State RegulationsNC specificDifficulty 2/5
A licensed producer tells a prospect, 'You should buy this policy because the state guaranty association stands behind it.' Under G.S. 58-62-86, this statement is:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under G.S. 58-62-86(a) and (b), no person may use the existence of the Life and Health Insurance Guaranty Association in any sales solicitation or inducement to purchase insurance, and member insurers must deliver the Commissioner-approved summary document before or at policy delivery. Delivering the required document does not license sales pitches based on the Association. For contracts the Association does not cover, a separate conspicuous written notice is required under G.S. 58-62-86(d).
Why the other options are wrong
- B) Delivering the approved summary document is a separate obligation and does not permit using the Association as a selling point.
- C) The prohibition is not conditioned on who raises the topic; soliciting with the Association's existence is barred regardless.
- D) Explaining guaranty protection at every sale is not required; what is required is refraining from using the Association to induce sales.
Memory hook
The guaranty association is a safety net, never a sales pitch.