Chapter 15 - Michigan State Law
False Report of Death or Sickness
A part of insurance fraud regulation. Any agent, physician, or insured who presents to an insurer a false certificate of death, sickness, or disability is guilty of a misdemeanor and is liable for a fine of up to $1,000, or imprisonment in the county jail of up to 3 months.
Summary Suspension
A form of disciplinary actions. Without prior hearing, the Commissioner may order this suspension of a licensee if he finds that protection of the public requires emergency action. If requested, the Commissioner may conduct a hearing on the suspension no later than 20 days after the suspension.
Allowable Charges
A part of Variable Products regulation. At the time a variable contract is delivered, an insurer must disclose all charges that may be made against the separate account.
Continuing Education Requirement Grace Period
A producer has a 90 day period from the expiration date of his license within to meet his continuing education requirements or the license will be canceled. During this period, the insurance producer may not solicit or sell new policies, bind coverage, or act as an producer except to service policies and collect commission on previously sold.
Exclusions and Restrictions of Credit Life Insurance
A standard provision of Credit Life insurance. No policy of life insurance other than industrial life insurance may be issued in Michigan with any of the following provisions: -Forfeiture of the policy for failure to repay any loan on the policy while the total indebtedness is less than the loan value -Time limit for legal action against the insurer of less than 6 years -An effective date more than 6 months before application was made -Settlement at maturity of less value than the amount insured by the policy plus dividend additions, if any, less any indebtedness to the insurer on the policy and less any premium that may be the terms of the policy be deducted.
Insurance Producer
A type of licensee. A person who sells, solicits, or negotiates insurance.
Twisting
An Unfair and Prohibited Insurance Trade practice. No insurer, officer, director agent, or solicitor may make any misrepresentation of policies for the purpose of inducing an insured to lapse his existing insurance therein, and to take out another policy in its place. Violators are subject to license revocation, and may not seek a new license for one year following the violation.
Term of Coverage for Credit Life Insurance
Any credit insurance extending more than 15 days beyond the maturity date of the debt must be extended without any additional cost to the debtor or pursuant to a written agreement, signed by the debtor.
Coordination of Benefits
Group health insurance rules for this include: -The primary plan pays its benefits as if the secondary plan or plans did not exist. A secondary plan takes the benefits of another plan into account before benefits are paid. -The benefits of the plan which covers the person as an employee or member is determined before those of the plan which covers the person as a dependent. -The benefits of a plan which covers a person as an employee are determined before those of a plan which covers that person as a laid-off or retired employee.
Types of Licensees
Insurance producer, insurance counselor, business entity, and limited lines producer
Insurance Fraud Regulation
It is an unlawful practice to knowingly make a material misrepresentation or concealment in an application for the insurance or renewal of a policy, or in a claim for benefits under an insurance policy. It is also unlawful to: -Solicit or accept insurance risks by or for an insolvent insurer -Conceal the records of an insurer, reinsurer, or other licensee -Divert the monies of an insurer, reinsurer, or other licensee A person who commits fraudulent insurance act is guilty of a felony punishable by imprisonment for up to 4 year, a fine of up to $50,000 or both, and must pay restitution. A person who enters into an agreement, combination, or conspiracy to commit fraud is guilty of a felony punishable by imprisonment of up to 10 years, a fine of up to $50,000 or both.
Privacy Notice
Neither the US brokers that handled this insurance nor the insurers that have underwritten this insurance will disclose nonpublic information concerning the buyer to non-affiliates of the brokers or insurers except as permitted by law.
Optional Provisions
Optional provisions for individual health insurance policies include misstatement of age, other insurance in this insurer, unpaid premiums, conformity with state statutes, and illegal occupation.
Cease and Desist Order
A form of disciplinary actions. If the Commissioner determines that a person has engaged in an unfair method of competition, or unfair/deceptive act/practice, he will issue an order requiring the person to refrain from engaging in the method of competition, act, or practice. Once this is ordered, the person may file a notice of appeal and may appeal a final order. If a person does these acts knowingly, the Commissioner may order a civil fine of up to $10,000 for each violation, or a suspension or revocation of the person's license, or both. Fines may not exceed $50,000 in total.
