State RegulationsNY specificDifficulty 2/5
A New York insurer designates one of its life insurance policy forms as a form that will be marketed with an illustration. Under Reg 74, whenever that form is sold, the insurer must ensure that:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under Reg 74 (11 NYCRR Part 53-3), when an insurer identifies a policy form as one to be marketed with an illustration, a basic illustration prepared and delivered in accordance with the regulation's illustration requirements must be used in sales of that form. The insurer cannot designate a form as illustrated and then allow sales without the required basic illustration; the New York State Department of Financial Services treats such failures as violations of Reg 74.
Why the other options are wrong
- B) Because the insurer designated the form as one to be marketed with an illustration, the illustration is required; it does not depend on the applicant's request.
- C) A generic average-values illustration does not satisfy the regulation; a basic illustration for the specific policy as applied for is required.
- D) The buyer's guide is a separate disclosure document; delivering it does not substitute for the required basic illustration.
Memory hook
A form designated for illustration must be sold with a basic illustration, every time.