dollars.
Memory hook
Accelerate, don't accumulate — living benefits re-time the payout.