Disclosure of Policy (or Account) Numbers
A licensee may not disclose, other than to a consumer reporting agency, a policy number, account number, or access code for a consumer's policy or account to any non-affiliated third party for use in telemarketing, direct mail marketing, or email marketing. An exception to this provision will apply if a licensee discloses a policy or account number: -To the licensee's service provider solely in order to perform marketing for the licensee's own products or services, as long as the service provider is not authorized to directly initiate charges to the account. -To a licensee who is a producer solely in order to perform marketing or the licensee's own products or services. -To a participant in an affinity or similar program where the participants in the program are identified to the customer when the customer enters into the program.
Rebating and Illegal Inducement
An Unfair and Prohibited Insurance Trade practice. It is the offer of any special favor in premiums due, dividends, or other benefits, or any valuable consideration or inducement not specified in the policy. A producer whose license is revoked for this may not apply for a new license for one year following the violation. It is an unfair practice to offer any of the following as inducement to purchase a policy: -Employment -Shares of stock or other securities -An advisory board contract promising special profits -Any prizes, goods, wares, merchandise, or tangible property valued at more than $10
Maximum Coverage of Credit Life Insurance
The initial amount of credit life insurance may not exceed in total amount repayable under the credit transaction.
Identity of Insurer
The name of the insurer must be clearly identified in all advertisements and, if any specific individual policy is advertised, it must be identified either by form number or other appropriate description. No advertisement may imply that a policy or insurer's financial condition has been approved by a governmental program or agency unless it is true.
Insurer Duties
This person's duties during replacement include: -Making certain that all replacement actions are in compliance with state regulations. -Notifying each insurer whose insurance is being replaced within 3 business days and, upon request, furnishing a copy of any proposals and comparison statemetns -Maintaining copies of proposals, receipts, and comparison statements for at least 3 years
Continuing Education Requirements
To maintain a producer's license, each licensee must complete a minimum of 24 credit hours, 3 hours of which must be in ethics, of approved insurance continuing education (CE) courses every 2 years. A nonresident who satisfies the continuing education requirements of his state also satisfies the Michigan requirements.
Consumer Privacy Regulation
Violation of privacy requirements is an unfair method of competition or an unfair or deceptive act and practice in the conduct of the business of insurance. These requirements are: notices, opt out requirements, standards for safeguarding customer information, information security program, objectives of information security program, and disclosure of policy or account numbers.
Group Health Insurance Conversion Privilege
Every group disability policy must provide that a dependent who has been continuously insured under the group policy for at least 3 months and whose insurance under the group policy has been terminated is entitled to be issued a conversion policy, without evidence of insurability. The insurer must give written notice to an insured of the conversion option and procedures within 14 days after the group plan's termination. The insured must apply for the conversion policy within 30 days after the termination of the group coverage. The converted policy may not impose any preexisting condition limitations other than those remaining unexpired under the policy from which conversion is exercised.
Preexisting Conditions with Replacing Health Insurance
If a group disability coverage is replaced by another group disability policy or certificate with a preexisting condition limitation, insuring 10 or more employees or members, the preexisting condition limitation for a condition covered by the replaced coverage may not be less than the following: -The coverage of the replacement policy or certificate without application of the preexisting condition limitation -The benefits of the replaced group disability coverage until the individual's preexisting condition limitation expires under the replacement policy
Child Enrollment
A part of the Michigan Eligibility Requirements. The insurer must permit a parent to enroll a dependent child who is otherwise eligible for coverage without regard to any enrollment season restrictions.
Producer Appointment
A producer may not act as an agent unless he is appointed as an agent by the insurer.
Reinstatement of Credit Life Insurance
A standard provision of Credit Life insurance. A lapsed life insurance policy may be reinstated within 3 years of lapse, upon evidence of insurability and payment of arrears of all premium due, including interest.
Incontestability of Credit Life Insurance
A standard provision of Credit Life insurance. An individual life insurance policy is incontestable after it has been in force during the lifetime of the insured for 2 years from its date of issue except for nonpayment of premiums.
Misrepresentation (False Information and Advertising)
An Unfair and Prohibited Insurance Trade practice. It is the issuing of any statement that falsely represents the benefits, advantages, conditions, or terms of any insurance policy. Publishing or disseminating in any fashion, or through any media, any untrue, deceptive, or misleading statement about the business of insurance or, with respect to any person, in the conduct of the person's insurance business. A person who knowingly makes any misrepresentation in the sale of insurance is guilty of a class 5 felony. All advertisements must be maintained for at least 4 years.
