Question 19

California’s maximum annual compensation for a life settlement broker is 10% of proceeds.

In California, the regulation stipulates that life settlement brokers can receive a maximum annual compensation of 10% of the proceeds from a life settlement transaction.

A) 10 % of proceeds

This option is correct because it aligns with California’s regulations regarding the maximum compensation a life settlement broker can earn. The law explicitly states that brokers are limited to this percentage, ensuring transparency and fairness in these financial transactions.

B) 15 % of proceeds

This option is incorrect as the law does not permit life settlement brokers to earn 15% of the proceeds. The maximum cap is set at 10%, making any higher percentage, including 15%, against state regulations.

C) 20 % of proceeds

This option is also incorrect. California law clearly defines that life settlement brokers cannot exceed a compensation rate of 10% of the proceeds, thus making 20% an unlawful figure for broker compensation.

D) No statutory limit

This option is incorrect because it suggests that there are no restrictions on compensation for life settlement brokers. In reality, California law imposes a specific limit of 10% on the annual compensation for brokers, which contradicts the assertion of having no statutory limit.

Conclusion

The correct answer is definitively 10% of proceeds, as per California regulations governing life settlement brokers. All other options fail to reflect the legal cap established by the state, ensuring that brokers operate within a structured and regulated framework to protect consumers.