State RegulationsTX specificDifficulty 1/5
Under the Texas life insurance illustration rules, what is the status of a life insurance illustration presented to a prospective buyer in Texas?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Under 28 TAC 21.2201-.2214, a life insurance illustration is a presentation of policy values that must be clearly labeled as an illustration, must separately identify guaranteed and nonguaranteed elements, and is not the contract; the guaranteed provisions of the issued policy govern what the owner is entitled to. The practical consequence is that a producer who presents a projection as a promise misstates the contract, and the insurer must retain the illustration and provide it in the form and manner the rule prescribes.
Why the other options are wrong
- A) An applicant's signature acknowledges that the illustration was received; it does not incorporate it into the contract.
- B) An illustration is not an offer the insurer must honor; only the issued policy's guaranteed terms are enforceable.
- C) An illustration is sales material regulated by the illustration rule, not a policy form filed for approval.
Memory hook
An illustration is the movie trailer, not the movie — the contract is the film.