False Statements
An Unfair and Prohibited Insurance Trade practice. No one may willfully withhold information from, or give false or misleading information to, the Commissioner, any statistical agency, rating organizations, data collection agency, or insurer, that might affect rates or premiums. A violation is subject to a fine of up to $1,500.
Special Offers
An advertisement may not falsely imply that only a specific number of policies will be sold, or that a time is fixed for the discontinuance of the sale of the particular policy because of special advantages available in the policy.
Counselor Qualifications
An application for this insurance license will not be approved by the Commissioner unless the applicant: -Possesses a good business reputation and good moral character -Has not committed any act that would result in license recovation -Has completed a prelicensing course for the lines applied for -Has paid the fees -Has successfully passed the examination
Lines of Insurance
An individual insurance producer may receive a license in the following lines: Life, Accident and health or sickness, Property, Casualty, Variable life and variable annuity products, Personal lines, Credit, and any other lines permitted under state laws.
Licensing Exam
Applicants for a resident producer license must pass a written examination. Before taking it, the applicant must complete a prelicensing course no more than 12 months before submitting the application for examination. Exemption for nonresidents: an applicant with a license in another state is not required to complete the prelicensing education.
Universal Life Disclosure
At the time the agent takes an application for a policy, the agent must furnish a statement of policy information to the applicant. Any statement of policy cost factors or benefits must contain all of the following: -The corresponding guaranteed policy cost factors or benefits -A statement explaining the non-guaranteed nature of any interest rates, charges, or other fees applied to the policy, including the insurer's rights to alter any of these factors -Any limitation on the crediting of interest
Standard Provisions of Credit Life Insurance
Entire contract, grace period, reinstatement, incontestability, right to examine (free look), misstatement of gender/age, exclusions and restrictions, and payment of premiums.
Small Employer
In Michigan, this is a business who employs at least 2-50 eligible employees on at least half of its working days.
Long-Term Care Insurance Exclusions
Include: -Preexisting conditions -Mental or nervous disorders (except for Alzheimer's) -Alcoholism or drug addiction -Suicide -Service in the armed forces or auxiliary units -War or act of war -Participation in a felony, riot, or insurrection
Medicare Required Disclosure Provisions
Insurer must provide: -A description of policy provisions relating to renewability, cancellation, or continuation of coverage, including any reservation of rights to change premium. -The premiums for the policy or certificate separately from the premiums for any optional or supplemental riders. Applicants for Medicare supplement insurance must be provided with a Guide to Health Insurance for People with Medicare.
Fees
Licensees and applicants must pay the following fees to the Commissioner: -Application fee for license as (non)resident agent, surplus lines agent, solicitor, counselor, or adjuster $10. Not transferable or refundable. -License examination fee $10. Not transferable or refundable. -Solicitor's license $10 annually. -Insurance counselor license $10 annually. -Adjuster's license $5 annually. -Surplus lines agent license $100 annually.
Change of Name and Address
Licensees must inform the Commissioner of a change of legal name or address within 30 days of the change.
Unfair and Prohibited Insurance Trade Practices
The following acts are defined by statute as unfair methods of competition and are strictly prohibited: Misrepresentation (False Information and Advertising); Twisting; False Statements; Defamation; Boycott, Coercion, Intimidation; and Unfair Discrimination.
Required Universal Life Provisions
The insurer must provide the policyholder with an annual report of the policy status itemizing: -The beginning and end of the current report period -The policy value at the end of the previous and current report periods -The total of all amounts credited or debited to the policy value during these current report period -The death benefit at the end of the current report period on each life covered by the policy -The net cash surrender value of the policy -The amount of outstanding loans, if any -Notice that the policy's net cash surrender value will not maintain insurance in force until the end of the next reporting period, if applicable. And each universal life insurance policy must contain: -Guarantees of minimum interest credits and maximum mortality and expense charges -A general description of the calculation of cash surrender values -A description of limitations on the policyowner's right to change the basic coverage -A statement that coverage may not continue to the maturity date even if scheduled premiums are paid in a timely manner -A requirement that written notice will be sent to the policyowner at least 30 days prior to terminate of coverage -For flexible premium universal life insurance policy, a grace period of at least 30 days -Notice that an illustrative report will be sent to the policyowner upon request
Notice and Opt Out Requirements for Licensees
The licensee is not required to provide these for nonpublic personal financial information if the licensee is an employee, agent, or other representative of a principal and all of the following are met: -The principal is another licensee -The principal otherwise complies with and provides the required notices -The licensee does not disclose any nonpublic personal information to any person other than the principal or its affiliates
Shopper's Guide
This must be provided to the applicant prior to the application's presentation or enrollment form's presentation, in the case of a producer solicitation.
