CHAPTER 8 STATE LAWS

Credit Life Insurance: Payment of Premiums

All policies must allow premiums to be paid in advance.

Solicitation and Sales Presentations: Advertising Beyond Limits of Licensing Jurisdiction

An advertisement that is intended to be seen or heard beyond the limits of the jurisdiction in which the insurer is licensed must not imply licensing beyond such limits.

Replacement: Penalties

An agent who fails to comply with Michigan replacement regulations is presumed to have given cause for revocation or suspension of his/her license, or for imposition of a civil penalty for each such failure.

Insurance Fraud Regulation: False Report of Death or Sickness

Any agent, physician, insured or other person 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 to imprisonment in the county jail of up to 3 months.

Variable Annuities License: Form Filing

Insurers must file variable life policies with the Commissioner, who must approve each policy before it is issued for delivery.

Group Life Conversion to Individual Policy

A group life policy must contain a provision that, if the insurance for an insured terminates due to termination of employment, the insured will be entitled, without evidence of insurability, to an individual policy upon application within 31 days of the termination date.

Consumer Privacy Regulation: Standards for Safeguarding Customer Information

The Gramm-Leach-Bliley 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 To release private or privileged health or medical information in Michigan generally requires the informed, written consent of the patient or his or her authorized representative.

Insurance Fraud Regulation: Release of Information

Upon written request by an authorized agency to an insurer, 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.

Life Insurance Basics: Insurable Interest

Any individual of competent legal capacity may procure an insurance policy upon his/her own life or body for the benefit of any person. No person may procure an insurance contract upon the life or body of another person unless the benefits are payable to the insured or the insured's beneficiary. Anyone with an insurable interest in the life of a person at least 18 years old may not insure that person's life without his/her written consent.

Types of Licensees: business entity

a corporation, association, partnership, limited liability company, limited liability partnership, or other legal entity, subject to licensure when acting as a producer.

Types of Licensees: insurance producer

a person required to be licensed under Michigan law to sell, solicit, or negotiate insurance.

Types of Licensees: insurance counselor

a person who provides advice, counsel, or opinion with respect to benefits promised, coverage afforded, or terms of a policy of insurance or annuity. A person cannot hold him/herself out as an insurance counselor unless he/she is licensed as an insurance counselor.

Consumer Privacy Regulation: Notice and Opt Out Requirements

A licensee is not required to provide the notice and opt out requirements 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

Variable Annuities License

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. Applicants 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 prelicensing education for the VA line of authority. However, continuing education requirements do apply

Licensing Exam: Exemption for Nonresidents

An applicant for an insurance producer license in Michigan who was previously licensed for the same qualifications in another state is not required to complete any prelicensing education or examination. To qualify the applicant must be currently licensed in the originating state, or have applied for a Michigan license within 90 days of the cancellation of the applicant's previous license.

Variable Annuities License: Allowable Charges

At the time a variable contract is delivered, an insurer must disclose all charges that may be made against the separate account.

Disciplinary Actions: Cease and Desist Order

If the Commissioner determines that a person has engaged in an unfair method of competition, or an unfair or deceptive act or practice, the Commissioner will issue an order requiring the person to cease and desist from engaging in the method of competition, act or practice. If the Commissioner orders a person to cease and desist, the person may file a notice of appeal and may appeal any final order. If a person knowingly violates a cease and desist order, the Commissioner may order a civil fine of up to $20,000 for each violation, or a suspension or revocation of the person's license, or both. Fines may not exceed a total of $100,000.

Unfair and Prohibited Insurance Trade Practices: Boycott, Coercion, Intimidation

It is an unfair practice in the business of insurance to enter into action resulting in an unreasonable restraint of trade, or monopoly in, the business of insurance.

Unfair and Prohibited Insurance Trade Practices: Unfair Discrimination

It is an unfair trade practice to charge different rates for individuals of the same class and life expectancy for life and health insurance policies.

Fees

Licensees and applicants for licensure must pay the following fees to the Commissioner: Application fee for license as resident agent, nonresident agent, surplus lines agent, solicitor, counselor, or adjuster (not transferable or refundable) $10 License examination fee for license as resident agent, surplus lines agent, solicitor, counselor, or adjuster (not transferable or refundable) $10 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 by any means acceptable to the Commissioner of a change of legal name or address within 30 days of the change.

