State RegulationsMI specificDifficulty 2/5
A Troy business owner wants to purchase a $10,000 life insurance policy on his business partner's life, naming himself as beneficiary. Under Michigan law, what is required before the insurer may issue this policy?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
M.C.L. 500.2211 requires the written consent of the insured before one person may insure another person's life for his or her own benefit on policies of $10,000 or more; the insured's signature on the application constitutes that consent. This protects individuals from being insured without their knowledge. The business owner therefore needs the partner's written consent, and the partner's signature on the application is sufficient.
Why the other options are wrong
- A) DIFS does not pre-approve third-party policies; the statutory consent requirement, not agency review, governs issuance.
- B) Business partnerships are not treated like family relationships for consent purposes; M.C.L. 500.2211 applies because the owner and the insured are different people.
- D) The consent requirement applies to policies of $10,000 or more, not to smaller policies; this option reverses the threshold.
Memory hook
Insure my body, I sign — $10,000 needs my OK.