Florida 2-15 Life, Health and Variable Annuity AgentFlorida Laws and Regulations Common to Life and Health InsuranceHard
A Florida licensed life and health agent is attempting to sell a new life insurance policy to a client. During the sales presentation, the agent emphasizes that the new policy offers 'superior returns' compared to the client's existing policy, without providing a balanced comparison of all relevant policy features, benefits, and limitations. This action is considered an example of:
- ATwisting.
- BDefamation.
- CRebating.
- DIncomplete comparison.
Show answer & explanationAnswer & explanation
Correct answer: D. Incomplete comparison.
An incomplete comparison occurs when an agent presents an unfair or misleading comparison of insurance policies, often by highlighting only favorable aspects of a new policy while omitting or misrepresenting less favorable aspects or existing policy benefits. This prevents the client from making an informed decision.
Why the other options are wrong
- A. Twisting involves inducing a policyholder to lapse, forfeit, or surrender an existing policy to replace it with a new one based on misleading or incomplete comparison, which is a specific outcome of an incomplete comparison, but the act itself of presenting an unbalanced comparison is 'incomplete comparison'.
- B. Defamation involves making false, maliciously critical statements about an insurer's financial condition or an agent's character, which is not the primary issue in this scenario.
- C. Rebating involves offering a prospect something of value not specified in the policy as an inducement to purchase, which is not described here.
Incomplete Comparison (Unfair Trade Practice)
Presenting an unfair or misleading comparison of insurance policies to a prospective buyer, often by omitting or misrepresenting material facts.
- Prevents consumers from making informed decisions.
- Focuses on highlighting only favorable aspects of one policy.
- A type of Unfair Trade Practice prohibited in Florida.
Memory trick: Don't mislead, defraud, or discriminate.