In a life insurance illustration used in a New York sale, how must amounts that depend on the insurer's future experience, such as dividends, be treated?

Why B is correct

Under Reg 74 (11 NYCRR Part 53), amounts in an illustration that depend on the insurer's future experience, such as dividends and nonguaranteed crediting rates, must be clearly labeled as nonguaranteed, because the insurer does not promise them. This lets a New York applicant compare policies on both a guaranteed and a nonguaranteed basis, which is the central purpose of the Department of Financial Services' illustration rules.

Why the other options are wrong

• A) Showing nonguaranteed amounts at a hypothetical maximum overstates the policy and is the kind of misleading presentation Reg 74 forbids.
• C) Dividend and other nonguaranteed amounts never become guaranteed merely because the policy issued; they remain dependent on future experience.
• D) Nonguaranteed elements are not banned from illustrations; where shown, they must be labeled, not omitted, under Reg 74.

Memory hook

If it depends on the future, label it nonguaranteed — Reg 74.