Colorado Life Producer License Practice Test

Which of the following terms is permissible in describing a life insurance policy in company advertisements?

1. Guaranteed return

2. Variable plan

3. Fixed income

4. Stable growth

The correct answer is: Variable plan

The term "variable plan" is permissible in advertising life insurance policies because it accurately describes a type of policy where the cash value and sometimes the death benefit can vary based on the performance of the investment options chosen by the policyholder. This term is recognized in the insurance industry and accurately reflects the nature of the policy, helping consumers understand that their returns are not fixed and can fluctuate based on market conditions. In contrast, the other terms may mislead or lack the necessary specificity required by regulatory standards for insurance advertising. "Guaranteed return" implies a promise that may not apply to all life insurance products, as not all policies provide guaranteed returns. "Fixed income" often refers to investment products offering reliable income through interest payments, which might not accurately depict a life insurance product. "Stable growth," while potentially appealing, does not convey the variable nature of the policy's performance and could mislead consumers regarding the risks and benefits associated with variable life insurance policies.