State RegulationsGA specificDifficulty 1/5
An advertisement for a life insurance policy sold in Georgia tells readers that as a policyholder they will own stock in the insurer and share in its profits. Under Georgia's advertising regulation, what is the status of this advertisement?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under Reg. 120-2-11-.10, a life insurance advertisement may not imply that the purchaser acquires stockholder-type ownership in, or stockholder-type profits of, the insurer. Buying a life policy does not make the owner a shareholder, so an ad that suggests the policy carries equity in the company misrepresents the nature of the contract and violates the regulation regardless of the insurer's corporate form.
Why the other options are wrong
- A) Even a stock insurer may not imply that policyholders acquire shareholder ownership or profits; the prohibition attaches to the misleading implication, not to the insurer's corporate structure.
- C) The rule does not flip between mutual and stock companies — neither may suggest that a policy confers stockholder equity.
- D) Where the advertisement is printed is irrelevant; the regulation governs advertisements used in Georgia and their misleading content.
Memory hook
A policy is not a share: no stock-ownership or profit claims in ads.