State RegulationsFL specificDifficulty 2/5
To reassure a hesitant prospect, a Florida agent says: 'Buy this long-term care policy; even if the company fails, the Guaranty Association guarantees your coverage.' Under Fla. Stat. 631.735, this sales pitch is:
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under Fla. Stat. 631.735, it is illegal to use the existence of the Florida Life and Health Insurance Guaranty Association for sales, solicitation, or inducement in any insurance transaction. Invoking the Association's safety net to close a sale would encourage consumers to judge insurers by the backstop instead of the insurer's own financial strength and would misstate the limited, conditional nature of the coverage the Association actually provides.
Why the other options are wrong
- A) Even an accurate description of the Association cannot lawfully be used to induce a purchase; accuracy is no defense under the statute.
- C) Reducing the statement to writing does not legalize using the Association's existence as a sales inducement.
- D) The prospect's residency affects eligibility for coverage after an insolvency, not the legality of the sales pitch.
Memory hook
Never sell the safety net.