State RegulationsMI specificDifficulty 2/5
A Grand Rapids insurer circulates a brochure for its individual health policy that describes the policy's benefits in terms that are untrue, misleading, and designed to deceive prospective purchasers. Under Michigan Administrative Code R 500.651–.669, how is this brochure classified?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
The Michigan Administrative Code advertising rules R 500.651–.669 prohibit accident and health advertisements that are untrue, deceptive, or misleading, consistent with the Michigan Insurance Code misrepresentation and false advertising prohibitions (M.C.L. 500.2005 and M.C.L. 500.2007). A brochure that misstates benefits to deceive purchasers fails that standard outright. The practical consequence is exposure to trade practice sanctions by DIFS for the insurer and any producer who uses it.
Why the other options are wrong
- A) Comparison with competitors does not license deception; even comparative statements must be truthful and not misleading.
- C) A buyer's guide is a prescribed educational document, not a shield for misleading benefit claims.
- D) An outline of coverage is a standardized summary with its own content rules; misdescribing benefits is unlawful regardless of outline delivery timing.
Memory hook
If the ad deceives, R 500.651–.669 forbid it.