An agent who tells a client that dividends are guaranteed may be guilty of what?

• A. Coercion
• B. Misrepresentation
• C. Breach of fiduciary duty
• D. Arbitration

Answer: (B)

Guaranteeing dividends is misrepresentation. Dividends on participating life insurance policies are not guaranteed; they depend on the insurer’s actual financial performance and can vary or not be paid at all. If an agent promises guaranteed dividends, they are presenting a false factual claim that can mislead the client into making a decision based on information that isn’t certain. This fits the idea of misrepresentation—stating or implying a fact about the product that is false or misleading. While an agent has duties that could implicate fiduciary responsibility, the clearest label for this behavior is misrepresentation.