Unfair and Prohibited Insurance Trade Practices: Twisting

No insurer, officer, director, agent or solicitor, may make any misrepresentation of policies for the purpose of inducing an insured to lapse his/her existing insurance therein, and to take out a another policy in its place. Violators are subject to license revocation, and may not seek a new license for one year following the violation.

Replacement: 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-type methods Group life insurance policies Policies is issued in connection with a pension, profit sharing, individual 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 Penalties

Universal Life: Required 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 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 policy owner at least 30 days prior to termination of coverage For flexible premium universal life insurance policies, a grace period of at least 30 days Notice that an illustrative report will be sent to the policyowner upon request

Solicitation and Sales Presentations: Advertising Identification of Insurer and Policy

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 use any combination of words or symbols that would mislead prospective insureds into believing that the solicitation is in some manner connected with a governmental program or agency.

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.

Summary Suspension

Without prior hearing, the Commissioner may order summary suspension of a license if he or she finds that protection of the public requires emergency action. If requested, the Commissioner may conduct a hearing on the suspension not later than 20 days after the suspension.

PRIVACY NOTICE

"Neither the U.S. brokers that handled this insurance nor the insurers that have underwritten this insurance will disclose nonpublic personal information concerning the buyer to non-affiliates of the brokers or insurers except as permitted by law."

Qualifications: Business Entity

A business entity applying for a resident insurer producer license will not be approved unless the Commissioner finds that the business entity has: Paid the applicable fees Designated an individual licensed producer responsible for the business entity's compliance with Michigan's insurance laws, rules, and regulations Not committed any act that would result in license revocation or other sanction

Credit Life Insurance: Living Benefit Provisions

A fixed indivisible premium life insurance policy that funds LTC benefits entirely by accelerating the death benefit must comply with all of 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 risk charges for mortality and morbidity benefits are guaranteed not to exceed the maximum charges set forth in 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 is 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 If life insurance products contain LTC benefits, the life insurance benefits in those products must comply with the requirements for individual and group life insurance and the LTC benefits must comply with the requirements applicable to long-term care insurance.

Insurance Fraud Regulation: Penalties

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 not less than 30 days or more than one year, or by a fine of not less than $100 or more than $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.

Solicitation and Sales Presentations: Advertising Form and Content

Advertisements must not be misleading. The form and content of an advertisement of a policy must be sufficiently complete and clear so as to avoid deception. An advertisement may not use the terms "investment," "investment plan," "expansion plan," "profit," "profits," "profit sharing," "interest plan," "savings," "savings plan," or other similar terms to mislead a prospective insured to believe that he/she will receive some benefit not available to other persons of the same class and equal expectation of life.

Solicitation and Sales Presentations: Advertising

An advertisement includes: Printed and published material and descriptive literature used in newspapers, magazines, radio and television scripts, billboards and similar displays Descriptive literature and sales aids of all kinds Prepared sales talks, presentations and material for use by agents and brokers Material used for the recruitment, training and education of insurance sales personnel

Commission for Disability Policies

An agent may not receive a commission for a disability policy issued to an individual eligible for Medicare, unless the amount of the commission paid in the first year of the policy is not more than the amount that the agent receives for the policy in each of the 2 subsequent renewal periods.

Fiduciary Responsibility

An agent or solicitor is a fiduciary for all money received or held by the agent in his/her capacity as a producer, and must abide by the following practices: No agent/solicitor may accept payment of a premium for a 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/solicitor must immediately provide a written receipt to the insured. An agent/solicitor must use reasonable accounting methods to record funds received in his/her fiduciary capacity including the receipt and distribution of all premiums due each insurer. An agent/solicitor must record return premiums received by or credited to him/her which are due an insured. The records must be open to examination by the Commissioner. An agent/solicitor may not reward or remunerate any person for procuring or inducing business, furnishing leads 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. 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/solicitor may not be a party to a contract under which the agent assumes any responsibility or obligation for payment, from his/her commission or any allocation of premium to him/her 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.

