Start Here: 5 Things You MUST Know
Solicitation means trying to get someone to buy insurance - through conversations, presentations, brochures, or any other method.
Every applicant must receive a written disclosure statement (basic info about cost and coverage) no later than when they sign the application.
Buyer's Guide = generic info about types of life insurance. Policy Summary = specific info about YOUR policy. Know the difference!
Illustrations show projected future values of a policy, but must clearly separate what's guaranteed from what's not guaranteed.
All sales presentations must be accurate and complete - no misleading claims, no exaggerations, no half-truths.
Overview
Before anyone can buy a life insurance policy, someone has to sell it to them. That selling process - from the very first conversation to the moment they sign an application - is called solicitation. Think of it as the "marketing and sales" phase of life insurance. This part covers the rules agents must follow when selling, and the documents customers are legally entitled to receive.
Why This Matters for the Exam
The exam loves to test whether you know the difference between the three key documents: Buyer's Guide, Policy Summary, and Illustration. They will describe one document and ask you to name it - or swap the definitions to trick you. Master these three and you'll nail several questions.
1. What is Solicitation?
Solicitation (plain English)
Solicitation is any attempt to persuade someone to buy an insurance policy. It can be done orally (in person, over the phone) or in writing (through mail, email, brochures, ads). Basically, if you're trying to get someone to buy insurance, you're soliciting.
What counts as solicitation? All of these:
Providing information
Telling a customer about the different types of life insurance products your company offers
Describing benefits
Explaining what a specific policy covers, how much it pays out, or what features it has
Making recommendations
Suggesting a specific type of policy - like saying "Based on your situation, whole life would be a good fit"
Securing a contract
Actually getting the customer to sign an application and commit to buying a policy from the insurer
The Golden Rule of Sales Presentations
Any sales presentations used by insurers or their agents must be accurate and complete. This means:
- -- No exaggerating benefits
- -- No hiding costs or exclusions
- -- No making promises the policy can't keep
- -- No using confusing language to mislead the customer
Real-World Scenario: What Solicitation Looks Like
The Setup: Agent Maria meets Tom at a community event. Tom mentions he just had his first child and is worried about providing for his family.
What Happens: Maria explains the different types of life insurance (term vs. whole life), describes the benefits of each, and recommends a 20-year term policy that fits Tom's budget. She gives Tom a brochure and schedules a follow-up meeting.
The Result: Everything Maria did - from the conversation to the brochure to the recommendation - counts as solicitation. She was attempting to persuade Tom to buy insurance. All of it must be accurate and complete.
2. The 3 Documents You MUST Know
When someone applies for life insurance, they're entitled to receive certain documents that help them understand what they're buying. There are three key documents, and they each serve a different purpose. The exam will test you on the differences.
| Feature | Buyer's Guide | Policy Summary | Illustration |
|---|---|---|---|
| What is it? | A booklet with generic info about life insurance in general | A document with specific info about the exact policy being issued | A chart/table showing projected future values of a policy over many years |
| Generic or Specific? | GENERIC | SPECIFIC | SPECIFIC (projected) |
| When delivered? | Before accepting initial premium (or with policy if 10+ day free-look period) | When the policy is delivered | During the sales presentation |
| Who creates it? | Language approved by the Department of Insurance | The insurance company | The insurance company (agents cannot modify) |
| Key contents | How to choose coverage, how to compare costs, types of policies explained | Agent info, insurer info, policy name, riders, premiums, cash values, death benefit | Guaranteed vs. non-guaranteed values over time |
| Think of it as... | "Life Insurance 101" pamphlet | "Here's exactly what YOUR policy does" | "Here's what your money MIGHT grow to" |
Memory Trick
Buyer's Guide = Basic (generic info for any buyer). Policy Summary = Personal and Specific (about YOUR policy). Illustration = Imagine the future (projected values).
3. Buyer's Guide - The "Life Insurance 101" Booklet
What is a Buyer's Guide?
