Question 87

An individual selling a policy for commission

Individuals selling insurance policies for commission are required to be licensed as insurance producers to ensure compliance with regulatory standards and protect consumers.

A) An underwriter at an insurer

An underwriter at an insurer is typically responsible for evaluating risks and determining policy terms but does not engage in selling insurance directly to consumers. Therefore, they do not need to be licensed as an insurance producer.

B) An officer or director of a licensed insurer

While officers or directors of a licensed insurer hold significant responsibilities within the company, they are not necessarily involved in the sale of insurance policies. As such, they are not required to obtain a producer license unless they engage in selling.

C) An administrator of a group plan

An administrator of a group plan may manage the plan but is generally not involved in directly selling insurance products. Their role typically does not require a license as an insurance producer unless they perform sales-related functions.

D) An individual selling a policy for commission

This option is correct as individuals who sell insurance policies for commission are legally required to be licensed as insurance producers. Licensing ensures that they meet the necessary qualifications and adhere to the regulations governing insurance sales, thereby protecting consumers.

Conclusion

The requirement for individuals selling policies for commission to be licensed as insurance producers is critical for ensuring accountability and professionalism in the insurance industry. The other options do not involve direct sales activities, thus exempting them from the licensing requirement. This distinction emphasizes the importance of regulation in protecting consumers in the insurance market.