A New York insurer's newspaper advertisement urges readers to act now, calling the coverage a special, limited-time introductory offer with substantial advantages not available later and only a limited number of policies to be sold. In fact, the offer is the insurer's usual enrollment method and there is no limit on the number of policies sold. Under Reg 34 (11 NYCRR Part 215), the advertisement is:
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Under Reg 34 (11 NYCRR Part 215), an advertisement of an individual policy may not represent, directly or by implication, that a contract is an introductory, initial or special offer, that applicants will receive substantial advantages not available at a later date, or that the offer is available only to a specified group or for a limited number of policies, unless such is in fact the case. An insurer that uses enrollment periods as its usual advertising method may not describe them as special or limited. Because the scarcity and 'advantages unavailable later' claims here are untrue, the advertisement is prohibited.
Why the other options are wrong
- A) Urgency appeals are not a safe harbor; false claims of special offers or limited availability are expressly prohibited by Reg 34.
- B) The truth about how many policies are ultimately sold does not cure the ad; promising advantages not available later when none exist is prohibited.
- C) The advertising rules apply to advertisements themselves; the fact that the statements appear in an ad rather than the policy provides no exemption.
Memory hook
Reg 34: a 'special limited-time offer' must be true, or it cannot be used.