Think of the Buyer's Guide like a "Life Insurance for Beginners" pamphlet. It's not about any specific policy - it's a general educational document that teaches someone what life insurance is, the different types available, how to figure out how much they need, and how to compare costs between different companies. The language in it must be approved by the Department of Insurance - agents can't write their own version or change the wording.
What's inside a Buyer's Guide:
How to choose the right amount
Guidance on figuring out how much life insurance coverage you actually need based on your situation
How to choose the right type
Explains the difference between term life, whole life, universal life, etc. in plain language
How to compare costs
Tips on comparing policies from different companies so you can find the best deal
Department-approved language only
The wording is standardized and controlled - the insurance company can't add their own marketing spin
When Must the Buyer's Guide Be Delivered?
General Rule: It must be given to the applicant before the company accepts the initial premium (the first payment). In other words, before the customer hands over any money.
Exception: If the policy includes a free-look period of at least 10 days, the Buyer's Guide can be delivered later - when the actual policy is delivered. A "free-look period" is a window of time (at least 10 days) after receiving the policy during which the customer can return it for a full refund, no questions asked. It's basically a trial period.
Real-World Scenario: The Buyer's Guide in Action
The Setup: Lisa is 28 and has never bought life insurance before. She meets with agent Kevin because her husband suggested they should "look into it."
What Happens: Before Lisa writes a check for her first premium payment, Kevin hands her a Buyer's Guide. It explains the different types of life insurance - term, whole life, universal - in simple language. It helps her understand how much coverage she might need and how to compare prices from different companies. It does NOT mention any specific policy or price - it's purely educational.
The Result: Lisa now understands the basics of life insurance before committing any money. The Buyer's Guide gave her a foundation of knowledge so she can make an informed decision. This is exactly what it's designed to do.
4. Policy Summary - The "Here's Exactly What YOUR Policy Does" Document
What is a Policy Summary?
Unlike the Buyer's Guide (which is generic), the Policy Summary is specific to the exact policy being issued to this customer. It's a written statement that describes the features and elements of that particular policy. Think of it as the "receipt and spec sheet" for your specific purchase.
What a Policy Summary must include:
Agent's name and address
Who sold you the policy and how to reach them
Insurer's full name and office address
The insurance company behind your policy
Generic name of the policy
The type of policy (e.g., "20-Year Level Term") plus each rider (add-on)
Premium amounts
How much you pay for the policy - your regular payment to keep it active
Cash value figures
Cash value is the savings that builds up inside certain policies (like whole life). It's money you can borrow against or withdraw while alive.
Dividend projections
Dividends are portions of the insurer's profits returned to policyholders of "participating" policies - like a refund or bonus payment.
Surrender value
Surrender value is how much cash you'd get if you canceled ("surrendered") the policy entirely. It may be less than the cash value due to fees.
Death benefit
Death benefit is the amount of money paid to your beneficiary (the person you choose) when you die. This is the core purpose of life insurance.
Figures for specific policy years
Shows values at different points in time - like Year 5, Year 10, Year 20 - so you can see how the policy changes over time
Key Term: Rider
A rider is an add-on to a basic insurance policy that provides extra coverage or benefits. Think of it like adding toppings to a pizza - the base policy is the pizza, and riders are the extras you can add on. For example, a "waiver of premium" rider means your premiums are waived (you don't have to pay) if you become disabled. Riders are listed in the Policy Summary so the customer knows exactly what extras they're getting.
When Must the Policy Summary Be Delivered?
The Policy Summary must be provided when the policy is delivered to the customer. This makes sense - it describes the specific policy being handed over, so it comes with the policy itself.
Real-World Scenario: The Policy Summary in Action
The Setup: Tom applied for a whole life policy three weeks ago. The insurance company approved him, and now agent Maria is delivering the finished policy to his home.
What Happens: Along with the policy itself, Maria hands Tom a Policy Summary. It shows: Maria's name and contact info, the insurance company's name (ABC Life Insurance, 123 Main St), the policy type ("Whole Life with Accidental Death Rider"), premiums of $150/month, cash values at Year 5 ($3,200), Year 10 ($8,400), Year 20 ($22,100), a surrender value, and a death benefit of $250,000.
