Ohio Insurance Laws and Regulations Practice Exam

If a life insurance application illustration shows future premiums being paid out of nonguaranteed values, it must disclose that:

1. The insurer guarantees the value

2. No further premiums are necessary

3. She may need to resume premium payments, depending on actual results

4. The policy is fully paid up

The correct answer is: She may need to resume premium payments, depending on actual results

A life insurance application illustration is a projection of potential premiums and benefits, but it is not guaranteed. Therefore, if the illustration shows future premiums being paid out of nonguaranteed values, it means that the premiums may potentially be higher than expected. In this case, the insurance company must disclose that the policyholder may need to resume premium payments depending on actual results, in order to maintain the policy. This is to prevent any confusion or surprises for the policyholder in the future. Option A is incorrect because the nonguaranteed values mean that there is no guarantee of a certain value. Option B is incorrect because the policyholder will still need to pay premiums, it's just that the cost may vary from the initial illustration. Option D is incorrect because a fully paid up policy means that no further premiums are required, which is not the case here.