Qualifications: Producer

An application for a resident producer license will not be approved unless the Commissioner finds that the applicant: Is at least 18 years of age Has not committed any act that would result in license revocation or other sanction Has completed a prelicensing course for the lines of insurance applied for Has paid the applicable fees Has successfully passed the examination for the lines of insurance applied for

Qualifications: Counselor

An application for an insurance counselor license will not be approved unless the Commissioner finds that the applicant: Possesses a good business reputation good moral character Has not committed any act that would result in license revocation or other sanction Has completed a prelicensing course for the lines of insurance applied for Has paid the applicable fees Has successfully passed the examination for the lines of insurance applied for

Assumed Names

An insurance producer doing business under any name other than the producer's legal name is required to notify the Commissioner prior to using the assumed name.

License Duration

An insurance producer license will remain in effect (unless revoked or suspended) as long as education requirements are met.

Credit Life Insurance: Term of Coverage

Any credit insurance extending more than 15 days beyond the maturity date of the debt must be extended without additional cost to the debtor or pursuant to a written agreement, signed by the debtor.

Licensing Exam

Applicants for a resident producer license must pass a written examination. Before taking the exam, the applicant must complete a prelicensing course no more than 12 months before submitting the application for examination. The Commissioner may waive the exam or prelicensing requirements for an applicant who: Applies for a limited license Has been a licensed insurance producer within the preceding 12 months Has obtained the CPCU, CLU, CIC or other professional designations Has an associate's, bachelor's, or master's degree with a concentration in insurance from an approved institution

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 Any illustration of the policy value must be accompanied by the corresponding net cash surrender value. Any statement regarding the crediting of a specific current interest rate must also contain the frequency and timing by which that rate is determined. If any statement refers to the policy being interest-indexed, the index must be described. Any illustrated benefits based upon non-guaranteed interest, mortality, or expense factors must be accompanied by a statement indicating that these benefits are not guaranteed. If the guaranteed cost factors or initial policy cost factor assumptions would result in policy values becoming exhausted before the policy's maturity date, that fact must be disclosed. If the policy information for the applicant is not furnished at the time of application, it must be delivered within 15 working days after the application is taken, but at least 5 days before delivery of the policy. If the policy is delivered sooner than 5 days after the policy information for the applicant, the free-look period is extended to 15 days.

Suspension, Revocation, Refusal to Issue or Renew: Notice of Denial

Before denying an application for a license, the Commissioner must notify the applicant or licensee of the denial in writing, including the reason for the denial. Not later than 30 days after this notice, the applicant or licensee may request a hearing before the Commissioner to determine the reasonableness of the Commissioner's action.

Written Agreement Between Counselor and Client

Before rendering services, an insurance counselor must prepare a written agreement, signed by both the counselor and the client, outlining the nature of the work to be performed by the counselor and the fee. The agreement 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 acting as insurance agent. The counselor must retain a copy of each agreement for 2 years after completion.

Credit Life Insurance: Authorized 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

Unfair and Prohibited Insurance Trade Practices: Defamation

Defamation 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 defames the financial condition of an insurer doing business in Michigan, is guilty of a misdemeanor punishable by imprisonment for not more than 1 year or a fine of up to $1,000.

Credit Life Insurance: Filing

Each insurer issuing credit life insurance or credit accident and health insurance must file with the Commissioner its schedules of premium rates.

Solicitation and Sales Presentations: Advertising File Maintenance

Each insurer must maintain a complete file containing a copy of every printed, published or prepared advertisement of its individual, blanket, franchise and group policies disseminated in Michigan. The file will be subject to inspection by the Insurance Department. All advertisements must be maintained for at least 4 years.

Consumer Privacy Regulation: Information Security Program

Each licensee must implement a comprehensive written information security program that includes administrative, technical, and physical safeguards for the protection of customer information. Objectives of Information Security Program A licensee's information security program must be designed to 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 Protect against unauthorized access to the information that could result in substantial harm or inconvenience to any customer

Replacement: Agent Duties

Each producer who initiates an application must submit to the insurer: A statement signed by the applicant affirming whether or not policy replacement is involved A statement signed by the producer affirming whether or not 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

Regulation of Variable Products

In Michigan, variable life insurance contracts and variable annuities are considered insurance products and regulated as such, despite their status as securities under federal law.

Insurance Fraud Regulation: Civil Immunity

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 National Association of Insurance Commissioners (NAIC), the Department of Insurance, or a federal or state agency established to detect and prevent fraudulent insurance acts.

