A licensed New York agent is helping a Manhattan client who is enrolled in Medicare evaluate Medicare supplement policies. Under New York law, what must the agent do regarding the appropriateness of the recommended purchase?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under the New York Insurance Law and the rules of the New York State Department of Financial Services governing Medicare supplement insurance, a producer who recommends the purchase of a Medicare supplement policy must have reasonable grounds to believe the recommendation is appropriate to the applicant's needs and financial circumstances, considering the coverage the applicant already has and the applicant's health care needs. Making a recommendation without that basis is an improper sales practice that can expose the agent to Department of Financial Services discipline.
Why the other options are wrong
- A) Affordability is only part of the analysis; the agent must also weigh the applicant's existing coverage and health care needs, not merely the first premium.
- C) A commission-driven recommendation is exactly what the appropriateness standard guards against; the producer, not the insurer, answers for the suitability of the recommendation.
- D) No advance approval from the Superintendent of Financial Services is required for an individual sale; the obligation rests on the agent to have reasonable grounds for the recommendation.
Memory hook
Appropriateness means reasonable grounds that the policy fits the client's needs, existing coverage, and budget.