State RegulationsNJ specificDifficulty 2/5
A producer wants to mention the Life and Health Guaranty Association during a sales presentation to help close a policy sale. Under New Jersey law, how may the association's existence be used?
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
The Guaranty Association Act, N.J.S.A. 17B:32A-1 et seq., contains an anti-solicitation provision: no person may use the existence of the guaranty association to solicit or induce the purchase of insurance. The rule exists because the association is a backstop for insolvency, not a selling feature — a producer who dangles it can mislead prospects about the certainty and extent of protection. The New Jersey Department of Banking and Insurance enforces this restriction against producers who treat the safety net as a sales pitch.
Why the other options are wrong
- A) Featuring the association in illustrations to drive the sale is exactly the solicitation the statute forbids.
- B) Far from mandating guaranty talk in presentations, the act prohibits using it to induce purchase at all.
- C) There is no policy-size carve-out; the anti-solicitation rule applies regardless of the policy's size.
Memory hook
The guaranty association is a backstop, not a selling point — never pitch it.