What type of information must insurance agents disclose to clients concerning policy terms?

The requirement for insurance agents to disclose material facts about coverages, limitations, and exclusions is crucial for ensuring that clients make informed decisions regarding their insurance policies. This encompasses a full understanding of what the policy covers, any restrictions that may apply, and situations that are explicitly not covered by the policy. Such transparency ensures that clients are aware of the potential risks they may still face and enables them to assess whether the coverage meets their needs adequately.

Offering only premium costs would not provide clients with a comprehensive understanding of the policy, as premiums are just one aspect of an insurance agreement. Similarly, discussing potential investment returns can lead to misunderstandings since many insurance products do not focus on investment performance as their primary function. Additionally, emphasizing only the benefits of a policy without addressing any limitations or exclusions can create a misleading impression of the coverage, ultimately harming the client's best interests. Therefore, the requirement to disclose material facts facilitates a transparent and responsible client-agent relationship.