State RegulationsMI specificDifficulty 2/5
A Kalamazoo producer shows a prospect an illustration with projected cash values and tells her, "These are the returns you will actually earn." Under Michigan illustration standards, this statement is:
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 D is correct
Under the illustration framework adopted by the Michigan Department of Insurance and Financial Services (DIFS) through DIFS Bulletin 2000-02, non-guaranteed elements of an illustration must be labeled as non-guaranteed and may never be presented as earned, assured, or guaranteed results. Telling a prospect she will actually earn the projected values is a misrepresentation of policy performance that exposes both the producer and the insurer to DIFS enforcement. The rule focuses on how the numbers are characterized, not on whether the projections happen to be accurate.
Why the other options are wrong
- A) Who prepared the illustration is irrelevant; the prohibition on presenting projections as guaranteed applies to everyone.
- B) Having the prospect sign a copy does not convert non-guaranteed projections into guaranteed values.
- C) The standard is not forecast accuracy; characterizing projections as actual returns is improper regardless of later results.
Memory hook
Never call a projection a promise.