The Result: Tom can see at a glance exactly what his policy does, what it costs, what it's worth at different points, and who to contact with questions. This is specific to HIS policy - not generic information.
5. Illustrations - The "Crystal Ball" Projections
What is an Illustration?
An illustration is a presentation or chart that shows what a life insurance policy might be worth in the future. It projects values like cash value and death benefit over a period of years - often 10, 20, or 30 years out. The key word is "might" because some of these values are not guaranteed. They depend on things like how well the insurance company's investments perform.
Guaranteed vs. Non-Guaranteed Values - What's the Difference?
GUARANTEED Values
These are the numbers the insurance company promises you will get, no matter what. They're written into the contract.
Example: "Your policy guarantees a minimum cash value of $5,000 at Year 10." Even if the company's investments tank, you're still getting that $5,000.
NON-GUARANTEED Values
These are projections - educated guesses based on current assumptions. They could be higher or lower than shown. The company is NOT promising these numbers.
Example: "Based on current interest rates, your cash value could be $8,500 at Year 10." But if rates drop, it might only be $6,200.
Strict Rules for Illustrations
Rule 1: Must clearly separate guaranteed from non-guaranteed
The customer must be able to look at the illustration and immediately tell which numbers are promises and which are projections. No blurring the lines.
Rule 2: Must state it is NOT part of the contract
An illustration is a sales tool, not a legal promise. It must clearly say that it is not part of the actual insurance contract.
Rule 3: Must label non-guaranteed values as such
Every non-guaranteed number must be identified as non-guaranteed. No hiding it in fine print.
Rule 4: Agents can ONLY use insurer-approved illustrations
An agent cannot create their own illustration or modify one provided by the company. They must use the official version exactly as given.
Real-World Scenario: How an Illustration is Used
The Setup: Agent Kevin is presenting a whole life policy to Sarah. She wants to know what the policy might be worth in 20 years.
What Happens: Kevin shows Sarah an illustration provided by his insurance company. It has two columns: "Guaranteed" and "Projected." At Year 20, the guaranteed cash value is $18,000 and the projected cash value is $26,500. The illustration clearly states at the top: "This illustration is not part of the insurance contract. Non-guaranteed values are based on current assumptions and are not promises." Kevin explains the difference and makes sure Sarah understands that the $26,500 is not a promise.
The Result: Sarah can see both the worst case (guaranteed) and the hopeful case (projected). She makes her decision with realistic expectations. If Kevin had made his own illustration showing $35,000 at Year 20 to make the sale look better, he would be violating the rules.
6. Disclosure Statement Requirements
What is a Disclosure Statement?
A disclosure statement is a written document that provides basic information about the cost and coverage of the insurance being sold. Think of "disclosure" as "revealing the important facts." The law requires that every applicant receive this information so they know what they're getting into before committing. The Buyer's Guide and Policy Summary together fulfill the disclosure requirement.
When Must the Disclosure Statement Be Given?
Deadline: No later than when the application for insurance is signed. The customer must have this information before or at the time they commit to buying the policy.
Document Delivery Timeline
Disclosure Statement
At or before signing app
Buyer's Guide
Before first premium (or with policy if 10-day free look)
Policy Summary
When policy is delivered
Real-World Scenario: Getting the Timing Right
The Setup: Agent Maria meets with client Dave. After discussing his needs, Dave decides he wants a $500,000 term life policy.
What Happens: Before Dave signs the application, Maria gives him the written disclosure statement explaining the cost and basic coverage. She also hands him the Buyer's Guide before accepting his first premium check. Three weeks later, when the policy is approved and Maria delivers it to Dave, she includes the Policy Summary showing all the specific details of his policy.
The Result: Maria followed the correct timeline perfectly. Disclosure statement at signing, Buyer's Guide before first payment, Policy Summary at delivery. If Maria had waited until policy delivery to give Dave the disclosure statement, she would have violated the rules.
