Question 73

California law requires that a life insurance policy illustration show both guaranteed and non-guaranteed values.

Life insurance policy illustrations in California must present both guaranteed and non-guaranteed values to provide a comprehensive view of the policy's potential performance over time.

A) Guaranteed values only

This option is incorrect because California law mandates that illustrations must include more than just guaranteed values. Focusing solely on guaranteed values does not provide a complete picture of the policy's potential benefits and performance.

B) Non-guaranteed values only

This option is also incorrect as it fails to meet the requirements set by California law. Illustrations that present only non-guaranteed values can mislead policyholders about the actual benefits they might receive, as they do not reflect the guaranteed aspects of the policy.

C) Both guaranteed and non-guaranteed values

This is the correct answer because California law specifically requires that life insurance policy illustrations include both types of values. This ensures that consumers can make informed decisions based on a full understanding of the policy's potential outcomes.

D) Projected dividends only

This option is not correct, as it is too narrow in scope. While projected dividends can be a component of non-guaranteed values, California law requires a broader representation that includes both guaranteed and non-guaranteed values, rather than focusing solely on dividends.

Conclusion

The requirement for illustrations to include both guaranteed and non-guaranteed values ensures that consumers have a realistic view of their life insurance policy's potential performance. Options A, B, and D fail to provide the comprehensive information mandated by law, making C the only correct choice. This dual presentation helps policyholders understand both the certainty and variability inherent in their insurance products.