Business Entity
A type of licensee. A corporation, association, partnership, limited liability company/partnership, or other legal entity, subject to licensure when acting as a producer.
Producer Qualifications
An application for a resident license will not be approved unless the Commissioner finds the applicant: -Is at least 18 years old -Has not committed any act that would result in license revocation -Has completed a prelicensing course for the lines applied for -Has paid the fees -Has successfully passed examination
Notice of Appointment
An insurer must file this within 15 days after the contract is executed or the first application for insurance is submitted. Upon receipt of this, the Commissioner will determine within 30 days whether the producer is eligible for appointment. If the producer is not, the Commissioner will notify the insurer within 5 days after the determination. An insurer must pay an appointment fee and remit an annual renewal fee for each appointed producer. This must be submitted to the Commissioner within 30 days after entering into a contract.
Termination of Appointment
An insurer who does this, terminates employment, or other relationship of a producer will mail a copy of the notification to the producer. This must be submitted to the Commissioner within 30 days after termination. An insurer may not cancel or refuse to renew a policy because of this. Following this, the producer may continue to represent the insurer in servicing existing policies, but may not bind a new risk, renew a policy, nor increase the obligation of the insurer under the policy without the approval of the insurer.
Notice of Denial
Before denying an application for a license, the Commissioner must let the licensee of the denial know in writing, including the reason. Not later than 30 after this notice, the licensee may request a hearing before the Commissioner to determine the reasonableness of the Commissioner's actions.
Written Agreement between Counselor and Client
Before rendering services, an insurance counselor must prepare this, signed by both counselor and client, outlining the nature of the work to be performed and the fee. It must clearly state that the counselor's fee may not be waived under any circumstances and disclose that the counselor will receive a commission from the insurer on any insurance placed by the counselor. The counselor must keep a copy for 2 years after completion.
Medicare Benefit Standards
Medicare supplement policies must be guaranteed renewable. Termination of a Medicare supplement policy or certificate must be without prejudice to any continuous loss which commenced while the policy was in force. A preexisting condition may not be excluded for more than 6 months after the effective date of coverage. No Medicare supplement policy may contain benefits that duplicate benefits provided by Medicare. An insurer may not cancel or refuse to renew a Medicare supplement policy for any other reason than the nonpayment of premiums or for a material misrepresentation. A Medicare supplement policy must provide that benefits and premiums under the policy may be suspended at the request of the policyholder for up to 24 months. The policyholder must request suspension within 90 days after the date the individual becomes entitled to assistance.
Deceptive Phrases
No advertisement can contain words or phrases such as "all, full. complete, comprehensive, unlimited, up to, as high as," or similar words, in a manner which exaggerates any benefits beyond the term of the policy. No advertisement may contain descriptions of a policy limitation worded to imply that it is a benefit, such as, describing a waiting period as a "benefit builder," or stating "even preexisting conditions are covered after 2 years." No advertisement may use words or phrases that tend to mislead the public into believing that the policy will enable them to profit from being hospitalized.
Commissions
No insurer or producer may pay this, a service fee, or other valuable consideration to a person for selling, soliciting, or negotiating insurance if that person is required to be licensed and is not. Renewal or other deferred versions of this may be paid to a person who is no longer actively licensed if the person was licensed during the transaction. An insurance agent may pay this to any person who does not transact insurance in this state unless the payment violates state law.
Acting without a License
No one may transact insurance unless he is licensed for the line(s) of insurance being sold, solicited, or negotiated. The Commissioner may issue a cease and desist order if he finds that a person is conducting transactions of insurance for which a certificate of authority or license is required without having obtained a certificate of authority or license.
Continuing Education Requirement Exceptions
The Commissioner may waive CE requirements for someone: -Who is unable to comply with the continuing education requirements due to military service. -For whom the Commissioner determines that enforcement of the requirements would cause a severe hardship. -Who is licensed to write only travel or baggage insurance policies and whose job is not for sales of those policies. -Who is licensed to write only limited line credit insurance.
