State RegulationsMI specificDifficulty 3/5
A producer hands a prospect a sales flyer stating, "Even if the insurer fails, Michigan's Life and Health Insurance Guaranty Association guarantees all your money back." Under Michigan law, this solicitation material is:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
M.C.L. 500.2005(i) specifically prohibits misrepresenting Michigan Life and Health Insurance Guaranty Association coverage to induce the purchase of insurance. MLHIGA protection is capped by statute under M.C.L. 500.7704, for example life insurance death benefits at $300,000, so a promise that "all your money back" is guaranteed is false on its face. DIFS treats guaranty-association hype in sales materials as a misrepresentation even when used during initial solicitation.
Why the other options are wrong
- B) Adding a mailing address does not cure the misrepresentation of guaranty-association coverage.
- C) MLHIGA coverage is capped at statutory maximums under M.C.L. 500.7704; it is not an unlimited guarantee of all funds.
- D) The misrepresentation is unlawful when used in solicitation materials to induce purchase; no completed sale is required for the violation.
Memory hook
Guaranty hype is a trap: M.C.L. 500.2005(i) caps the bragging, not just the coverage.