What must agents disclose when offering insurance policies with dividend options?

When agents offer insurance policies that include dividend options, it is essential for them to disclose that dividends are not guaranteed. This is important because it reflects the nature of dividends in mutual insurance companies, which can vary based on the company’s financial performance, claims experience, and investment returns. By informing potential policyholders that dividends are not guaranteed, agents ensure that clients have a realistic understanding of the potential benefits and risks associated with their policy.

Other details about dividends, such as their frequency of payment or conditions surrounding their guarantee, can vary widely among different policies and companies, but the key point that dividends cannot be promised is fundamental for maintaining transparency and trust in the insurance transaction. This adherence to disclosure requirements is also a crucial aspect of compliance with insurance regulations designed to protect consumers.