State RegulationsNY specificDifficulty 2/5
A Manhattan agent tells a prospect that the policy's cash value is guaranteed to equal the death benefit, knowing the statement is untrue, in order to close the sale. Under the New York Insurance Law, this conduct is:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under N.Y. Ins. Law §2123 and Reg 64, Part 216.3, it is a prohibited practice to misrepresent the terms, benefits, dividends, or cash value of an insurance policy, or to make misleading statements with intent to induce the purchase. The Superintendent of Financial Services can penalize both the agent and, where responsible, the insurer.
Why the other options are wrong
- B) Defamation under §2604 concerns false statements about another insurer or producer, not misstatements of one's own policy terms.
- C) Rebating under §2324 involves giving the insured an inducement of value, not making untrue statements about policy values.
- D) Controlled business under §2103(i) concerns writing insurance on the licensee's own affairs, which is not what happened here.
Memory hook
False statements about the policy's terms or values = misrepresentation.