Series 7 practice questionmediumCommunications with the Public (Retail and Institutional) — Hypothetical Illustrations
A registered representative wants to use a hypothetical illustration of a variable life policy in a presentation. Which of the following is required for compliance?
- AOnly average returns must be shown
- BIllustrations may only show positive performance scenarios
- CIt must also show the impact of maximum charges and fees✓ Correct answer
- DHypothetical illustrations are prohibited
Explanation
Why C — It must also show the impact of maximum charges and fees
FINRA requires that hypothetical illustrations for variable products include the maximum possible charges and fees to ensure fair presentation.
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