Which of the following is an example of false advertising in insurance?

The example of false advertising in insurance is when an insurer exaggerates its dividends in an advertisement. This practice misleads potential customers by making representations about the benefits or payouts of the insurance policy that are not accurate or realistic. Exaggerating dividends does not provide a truthful representation of what policyholders can actually expect, leading to a misunderstanding about the product's value and the financial realities of the insurance policy.

False advertising is prohibited because it jeopardizes consumer trust and can lead to significant financial repercussions for policyholders who base their purchasing decisions on misleading information. In this context, it is crucial for insurers to present clear, truthful, and not misleading information about the policies they offer in any promotional material.

Other options may present scenarios that could be viewed as deceptive or overly generous but do not necessarily constitute false advertising under legal definitions. Free insurance for life could imply strict conditions that might be disclosed elsewhere, guaranteed acceptance must typically be backed by the product’s terms, and promoting unlimited coverage often involves comprehensive disclaimers. Therefore, while these could be misleading, they do not directly exemplify the legal criteria for false advertising as accurately as exaggerating dividends does.