State RegulationsMI specificDifficulty 2/5
A Novi producer shows a client an illustration projecting high cash values and tells the client, "These numbers are locked in by the contract." If the illustrated values are non-guaranteed, the producer has:
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
DIFS Bulletin 2000-02, adopting the life insurance illustration model, and the misrepresentation rules of M.C.L. 500.2005 prohibit presenting non-guaranteed elements as guaranteed. Only the guaranteed elements of an illustration are contractual, so telling a client that projected cash values are "locked in" misrepresents the policy's benefits during solicitation and exposes the producer to DIFS enforcement.
Why the other options are wrong
- A) Illustrations are not binding contracts; only the guaranteed elements are contractual, and the figures shown here are non-guaranteed.
- B) Leaving a copy with the client after the sale does not cure the misrepresentation made during the presentation.
- D) The violation occurs at the time of presentation, regardless of whether the client later surrenders at a loss.
Memory hook
"Locked in" is a lie unless the value is a guaranteed element.