Under California's life insurance illustration rules, a policy illustration used in a sales presentation must:
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
California regulates life insurance illustrations under the Insurance Code, CIC Section 10509.950 et seq., to prevent misleading sales presentations. An illustration must separate and clearly label guaranteed elements from non-guaranteed, ledgered values so that the applicant understands that illustrated dividends, cash values, and benefits are not promises. Illustrations are prepared by the insurer from the policy's approved assumptions and must not present optimistic projections as guarantees, because a buyer could otherwise be misled about how the policy will actually perform over time.
Why the other options are wrong
- A) Illustrations must not guarantee non-guaranteed values; presenting them as promises would mislead applicants about the policy's actual performance.
- C) Showing only the best dividend scale would be deceptive; illustrations must present the insurer's approved assumptions, not cherry-picked maxima.
- D) Illustrations are insurer-prepared documents based on the policy's guaranteed and current values; applicants do not prepare their own illustrations.
Memory hook
Illustrations inform, they do not promise. Guaranteed versus not — label the difference.