Reports of Actions
Within 30 days, a licensed agent must report any disciplinary action by the insurance regulatory agency of any other state involving fraud, deceit, misrepresentation, or violation of any insurance law. Failure to report as required may, after notice and hearing, result in suspension or revocation of the violators license or subject the violator to civil fines.
Eligibility of Employees
Within a small employer this type of employee is one who works on a full-time basis with a normal workweek of 30 hours or more. An employer may extend eligibility to worker with a normal workweek of 17.5-30 hours if these eligibility criteria are applied among all of the employees and without regard to health status related factors.
Fiduciary Responsibility
An agent or solicitor is a fiduciary for all money received or held by the agent in his capacity as a producer, and must abide by the following practices: -No agent may accept payment of a premium for Medicare supplemental policy or certificate in the form of a check or money order made payable to the agent instead of the insurer. -Upon receiving payment of a premium for a Medicare supplemental policy or certificate, an agent must immediately provide a written receipt to the insured. -An agent must use reasonable accounting methods to record funds received in his fiduciary capacity including the receipt and distribution of all premiums due each insurer. -An agent must record return premiums received by or credited to him which are due an insured. The records must be open to examination. -An agent may not reward any person for procuring or inducing business, furnishing leading or prospects, or acting in any other manner as an agent. -A person may not sell or attempt to sell insurance by means of intimidation or threats, whether express or implied. -A person may not induce the purchase of insurance through a particular agent or from a particular insurer by means of a promise to sell goods, to lend money, to provide services, or by a threat to refuse to sell goods, to refuse to lend money, or to refuse to provide services. -An agent may not be party to a contract under which the agent assumes any responsibility or obligation for payment, for his commission or any allocation of premium to him by the insurer, of any losses on insurance policies sold by the agent unless the claim adjusting is done by insurance company adjusters or licensed independent adjusters.
Information Security Program
Each licensee must implement one of these comprehensive written programs that includes administrative, technical, and physical safeguards for the protection of customer information. This program must do all of the following: -Ensure the security and confidentiality of customer information -Protect against any anticipated threats or hazards to the integrity of the information -Protects against unauthorized access to the information that could result in substantial harm or inconvenience to any customer.
Authorized Credit Life Insurance Policies
Credit life insurance and credit disability insurance may be issued only in the following forms: -Individual policies of life insurance issued to debtors on a term plan -Individual policies of accident and health insurance issued to debtors on a term plan, or disability provisions in individual life policies -Group policies of life insurance issued to creditors providing insurance upon the lives of debtors on a term plan -Group policies of accident and health insurance issued to creditors on a term plan insuring debtors, or disability provisions in group life policies
Living Benefit Provisions of Credit Life Insurance
A fixed indivisible premium life insruance policy that fund LTC benefits entirely by accelerating the death benefit must comply with all the following provisions: -Premiums required to be paid are fixed and guaranteed for the life of the policy -The guaranteed cash surrender value is stated in the policy -The death benefit and long-term care benefits are guaranteed for the life of the policy -The interest credited internally is guaranteed not to be less than the minimum interest rate set forth in the policy -The benefits cannot be terminated by the insurer except for nonpayment of premium -The policy meets the applicable nonforfeiture requirements -At the time of issue, the policy if accompanied by an illustration that clearly discloses the year-by-year progression of cash values and face amount -The policyowner is provided with an annual report showing the current cash value, death benefit, and LTC benefits
Penalties
A form of disciplinary actions. In addition to a cease and desist order, the Commissioner may: -Order payment of an administrative penalty of up to $500 per violation, not to exceed $2,500 for the same violation. -Order payment of an administrative penalty of up to $2,500 per violation if the person should have known the wrong of his actions, not to exceed $25,000 for the same violation. Violation of the statutes regulating rearing and misrepresentation is a misdemeanor, subject to a fine of $100 per rebating violation or up to $1,000 for each misrepresentation violation. Both violations are subject to imprisonment.
Suspension, Revocation, Refusal to Issue or Renew
A form of disciplinary actions. When it appears to the Commissioner that any person has committed a violation of insurance law which makes the continued operation of an insurer contrary to the interests of policyholders or the public, the Commissioner, after giving notice and an opportunity to be heard, may do these to insurers. The Commissioner may also do these to any licensee who: -Provides incomplete or materially untrue information in the license application. -Violates any insurance law, regulation, subpoena, or order of the Commissioner. -Obtains a license through fraud or misrepresentation. -Improperly withholds any monies or properties received in the course of doing business. -Misrepresents the provisions, terms, and conditions of an insurance policy. -Has been convicted of a misdemeanor or felony. -Commits any unfair trade practice. -Has a license denied, suspended, or revoked in another state. -Forges another person's name in an application or document related to insurance. -Cheats on an exam. -Knowingly accepts business from a producer who is not licensed. -Fails to comply with an administrative order for child support. -Fails to pay single business tax.
