State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
Under California's life insurance disclosure rules, a policy that imposes surrender charges must disclose to the policyowner:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
California requires that policies with surrender charges clearly disclose the charges and the surrender charge period, so the policyowner understands what the cash value would be reduced by if the policy is surrendered in its early years. Surrender charges are typically highest at issue and decline to zero over a stated number of years. This disclosure is part of the consumer-protection framework governing life insurance sales.
Why the other options are wrong
- B) Agent commissions are set by agency agreement and are not the subject of the surrender-charge disclosure.
- C) The insured's underwriting class is reflected in the premium and is not part of this disclosure.
- D) The dividend scale is shown in illustrations, not in the surrender-charge disclosure.
Memory hook
Surrender charges = the early-exit fee, fully disclosed. Know what it costs to leave before the charge period ends.