State RegulationsMI specificDifficulty 2/5
After a viatical settlement is completed, when the insured dies the death proceeds are payable to:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
In the viatical transfer contemplated by Michigan's living benefit provisions (M.C.L. 500.3928, M.C.L. 500.3949), the settlement provider purchases the policy and steps into the shoes of the policyowner and beneficiary. Because the provider now owns the contract, the death proceeds at the insured's death are payable to the provider — that is precisely the return the provider priced when it discounted the purchase below the face amount.
Why the other options are wrong
- B) The original beneficiary designation is superseded by the sale; the provider's ownership and new beneficiary designation control.
- C) Payment to the estate occurs only where no beneficiary is designated and no transfer has occurred — neither describes a completed settlement.
- D) The insurer is not a party to the settlement and has no retained interest; it simply pays the proceeds to the current owner-beneficiary.
Memory hook
Sell the policy, sell the payoff — the provider collects at death.