Under California's life insurance illustration standards (CIC §10509.950 et seq.), when an agent uses an illustration in a sales presentation, the illustration must:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
California's illustration regulation (CIC §10509.950-10509.965) requires that illustrations clearly disclose which figures are guaranteed and which are nonguaranteed, that they be self-supporting, and that the policyowner sign the illustration. This prevents the sale of overstated, unachievable values. Nonguaranteed elements — dividends, credited interest, or nonguaranteed charges — may be shown only if clearly labeled as nonguaranteed. Illustrations need not contain only guaranteed values, are not individually pre-approved by the Commissioner, and never carry a guarantee that illustrated nonguaranteed results will actually be credited.
Why the other options are wrong
- B) Illustrations may include nonguaranteed values; the regulation requires that they be clearly labeled as nonguaranteed, not that they be excluded from the illustration entirely.
- C) Illustration forms must comply with filing and use rules, but each sales illustration is not individually submitted to or pre-approved by the Commissioner before each presentation.
- D) Nonguaranteed values are by definition not promised by the insurer. An illustration cannot guarantee that illustrated nonguaranteed results will actually be credited to the policy.
Memory hook
If it's in the illustration, label it: guaranteed, or it could ghost you.