State RegulationsNY specificDifficulty 1/5
During a sales presentation for a life insurance policy in New York, the agent shows the applicant an illustration of future policy values. Under Reg 74, which statement about the illustration is correct?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under Reg 74 (11 NYCRR Part 53), a life insurance illustration presented to a prospective New York applicant must clearly differentiate the policy's guaranteed elements from nonguaranteed elements, such as dividends or current interest credits, so the consumer can see which values are promised and which merely reflect the insurer's current assumptions. A misleading illustration that obscures that distinction violates New York's solicitation rules, which are enforced by the Department of Financial Services.
Why the other options are wrong
- A) Blending guaranteed and nonguaranteed figures without a clear distinction is exactly what Reg 74 forbids; the consumer must be able to tell promises from projections.
- C) The illustration is part of the solicitation process that precedes issuance; it is not a document generated only after the policy is delivered.
- D) An agent may never tailor or inflate projected values; the illustration must reflect the insurer's approved scale of nonguaranteed elements, not the applicant's wishes.
Memory hook
Guaranteed vs. nonguaranteed - the illustration must always show the seam.