2.1 Michigan Life Insurance Policy Requirements

Michigan law imposes specific requirements on life insurance policies sold in the state. These requirements protect consumers and ensure policy standardization.

Free Look Period

Michigan provides a free look period for life insurance policies:

During the free look period, the policyholder can:

• Review the policy
• Return it for a full refund of premiums paid
• No questions asked, no penalty

Exam Tip: Michigan's standard 10-day free look is extended to 30 days for seniors age 65 and older. This is an important consumer protection.

Incontestability Clause

Michigan requires a 2-year incontestability clause in all life insurance policies:

• After 2 years from issue, the insurer cannot contest the policy based on misstatements in the application
• Exceptions: Fraud, non-payment of premiums
• The clause protects beneficiaries from having claims denied due to application errors

Michigan Specific Rules

• Incontestability period begins from the issue date
• If policy lapses and is reinstated, a new 2-year period begins
• Material fraud may still be grounds for contest in some circumstances

Suicide Clause

Michigan limits the suicide exclusion:

• Suicide exclusion cannot exceed 2 years from policy issue
• After 2 years, death by suicide is covered
• If policy is reinstated, new 2-year period may apply
• Return of premiums (not face amount) if suicide occurs during exclusion period

Required Standard Provisions

Michigan requires life insurance policies to contain these provisions:

Grace Period

• Coverage continues during grace period
• Premium must be paid to prevent lapse
• If insured dies during grace period, claim paid minus premium due

Reinstatement

Michigan requires policies to include reinstatement rights:

• Policyholder can reinstate within 3 years of lapse
• Must provide evidence of insurability
• Must pay back premiums with interest
• New contestability period may apply

Entire Contract Provision

• Policy and application constitute entire contract
• No other documents can modify the contract
• Protects against hidden terms

Misstatement of Age

If age is misstated:

• Benefits adjusted to what premium would have purchased at correct age
• No policy voidance for age misstatement alone

Underwriting Considerations

Permitted Factors

Michigan permits insurers to consider:

• Age
• Sex (different rates for men and women)
• Health history
• Tobacco use
• Occupation
• Avocations and hobbies

Prohibited Discrimination

Michigan prohibits unfair discrimination based on:

• Race or ethnicity
• Religion
• National origin
• Disability (with actuarial limitations)
• Genetic information (GINA protections)

Note: Unlike some states, Michigan permits sex-based rate differentiation in life insurance, recognizing actuarial differences in mortality.