State RegulationsNC specificDifficulty 2/5
A licensed North Carolina producer tells a prospect, "You really should buy this policy today — the state guaranty association stands behind the insurer." Under G.S. 58-62-86, how is this sales approach treated?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under G.S. 58-62-86(a),(b), no member insurer, agent, affiliate, or other person may use the existence of the North Carolina Life and Health Insurance Guaranty Association for the purpose of selling insurance or inducing the purchase of a policy. Member insurers must instead deliver the Commissioner-approved summary document before or at policy delivery, and the producer's pitch here is an unlawful use of the Association as a sales inducement.
Why the other options are wrong
- A) Accuracy is no defense; the statute bans the use of the Association's existence as an inducement regardless of whether the statement is accurate.
- C) The prohibition is not conditioned on who raises the topic; invoking the Association to induce purchase is barred in all cases.
- D) The required delivery item is the Commissioner-approved summary document at or before delivery, not a sales-oriented guaranty endorsement.
Memory hook
The guaranty fund is a safety net, never a sales pitch.