Life & Health Insurance Exam (National Portion)General InsuranceEasy
An insurance producer collects premiums from policyholders and then forwards them to the insurer. In this role, the producer is acting as a:
- AAdjuster
- BFiduciary
- CUnderwriter
- DActuary
Show answer & explanationAnswer & explanation
Correct answer: B. Fiduciary
A fiduciary is someone in a position of trust who handles money or property for another. When a producer collects premiums, they are holding those funds in trust for the insurer.
Why the other options are wrong
- A. An adjuster investigates and settles claims.
- C. An underwriter assesses risk and determines eligibility for coverage.
- D. An actuary calculates risks and premiums for the insurer.
Fiduciary Duty
A legal duty to act solely in another party's best interests. For insurance producers, this includes proper handling of premiums.
- Involves trust and confidence.
- Applies to handling client funds.
- Requires acting in the insurer's and client's best interest.
Memory trick: F.A.C.T.S. - Fiduciary, Agent, Compliance, Trust, Service