Florida 2-15 Life, Health and Variable Annuity AgentFlorida Laws and Regulations Common to Life and Health InsuranceMedium
A Florida licensed life agent, John, is soliciting business. He tells a potential client that by purchasing a specific annuity product, they will receive a 'special dividend' that is not guaranteed in the policy contract but has been paid out 'historically'. What unfair trade practice is John committing?
- ASliding
- BMisrepresentation
- CTwisting
- DRebating
Show answer & explanationAnswer & explanation
Correct answer: B. Misrepresentation
John is making a false statement about a policy's benefits (a 'special dividend' that is not guaranteed) to induce a sale. This is a clear example of misrepresentation.
Why the other options are wrong
- A. Sliding involves adding coverages or products to a policy without the insured's full knowledge or consent.
- C. Twisting involves inducing a policyholder to lapse or surrender an existing policy to replace it with another to the insured's detriment.
- D. Rebating involves offering inducements not specified in the policy, often a return of premium or special advantage.
Misrepresentation (Unfair Trade Practice)
Making false statements or omitting material information about policy terms, benefits, dividends, or financial condition of an insurer to induce a person to purchase or lapse a policy.
- Involves untrue statements or misleading omissions.
- Can apply to policy features, financial status, or dividends.
- Aims to induce a sale or policy change.
Memory trick: Don't misrepresent the facts, or you'll misplace your license.