State RegulationsNC specificDifficulty 2/5
A North Carolina producer, trying to close a sale, tells a prospect that the state guaranty association will stand behind the policy being recommended. Under North Carolina law, how is this practice treated?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Under G.S. 58-62-86(a) and (b), no person, including any member insurer, agent, or affiliate, may use the existence of the North Carolina Life and Health Insurance Guaranty Association in any sales solicitation or inducement to purchase insurance. Member insurers must instead deliver the Commissioner-approved summary document about the Association before or at policy delivery. Using the guaranty as a selling point misleads consumers into treating the Association as a credit-enhancement feature.
Why the other options are wrong
- A) Accuracy is no defense; the statute bans using the Association's existence as an inducement outright, not just inaccurate statements about it.
- B) The prohibition applies to all sales solicitation regardless of who raises the topic first.
- C) The ban reaches any person, including producers and affiliates, not merely member insurers.
Memory hook
The guaranty association is a safety net, never a sales pitch.