Insurance Fraud Regulation

It is an unlawful, fraudulent practice to knowingly make a material misrepresentations or concealments in an application for the issuance or renewal of an insurance policy, or in a claim for benefits under an insurance policy. It is also a fraudulent practice 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 a fraudulent insurance act is guilty of a felony punishable by imprisonment for up to 4 years, 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, or by a fine of up to $50,000, or both.

Lines of Insurance

Life Accident and health or sickness Property Casualty Variable life and variable annuity products Personal lines Credit Any other line of insurance permitted under state laws or rules

Limited lines insurance is any of the following:

Marine insurance Credit insurance Surety and fidelity insurance Legal expense insurance Livestock insurance Malpractice insurance Plate glass insurance A Limited lines producer is authorized by the Commissioner to sell, solicit, or negotiate limited lines insurance.

Unfair and Prohibited Insurance Trade Practices: Misrepresentation; False Information and Advertising

Misrepresentation 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, or misrepresents the identity of the insurer. A person who knowingly makes any misrepresentation in the sale of insurance is guilty of a class 5 felony. If an insurer falsely represents that its financial standing is greater than its actual amount, every director or officer will be deemed guilty of a misdemeanor punishable by a fine of $100, imprisonment of up to 3 months, or both. No insurer doing business in Michigan, or its officers or agents, may issue any false or misleading advertisement concealing its true identity, subject to a fine of up to $500.

Unfair and Prohibited Insurance Trade Practices: Rebating and Illegal Inducement

Rebating is the offer of any rebate of premiums due, any special favor in dividends or other benefits, or any valuable consideration or inducement not specified in the policy. A producer whose license is revoked for rebating may not apply for a new license for one year following the violation. It is an unfair trade practice to offer any of the following as an inducement to purchase or renew an insurance policy: Employment Shares of stock or other securities issued or at any time to be issued An advisory board contract promising special profits Any prizes, goods, wares, merchandise or tangible property valued at more than $10

Suspension, Revocation, Refusal to Issue or Renew: Licensees

The Commissioner may suspend, revoke or nonrenew any license issued to a licensee who: Provides incomplete or materially untrue information in the license application Violates any insurance law, regulation, subpoena or order of the Commissioner, or of another state's insurance 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 examination 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

Continuing Education Requirements: Exceptions

The Commissioner may waive the continuing education requirements for an insurance producer: 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 employment is for a purpose other than the sale of those policies Who is licensed to write only limited line credit insurance

Credit Life Insurance: Maximum Coverage

The initial amount of credit life insurance may not exceed the total amount repayable under the credit transaction.

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:

Suspension, Revocation, Refusal to Issue or Renew: Insurers

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 suspend, revoke or refuse to renew the insurer's license or authority to do business in Michigan.

Report of Actions

Within 30 days of occurrence, a licensed agent must report any disciplinary action by the insurance regulatory agency of any other state or territory of the United States; each disciplinary action on an occupational license held by the licensee; each judgment or injunction entered against the licensee involving fraud, deceit, misrepresentation, or violation of any insurance law. Such information is confidential by law and is privileged. Failure to report as required may, after notice and hearing, result in suspension or revocation of the violators license or certificate of authority, or subject the violator to civil fines.

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 nonaffiliated 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 or other access number or access code: 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 for 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.

Continuing Education Requirements: Nonresident Producer

A nonresident insurance producer who satisfies the continuing education requirements in the producer's home state also satisfies the Michigan continuing education requirements if the nonresident producer's home state recognizes the satisfaction of its continuing education requirements imposed on producers from this state on the same basis.

Continuing Education Requirements: Grace Period

A producer has a 90-day grace period from the expiration date of his/her license within which to meet his/her continuing education requirements or the license will be canceled. During the 90-day grace period, the insurance producer may not solicit or sell new policies of insurance, bind coverage, or otherwise act as an insurance producer except to service policies previously sold and receive commissions on policies previously sold.

