State RegulationsIL specificDifficulty 2/5
An Illinois producer tells an applicant that a life policy's future dividends are guaranteed, knowing they are not, to induce the purchase. Under Illinois law, what is the proper characterization and consequence?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
215 ILCS 5/236 reaches unfair and deceptive practices in life insurance, and misrepresenting a policy's terms or benefits to induce purchase is the classic target of that provision. The Director of Insurance is the enforcement authority, so the producer's false guarantee of non-guaranteed dividends exposes both the producer and the insurer to state regulatory action.
Why the other options are wrong
- A) Disclosure inside the policy does not sanitize a false oral representation used to sell it; the deception itself is the violation.
- B) Illinois oversight through the Director of Insurance is exactly the enforcement channel the Legislature created for such conduct.
- C) This is a matter of state insurance regulation under the Illinois Insurance Code, not a federal program concern.
Memory hook
Guarantee what isn't guaranteed, and 5/236 finds you.