Life License Qualification Program (LLQP) Practice Exam

An example of false advertising would be?

1. Paid testimonials from celebrity endorsements

2. An insurer exaggerating its dividends in a magazine advertisement

3. An agent spending more than $25 on marketing gifts for a client

4. An insurer advertising in an insurance trade journal

The correct answer is: An insurer exaggerating its dividends in a magazine advertisement

The situation described involving an insurer exaggerating its dividends in a magazine advertisement clearly exemplifies false advertising because it misleads potential customers about the financial benefits they can expect. The essence of false advertising lies in presenting information that is deceptive or misleading, particularly regarding the expected outcomes or benefits of a product or service. In this case, by exaggerating dividends, the insurer creates an unrealistic expectation among consumers, which could influence their purchasing decisions. On the other hand, paid testimonials from celebrity endorsements can be seen as a legitimate marketing strategy, as long as they are disclosed appropriately. The scenario involving an agent spending more than $25 on marketing gifts might raise ethical concerns, but it doesn't inherently constitute false advertising. Lastly, advertising in an insurance trade journal is a standard marketing practice and does not involve misleading or deceptive representations regarding the products being offered.