A California producer promotes a life insurance policy's accelerated death benefit for chronic illness as a replacement for long-term care insurance. Under CIC Sections 10234.93 and 10295.12, the producer must:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
California requires that when an accelerated death benefit for chronic illness is marketed in connection with long-term care needs, the applicant must receive a disclosure of the significant differences between the accelerated death benefit and a long-term care insurance policy. The products differ in how benefits are triggered, how they are structured, and how they are regulated, and a buyer could be harmed by assuming they are interchangeable. The disclosure duty is specifically designed to prevent that confusion. The disclosure must be made before the application is completed so the buyer's decision is informed.
Why the other options are wrong
- B) The two products have different triggering conditions, benefit structures, and regulatory frameworks; they cannot be treated as identical. The disclosure must be given before the application is completed so the buyer can make an informed decision.
- C) The disclosure rule does not create a free long-term care benefit; no coverage is added at no cost. The two products trigger benefits differently and are regulated under different statutory frameworks.
- D) Marketing is permitted; the obligation is to disclose the differences, not to stop selling the life policy. No statute adds long-term care coverage to a life policy without a premium for that benefit.
Memory hook
ADB for chronic illness is not LTC. California says disclose the gap or do not sell the confusion.