State RegulationsNY specificDifficulty 2/5
A life settlement company's flyer distributed in Buffalo urges policy owners to get 'guaranteed, risk-free cash' by selling their policies, omitting the loss of the death benefit and other consequences. Under New York law, this advertising:
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Under N.Y. Ins. Law §7809, life settlement advertising may not be false, misleading, or deceptive, and the Superintendent of Financial Services enforces that standard. A 'guaranteed, risk-free cash' pitch that omits the loss of the death benefit and other downsides misrepresents the transaction's consequences — exactly what the advertising rules target. Fee arrangements and insurer consent are irrelevant to whether the ad misleads consumers.
Why the other options are wrong
- A) Life settlements are regulated under the New York Insurance Law; being commercial transactions does not exempt their advertising from §7809.
- B) An insurer's consent cannot bless misleading advertising — truthfulness is the statutory standard, not issuer approval.
- C) The presence or absence of a broker fee has no bearing on whether the advertising is misleading.
Memory hook
'Risk-free cash' is a red flag: §7809 bans settlement ads that hide the trade-offs.