State RegulationsMI specificDifficulty 3/5
Which Michigan insurer is exempt from the requirement to mail a written lapse notice at least 30 days before an individual life policy's coverage terminates for nonpayment?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
M.C.L. 500.4012 excuses from the 30-day mailed lapse notice any insurer that collects a majority of its annual premium in person. The rationale is that a company dealing face-to-face with most premium payers already has direct contact about nonpayment. All other insurers must mail the written notice to the policyowner's last known address at least 30 days before termination.
Why the other options are wrong
- B) Direct-response sellers get no exemption; the exception turns on in-person collection of a majority of annual premium.
- C) Collection by mail is the opposite of the exemption's trigger; mailed-payment insurers must still send the notice.
- D) An automatic premium loan provision does not lift the notice duty; only majority in-person collection does.
Memory hook
Collect premiums face-to-face? Skip the mailed lapse notice.