If an agent claims dividends are guaranteed, this would be an example of what?

• A. Coercion
• B. Misrepresentation
• C. Breach of contract
• D. Non-disclosure

Answer: (B)

Misrepresentation is the right concept. Claiming that dividends are guaranteed states a fact about the policy's financial benefits as if it were certainly true. In most policies that pay dividends, the amount and even the existence of dividends aren’t guaranteed and depend on the insurer’s performance and decisions by its board. Presenting them as guaranteed is a false statement of a material fact that can influence a buyer’s decision, which is exactly what misrepresentation covers. It’s not coercion (no threat), not a breach of contract (no term is being broken), and while omitting information can be a issue, the scenario focuses on a false assertion rather than a mere omission.