State RegulationsNY specificDifficulty 2/5
By adding the premium-financing inquiry to its New York life insurance application, the insurer:
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under N.Y. Ins. Law §7812, the financing inquiry is authorized 'without limiting the ability of an insurer to assess the insurability of a policy applicant and to determine whether or not to issue the policy,' and it is in addition to other questions the insurer may lawfully pose. Disclosing a premium-finance intention therefore informs underwriting, but it neither compels issuance, compels declination, nor waives any of the insurer's other rights under New York law.
Why the other options are wrong
- A) Disclosure of financing does not compel issuance; the insurer remains free to decide whether to issue the policy.
- C) Nothing in the section requires the insurer to decline applications in which financing is disclosed.
- D) The inquiry has no effect on the insurer's rights regarding misstatements in the application.
Memory hook
Asking about premium financing never limits the insurer's underwriting judgment.