Solicitation and Sales Presentations: Advertising Disclosure Requirements

An advertisement must prominently describe the type of policy advertised. Advertisements may not use a name for a life insurance policy that does not include the words "life insurance" unless accompanied by other language clearly indicating it is life insurance. Any projection or illustration must clearly indicate that the dividends are not guaranteed. An advertisement may not state or imply that illustrated dividends or pure endowments will be sufficient to assure, without the further payment of premiums, the receipt of benefits, such as a paid-up policy, unless the advertisement clearly and precisely explains what benefits or coverage would be provided at such time and under what conditions this would occur. No advertisement may imply that the insured will acquire a stock ownership interest in the insurance company by virtue of the purchase of the policy. An advertisement may not imply that purchasing a policy entitles an insured to become a member of a limited group of persons who may receive special offers or favored treatment.

Consumer Privacy Regulation: Notices

An insurer or agent must provide a notice of information practices to all applicants or policyholders as follows: With a written application, disclosure notice must be given at the time of delivery of the policy or at the time when the collection of personal information is taken from a source other than the applicant 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, except when personal information is collected only from the policyholder The notice must be in writing and contain the following information: A statement that information may be collected from persons other than the individual who is to be insured A list of the types of information that may be collected and the origin and investigative method used The types of disclosure A description of the insured's rights and how the rights may be exercised A statement that the information obtained may be retained by the insurer and disclosed to other persons

Credit Life Insurance: Standard Provisions

Entire Contract - The policy and application must constitute the entire contract between the parties. Grace Period - The grace period for individual life insurance policies may not be less than 30 days. Reinstatement - 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 - 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. Right to Examine (Free Look) - The free look period in Michigan is 10 days. Misstatement of Age/Gender - In the case of a misstatement of age or gender on the policy, any benefits will be adjusted according to what the premiums paid would have allowed at the correct age or gender. Exclusions and Restrictions - 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 by the terms of the policy be deducted

Penalties

In addition to a cease and desist order, the Commissioner may: Order payment of an administrative penalty of up to $1,000 per violation, not to exceed $10,000 for the same violation Order payment of an administrative penalty of up to $5,000 per violation (not to exceed $50,000 for the same violation) if the person should have known that his/her actions could result in license suspension or revocation Violation of the statutes regulating rearing and misrepresentation is a misdemeanor, subject to a fine of not up to $100 per rebating or inducement violation, or up to $2,000 for each misrepresentation violation. Both types of violation are also subject to imprisonment in the county jail at the discretion of the Commissioner. The amount of the insurance will be reduced in the proportion as the amount or value of any rebate.

Misrepresentation in Insurance Applications

No licensee may furnish a fee, commission, money, or other benefit in exchange for false or fraudulent representations on an application for insurance.

Unfair and Prohibited Insurance Trade Practices: False Statements

No one may willfully withhold information from, or give false or misleading information to, the Commissioner, any statistical agency, rating organization, data collection agency, or insurer, that might affect rates or premiums. A violation of this section is subject to a fine of up to $1,500. It is an unfair practice in the business of insurance to file a false financial statement with public officials, or record a false material fact in a book or record with the intent to deceive.

Michigan Life and Health Insurance Guaranty Association

The Michigan Life and Health Insurance Guaranty 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 a 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 the rights duties, and obligations of the insolvent insurer. The association's liability is equal to the insurer's contractual obligation had it not become insolvent, up to the following limits for one life (regardless of the number of policies written): $300,000 in life insurance death benefits and $100,000 in net cash surrender and withdrawal values $100,000 for health insurance $100,000 in annuity benefits $300,000 for disability income or long-term care benefits $500,000 in basic hospital, medical and surgical insurance benefits

Replacement: Insurer Duties

The replacing insurer's duties 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 statements Maintaining copies of proposals, receipts, and comparison statements for at least 3 years

Universal Life

Universal life insurance means any individual or group life insurance policy under which interest credits are paid. Flexible premium universal life insurance policy means a universal life insurance policy that permits the policyowner to vary the amount or timing of one or more premium payments or the amount of insurance. Fixed premium universal life insurance policy means a universal life insurance policy other than a flexible premium universal life insurance policy.

Variable Annuities License: Minimum Requirements

Variable life insurance policies must comply with the following minimum 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 A variable life policy 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 that 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

Suspension, Revocation, Refusal to Issue or Renew: Notice of Hearing

When a person has engaged in an unfair or deceptive act or practice, and the Commissioner determines that a hearing would be in the interest of the public, the Commissioner will give 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 upon the violator a statement of the charges and a notice of a hearing of at least 15 days.

Credit Life Insurance: Disclosure

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.