Use of Genetic Information
A hospital, medical, or surgical policy may not require an insured or an asymptomatic applicant for insurance to do either of the following: -Undergo genetic testing before being issued a policy. -Disclose whether genetic testing has been conducted, or any test results or other genetic information
Time Limit on Certain Defenses
A individual health insurance policy general provision. The period for contestability for 2 years. The grace period is 10 days for monthly premiums, and 31 days for all other modes of payment. A policy may be reinstated within 60 days of a policy lapse. If the insurer requires a new application and issues a binding receipt, the policy must be reinstated within 45 days, unless the new application is denied. A reinstated policy will immediately cover accidental injury and will begin to cover sickness 10 days after the reinstatement date. Claims must be paid immediately upon receiving the proof of the claim. However, insurers may pay installment amounts until the proof is provided. The insurer has the right to conduct physical examinations as required pursuant to a claim, and to make an autopsy where not forbidden by law. The period for legal action is no less than 3 years. The free look period in Michigan is at least 10 days.
Variable Annuities License
A part of Variable Products regulation. All resident applicants for the variable annuities (VA) line of authority must register with FINRA, unless the Department of Insurance has exempted the agency from registering. Applicant for the VA license must pass variable annuities examination, but are not required to hold a basic life qualification as a precondition for licensure. Michigan does not require pre-licensing education for this license. but continuing education requirements do apply.
Variable Annuities Minimum Requirements
A part of Variable Products regulation. Variable life insurance policies must comply with these requirements: -The insurer bears mortality and expense risks -For scheduled premium policies, the insurer must provide a minimum death benefit that equals or exceeds the initial face amount of the policy as long as the insured pays the premiums -Any changes in the variable death benefit must be determined at least annually -The cash value must be determined at least monthly It also must specify: -That the amount or duration of the death benefit may be variable or fixed under specified conditions -That cash values may increase or decrease according to the experience of the separate account, subject to any specified minimum guarantees -Any minimum death benefit is required -The method for determining the amount of insurance payable at death -That the policyholder may return the policy within 10 days after delivery of the policy and receive a refund equal to the difference between the premiums paid and the amounts allocated to any separate accounts under the policy -The grace period -Reinstatement provision, if applicable -Designation of the separate account
Penalties
A part of insurance fraud regulation. A person, officer, member, or examining physician of any society authorized to do business who knowingly makes a false or fraudulent statement or representation in an application for membership, or for the purpose of obtaining any benefit is guilty of a misdemeanor and is subject to imprisonment for 30 days to 1 year, a fine of $100 to $500, or both. A person who willfully makes a false statement as to the death or disability of a certificate holder in a society for the purpose of procuring payment of a benefit is guilty of perjury.
Civil Immunity
A part of insurance fraud regulation. Insurers, employees, producers, or other persons acting without malice, fraudulent intent, or bad faith, may not be subject to civil liability for libel, slander, or any other related action when information is given to law enforcement officials, the NAIC, the Department of Insurance, or a federal/state agency established to detect and prevent fraudulent insurance acts.
Release of Information
A part of insurance fraud regulation. Upon written request by an authorized agency to an insurance, the insurer or an agent authorized by the insurer may release any information that is considered important relating to any suspected insurance fraud. If an insurer knows the identity of a person who it has reason to believe committed a fraudulent insurance act, the insurer may notify an authorized agency of such knowledge.
Denial of Enrollment
A part of the Michigan Eligibility Requirements. An insurer may not do this to an insured's child on any of the following grounds: -The child was born out of wedlock -The child is not claimed as a dependent on the insured's federal income tax return -The child does not reside with the insured or in the insured's service area
Dependent Child Age Limit
A part of the Michigan Eligibility Requirements. Attainment of age 19 for a dependent will not terminate the coverage under an individual or group disability policy if the child is both incapable of self-sustaining employment by reason of mental retardation or physical handicap and chiefly dependent upon the policyholder for support and maintenance. However, the policyholder must provide the insurer with documentation of such incapacity or dependence within 31 days of the child's attainment of the limiting age.
