State RegulationsNY specificDifficulty 1/5
During a sales presentation in Albany, an agent tells a prospect: 'If this insurer ever fails, the Life Insurance Company Guaranty Corporation of New York will stand behind your policy.' Under N.Y. Ins. Law §7718, this statement is:
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under N.Y. Ins. Law §7718, the existence of the Life Insurance Company Guaranty Corporation of New York may not be used in the sales or solicitation of insurance or to induce the purchase of insurance. The agent's assurance that the guaranty corporation stands behind the policy is a classic violation: New York policy is that coverage must not be sold on the comfort of guaranty protection.
Why the other options are wrong
- A) The law imposes a prohibition, not a disclosure duty; agents are never required to advertise guaranty protection in a sale.
- B) The insurer's financial condition creates no exception; the prohibition applies at all times.
- D) Providing the corporation's annual report does not cure the violation; the statute bars using the corporation's existence to induce the purchase.
Memory hook
Sell the policy, not the safety net; never invoke the guaranty corporation in a sale.