State RegulationsMI specificDifficulty 2/5
Before terminating an individual life policy for nonpayment of a premium after the first policy year, what notice must a Michigan insurer give the policyowner?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
M.C.L. 500.4012 requires the insurer to mail written notice to the policyowner's last known address at least 30 days before terminating coverage for nonpayment after the first policy year. Michigan grants an exemption for insurers that collect a majority of their annual premiums in person, but most Michigan life insurers must send this written lapse notice before coverage ends.
Why the other options are wrong
- A) A telephone call does not satisfy the statutory requirement, and the statute's timing is measured before termination, not after the missed premium.
- B) A certified letter 5 days before termination is neither the required form nor the required timing under M.C.L. 500.4012.
- C) Notice is required: the insurer must mail written notice to the last known address at least 30 days before termination unless an exemption applies.
Memory hook
Lapse takes 30 days' written warning to the last known address.