State RegulationsMI specificDifficulty 2/5
A Michigan producer explains the nonforfeiture benefit that must be offered with individual long-term care policies. Which statement is accurate?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
A nonforfeiture benefit protects the value the policyholder has built: if the policy later lapses for nonpayment, the insured retains some defined level of benefits rather than losing everything. Michigan requires insurers to offer a nonforfeiture option with individual long-term care policies (M.C.L. 500.3910, within M.C.L. 500.3901 to 500.3955), and the offer requirement exists because long-term care premiums are paid for years before any claim arises.
Why the other options are wrong
- A) A nonforfeiture benefit is not a return-of-premium promise; it preserves some benefits, not all premiums plus interest.
- C) Paying premiums during a claim is a premium waiver concept, not what a nonforfeiture benefit does.
- D) A guaranteed full refund shortly after lapse describes a return right, not a nonforfeiture benefit.
Memory hook
Nonforfeiture: lapse does not mean lose everything; some benefit survives.