During a sales presentation for a participating life insurance policy, what must a producer include?

In the context of a participating life insurance policy, it is essential for a producer to include a statement that dividends are not guaranteed. This is important because participating policies allow policyholders to receive dividends based on the insurer’s performance, but these dividends can fluctuate from year to year and are not guaranteed. By clearly stating this upfront, the producer ensures that the customer has a realistic understanding of the potential benefits and risks associated with participating policies.

Providing this information helps maintain transparency in the sales process and sets proper expectations for the client. Understanding that dividends may vary helps clients make informed decisions about their insurance needs and financial planning.

While other factors such as annual premium adjustments, comparisons to non-participating policies, and details on mortality rates are important in the overall discussion of life insurance, the guarantee of dividends is a critical specific aspect of participating policies that must be communicated clearly to avoid misunderstandings.