State RegulationsMI specificDifficulty 2/5
A Michigan individual life policy is being reviewed for compliance with the state's prohibited-provision rules. Which provision would violate M.C.L. 500.4046?
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
M.C.L. 500.4046 prohibits harsh contract terms in Michigan individual life policies: the policy may not be forfeited solely for failure to repay a policy loan, the contract may not shorten the statutory limitations period, and settlement at maturity may not be for less than full value. The other listed provisions are lawful limitations or required provisions elsewhere in the Michigan Insurance Code.
Why the other options are wrong
- B) An aviation liability limitation is permitted under Michigan law, subject to its own statutory limits, so it does not violate M.C.L. 500.4046.
- C) M.C.L. 500.4010 requires premiums to be payable in advance, so this provision is mandated rather than prohibited.
- D) A 2-year contestability period is exactly what M.C.L. 500.4014 requires; it is a standard compliant provision.
Memory hook
A policy loan default alone can never kill the coverage.