State RegulationsNY specificDifficulty 2/5
A licensed New York life agent's sales flyer describes a whole life policy's future dividends as 'guaranteed annual payments.' Under N.Y. Ins. Law §2122, this advertisement is:
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under N.Y. Ins. Law §2122, misrepresenting the terms, benefits, advantages, or dividends of an insurance policy is an unfair method of competition and an unfair trade practice in New York. Dividends are not guaranteed, so a flyer describing them as guaranteed payments misrepresents the policy's terms. The Superintendent of Financial Services may take enforcement action, and the agent faces discipline even though the advertisement was informal.
Why the other options are wrong
- A) The insurer's silence does not cure a misleading statement — the conduct is unlawful on its own under §2122.
- C) Sales flyers, letters, and other material used to promote insurance are advertisements subject to §2122, however informal they are.
- D) The question of prior filing does not make a misleading ad lawful; the misrepresentation itself is the prohibited practice.
Memory hook
§2122: twist the policy's terms in an ad and you have committed an unfair trade practice.