Cash surrender value misrepresentation detection

• A. Guess cash value based on age.
• B. Review policy terms, verify cash value projections, and compare with reported assets and affordability.
• C. Ignore cash surrender value.
• D. Only compare cash value to the policy premium.

Answer: (B)

Detecting misrepresentation of cash surrender value hinges on verifying that the cash value projections truly reflect the policy’s terms and the applicant’s financial situation. Begin with the policy terms to understand how cash values are built, what guarantees exist, and any charges or riders that can affect surrender value. Then verify the projections by re-running them using the same assumptions shown in the illustration and aligned with the policy’s actual terms, so the numbers are credible. Finally, compare those projections with the applicant’s reported assets and affordability to ensure the expected value and premium obligations fit their finances. This cross-check catches overstated assets, unrealistic affordability, or improper illustrations, providing a thorough validation rather than relying on guesswork, ignoring cash surrender value, or only comparing value to the premium.