Non-Custodial Parents
A part of the Michigan Eligibility Requirements. If a child has health coverage through an insurer of this type of parent, the insurer must: -Provide the custodial parent with information necessary for the child to obtain benefits -Permit the custodial parent or, with the custodial parent's approval, the provider to submit a claim for covered services without the non-custodial parent's approval -Make payment on claims directly to the custodial parent or medical provider
Notices
A part of the consumer privacy regulation. An insurer or agent must provide a notice of information practices to all applicant and policyholders as follows: -With a written application, disclosure notice must be given at the time of delivery of the policy or at the collection of personal information. -In the case of a renewal policy, at least annually -In the case of policy reinstatement or change in insurance benefits, a notice must be given no later than at the time a request is made for reinstatement or a change in benefits is received. This must be in writing and contain the following: -A statement that information may be collected from persons other than the insured. -A list of the types of information that may be collected and the origin and investigative method used. -The types of disclosure
License Not Required
A producer's license is not required of employees, officers, and directors who do not transact insurance, do not receive commissions, and who engage in the following capacities: -Executive, admin, managerial, or clerical tasks indirectly related to the transaction of insurance. -Underwriting, loss control, inspection, or the processing, adjusting, investigating, or settling of a claim on a contract of insurance. -Providing technical advice and assistance to licensed insurance producers. -Securing and furnishing information for the administration of group insurance. -Performing administrative services related to mass marketed property and casualty insurance. -Administration of a program of employee benefits for the employer's or association's own employees who are not compensated by the company issuing the contracts. -The inspection, rating, or classification of risks, or the supervision of the training of insurance producers. -Advertising -Counsel to an employer concerning its insurance interests.
Right to Examine (Free Look)
A standard provision of Credit Life insurance. In Michigan, this period is 10 days.
Notice and Opt Out Requirements for Surplus Brokers
A surplus line broker or insurer is considered to be in compliance with the notice and opt out requirements for nonpublic personal financial information if all of the following are met: -The broker does not disclose nonpublic personal information of a consumer to non-affiliated third parties for any purpose, including joint servicing or marketing. -The broker delivers the Privacy Notice to the consumer at the time a customer relationship is established.
Insurance Counselor
A type of licensee. A person who provides advice, counsel, or opinion with respect to benefits promised, coverage afforded, or terms of a policy of insurance or annuity. Someone who provides advice about insurance policy terms and benefits for a fee.
Limited Lines Producer
A type of licensee. Authorized by the Commissioner to sell, solicit, or negotiate limited lines insurance. Examples of this insurance includes: Marine, credit, surety and fidelity, legal expense, livestock, malpractice, and plate glass insurance.
Form and Consent
Advertisements must be truthful and not misleading in fact or by implication. These parts of an advertisement of a policy must be sufficiently complete and clear so as to avoid deception.
Long-Term Care Insurance Preexisting Conditions
An LTC policy may not exclude losses incurred more than 6 months from the effective date of coverage for a preexisting condition.
Home Health Care (or Assisted Living)
An LTC policy may not limit or exclude these benefits in any of the following ways: -By requiring that the insured would need skilled care in a skilled nursing facility if these services were not provided. -By requiring that the insured first or simultaneously receive nursing or therapeutic services in a home or community setting before these services are covered. -By limiting eligible services to services provided by registered nurses or licensed practical nurses. -By requiring that a nurse or therapist provide services covered by the policy that can be provided by a home health aide or other licensed home health care worker acting within the scope of his licensure. -By requiring that the insured have an acute condition before these services are covered. -By limiting benefits to services provided by Medicare-certified agencies or providers.
Defamation
An Unfair and Prohibited Insurance Trade practice. Includes making any false or maliciously critical statement regarding the financial condition of any person or business entity, with the intent to injure. Any person who does this is guilty of a misdemeanor punishable by imprisonment for not more than 1 year or a fine of up to $1,000.
Unfair Sex/Race Discrimination
An Unfair and Prohibited Insurance Trade practice. Insurers may not restrict the amount of benefits payable on the basis of age, sex, race, creed, national origin, or marital status, except to the extent the amount of benefits, term, conditions, or type of coverage vary as a result of the application rate differentials.
