State RegulationsAZ specificDifficulty 2/5
To close a sale, a producer tells a prospect that a participating life policy's dividend is guaranteed, even though dividends depend on the insurer's future experience. Under Arizona law, this statement is:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
A.R.S. 20-443.01 expressly condemns representations that a policy's dividends are guaranteed when they are not, as part of Arizona's prohibition on misleading statements used to induce insurance purchases. Because policy dividends depend on the insurer's experience and are not assured, presenting them as guaranteed deceives the buyer about the product's actual terms.
Why the other options are wrong
- B) Wrong because the prospect's questions do not license false answers; a guaranteed-dividend claim violates A.R.S. 20-443.01 regardless of who raised it.
- C) Wrong because dividend history is not a guarantee; representing non-guaranteed dividends as assured is exactly what A.R.S. 20-443.01 prohibits.
- D) Wrong because the insurer's internal policy cannot authorize a statement that Arizona law treats as misrepresentation.
Memory hook
Never call a dividend guaranteed — 20-443.01 forbids the promise.