State RegulationsMI specificDifficulty 2/5
In a Michigan individual life policy, a provision allowing the insurer to settle at maturity for less than the policy's full value is:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
M.C.L. 500.4046 prohibits any provision that permits settlement of the policy at maturity for less than its full value. When the contract matures, the policyowner is entitled to the full contractual value; an insurer cannot write in a discount. This protects the maturity proceeds — whether cash value or endowment amount — from being eroded by fine print at the moment the policyowner is finally supposed to collect.
Why the other options are wrong
- B) Written consent at delivery cannot validate a clause that M.C.L. 500.4046 expressly prohibits.
- C) There is no policy-age exception; the prohibition applies regardless of how long the policy has been in force.
- D) An outstanding policy loan is offset against proceeds under general policy-loan rules, but M.C.L. 500.4046 still forbids a contractual maturity discount, and no such settlement is required.
Memory hook
At maturity it's full value — Michigan bans the built-in discount.