Unfair Discrimination
An Unfair and Prohibited Insurance Trade practice. It is an unfair practice to charge different rates for individuals of the same class and life expectancy for life and health insurance. This includes sex/race discrimination and rebating and illegal inducement.
Boycott, Coercion, Intimidation
An Unfair and Prohibited Insurance Trade practice. It is an unfair practice to enter into action resulting in an unreasonable restraint of trade, or monopoly in, the business of insurance.
Commission for Disability Policies
An agent may not receive this for this policy issued to an individual eligible for Medicare, unless the amount paid in the first year of the policy is not more than the amount that the agent receives for the same policy in each of the 2 subsequent renewal periods.
Replacement Penalties
An agent who fails to comply with Michigan replacement regulations is presumed to have given cause for revocation or suspension of his license, or for imposition of a civil penalty for each such failure.
Agent Duties
Each producer who initiates an application must submit to the insurer: -A statement signed by the applicant and by the producer affirming whether or not a policy replacement is involved When replacement is involved, the producer must: -Present to the applicant with a Notice Regarding Replacement -Obtain a list of all existing life insurance and/or annuities to be replaced -Provide the applicant all sales materials used in presentation -Provide the replacing insurer with a Replacement Notice
Long-Term Care Inflation Protection
If an LTC policy is offered, the insurer must also offer the applicant, at the time of purchase, the option to buy an inflation protection feature that: -Increases benefit levels annually at a rate no less than 5% -Guarantees that the insured may periodically increase benefit levels without providing evidence of insurability or health status, so long as the option for the previous period has not been declined. -Covers a specified percentage of actual or reasonable charges and does not include a maximum specified indemnity amount or limit.
Exemptions
The following types of policies are exempt from replacement regulations: -Replacements by the same insurer that issued the existing policy -Credit life insurance administered by group-types methods -Group life insurance policies -Policies issued in connection with a pension, profit sharing, individuals retirement account or other benefit plan qualifying for an income tax deduction of premiums -Nonconvertible term policies which cannot be renewed and which would expire within 5 years
Gramm-Leach-Bliley Act
This Act requires state insurance regulatory authorities to establish appropriate standards relating to all of the following administrative, technical, and physical safeguards for the following reasons: -To ensure the security and confidentiality of customer records and information. -To protect against any anticipated threats or hazards to the security or integrity of such records. -To protect against unauthorized access to or use of records or information that may result in substantial harm or inconvenience to a customer.
Business Entity Qualifications
This applicant which applied for a resident insurer producer license will not be approved unless the Commissioner finds that they have: -Paid the fees -Designated an individual licensed producer responsible for compliance with Michigan laws, rules, and regulations -Not committed any act that would result in license revocation
Michigan Life and Health Insurance Guaranty Association
This association provides protection to policyowners and beneficiaries in the event of insurer impairment or insolvency. All insurers authorized to transact life and health insurance in Michigan are required to be members of the Association. The association is funded by assessments from each insurer member. If the member insurer becomes impaired or insolvent, an assessment will be made against the other members to provide money for the claims of the insolvent insurer. The Association assumes all rights, duties, and obligations of the insolvent insurer.
Blanket Insuarnce
This disability insurance is a form of limited health insurance covering groups of persons whose membership fluctuates. Members of the group are automatically covered, and are not individually underwritten. Some examples of the types of groups covered in Michigan include: passengers of a common carrier; employees of a single employer; students or teachers; volunteer fire department; debtors of a single creditor; members of a sports team; attendees of a camp. Must contain all the provisions required under individual disability policies, plus a provision that new persons eligible for coverage will be added to the group. An individual application is not required. All benefits are payable to the person insured, their beneficiary or their legal guardian where applicable. If directed by the insured, benefits may be paid directly to a third-party organization such as a creditor.
Notice of Hearing
When a person has engaged in an unfair or deceptive act, and the Commissioner determines that a hearing would be of public interest, he will give this notice in writing to the person involved, including the general nature of the complaint and the proceedings contemplated. If an unfair or deceptive practice is not specified in the insurance code, the Commissioner may still serve the statement of charges and this notice of at least 15 days.
Disclosure of Credit Life Insurance
When a premium or identifiable charge is payable at the time the insurance is applied for, disclosures must be made to the principal debtor and copies given and retained in accordance with state and federal law. The creditor must disclose the optional nature of the coverage, premium, or identifiable charge separately by type of coverage.
