State RegulationsMI specificDifficulty 1/5
The conformity with state statutes provision, authorized by M.C.L. 500.3450, has what effect on a Michigan individual disability policy?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
M.C.L. 500.3450 permits the conformity with state statutes optional provision in Michigan disability policies. Its function is to make the policy self-correcting: if any term conflicts with the statutes of the state in which the insured resides on the policy's effective date, the policy is automatically read as conforming to those minimum statutory standards. The insured therefore receives at least the protection state law requires, regardless of what the printed contract says.
Why the other options are wrong
- A) The provision keys to the law of the state where the insured resides, not the insurer's home state.
- C) There is no election among states; the conforming law is that of the insured's state of residence.
- D) The provision operates within state insurance law; it does not federalize the contract.
Memory hook
Resident's state law wins: the policy bends to meet the minimum.