State RegulationsMI specificDifficulty 2/5
During a sales presentation in Lansing, a producer tells an applicant that a participating whole life policy will "definitely pay large dividends every year." Under Michigan law governing solicitation and sales presentations, this statement is a problem primarily because it:
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Michigan's solicitation provisions (M.C.L. 500.1371 to M.C.L. 500.1383) and the unfair trade practices rules of the Insurance Code of 1956 (M.C.L. 500.2005) prohibit misrepresenting policy terms, benefits, or advantages during solicitation. Dividends on participating policies are not guaranteed, so promising them as certain misrepresents a material fact. The practical consequence is disciplinary exposure for the producer and potential rescission exposure for the insurer.
Why the other options are wrong
- A) The problem is the false certainty about dividends, not a comparison with a competitor's product.
- C) Disclosing financial condition is not unlawful; M.C.L. 500.2005 prohibits misrepresenting financial condition, not mentioning it.
- D) The statement creates no signing requirement; illustration signature sequencing is not the issue raised by promising guaranteed dividends.
Memory hook
"Definitely" is the danger word: dividend projections are not promises.