Cheat Sheet
Print this page for quick referenceSolicitation
- -- Any attempt to persuade someone to buy insurance
- -- Can be oral or written
- -- Includes: info, benefits, recommendations, securing contracts
- -- All presentations must be accurate and complete
Disclosure Statement
- -- Written statement about cost and coverage
- -- Deadline: at or before application is signed
- -- Every applicant must receive one
Buyer's Guide
- -- GENERIC info about life insurance types
- -- Language approved by Dept. of Insurance
- -- Delivered: before first premium
- -- Exception: with policy if 10+ day free-look period
Policy Summary
- -- SPECIFIC info about the policy being issued
- -- Includes: agent info, insurer, policy name, riders, premiums, cash value, dividends, surrender value, death benefit
- -- Delivered: when policy is delivered
Illustrations
- -- Shows projected future values (guaranteed AND non-guaranteed)
- -- Must clearly separate guaranteed vs. projected amounts
- -- Must state it is NOT part of the contract
- -- Must label non-guaranteed values as non-guaranteed
- -- Agents can ONLY use insurer-approved illustrations - NO modifications allowed
Key Numbers to Memorize
10
Days minimum for free-look period to delay Buyer's Guide delivery
3
Key documents to know (Buyer's Guide, Policy Summary, Illustration)
0
Changes an agent can make to an illustration
Exam Trap Alerts
1. Buyer's Guide vs. Policy Summary Swap
The exam WILL try to swap the definitions of these two documents. Remember: Buyer's Guide = GENERIC information about types of life insurance in general. Policy Summary = SPECIFIC information about the exact policy being issued to that customer. If the question describes a document with the agent's name, insurer's address, and premium amounts, that's a Policy Summary - not a Buyer's Guide.
2. Delivery Timing Mix-Up
The exam may try to confuse you on WHEN each document is delivered. Disclosure statement = at or before signing the application. Buyer's Guide = before accepting the first premium. Policy Summary = when the policy is delivered. Don't mix up "before first premium" with "when the policy is delivered" - these are different moments in time.
3. The Free-Look Exception Trick
The Buyer's Guide normally must be given BEFORE the first premium. But if the policy has an unconditional refund provision (free-look period) of at least 10 days, the Buyer's Guide can be delivered WITH the policy instead. Watch for questions that say "15-day free-look period" - yes, that qualifies (it's more than 10). But "7-day free-look period" does NOT qualify.
4. Illustrations Are NOT Part of the Contract
If the exam asks whether an illustration is part of the insurance contract, the answer is NO. It must clearly state that it is not part of the contract. Non-guaranteed values shown in an illustration are projections, not promises. The only numbers the company is bound to are the guaranteed values written into the actual policy.
5. Agents Cannot Create or Modify Illustrations
An agent may only use illustrations that have been approved by the insurance company. They cannot create their own illustrations, modify the numbers, or change the format. If a question describes an agent making a "custom illustration" for a client, that's a violation.
6. Who Writes the Buyer's Guide?
The Buyer's Guide contains language approved by the Department of Insurance, not by the insurance company or the agent. The exam may try to trick you into thinking the insurer writes it. The insurer distributes it, but the content is controlled by the state's insurance department.
Quick Reference Summary
Solicitation
Any attempt to persuade someone to buy insurance - oral or written
Sales Presentations
Must be accurate and complete - no misleading claims
Disclosure Statement
Written cost/coverage info - given at or before signing the application
Buyer's Guide
Generic life insurance education - given before first premium (or with policy if 10+ day free look)
Policy Summary
Specific details of YOUR policy - given when policy is delivered
Illustration
Projected future values (guaranteed vs. non-guaranteed) - insurer-approved only, not part of the contract
Cash Value
Savings that builds inside certain policies - money you can borrow or withdraw while alive
Surrender Value
Cash you'd receive if you canceled the policy entirely - may be less than cash value
Rider
An add-on to a base policy that provides extra coverage or benefits