Exaggerating policy benefits to induce purchase is an example of which unethical practice?

• A. Misrepresentation
• B. Fraud
• C. Negligence
• D. Breach

Answer: (A)

Exaggerating policy benefits to induce purchase is misrepresentation. In insurance ethics, misrepresentation happens when a producer communicates false or misleading information about a policy’s benefits as if it were true, causing the buyer to decide based on those distorted facts. This undermines informed consent and the integrity of the sale.

It isn’t negligence, which would be a careless or erroneous statement without the intended misleading impact. It isn’t a breach, since there’s no contract promise to fail yet. And while intentional deceit to gain something could be fraud, the scenario described fits the misrepresentation concept—false statements about what the policy will pay or cover used to push a sale.