State RegulationsMI specificDifficulty 2/5
A Detroit producer falsely tells a policyowner that her current life policy contains serious defects, hoping she will let it lapse and buy a new policy from him. This practice is best described as:
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
M.C.L. 500.2005(f) makes it unlawful to misrepresent policy provisions for the purpose of inducing a policyowner to lapse, forfeit, exchange, convert, or surrender a policy — the practice known as twisting. The false claims about the existing policy are the misrepresentation; no rebate is offered, nothing is coerced, and no claim is being settled.
Why the other options are wrong
- A) Rebating involves giving value not specified in the contract, not false statements about a policy.
- B) Coercion involves compelling actions through force or threat, which is absent here.
- C) No claim is pending or being settled, so claim settlement practices are not implicated.
Memory hook
Bad-mouthing her policy to make her switch? That's twisting.