Arkansas Life and Health Insurance Practice Exam 2025 – The Comprehensive All-in-One Guide for Exam Success!

Question: 1 / 400

Which of the following statements accurately describes the fiduciary and contractual relationships between producers, clients, and insurers?

Clients are responsible for the funds received by licensees

The correct answer is C. This is because, as fiduciary agents, producers are entrusted with handling client funds and are held to a high standard of care to act in the best interest of their clients. This means that licensees must hold the funds in trust and any personal use of those funds is considered theft and is punishable by law. Option A is incorrect as clients are not responsible for the actions of the producers. Option B is also incorrect as licensees are not permitted to use client funds for personal use, regardless of need. Option D is incorrect as producers do have a fiduciary duty to act in the best interest of the insurer, as well as the client.

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Licensees may use the funds for personal use if needed

Funds received by licensees must be held in trust, and any personal use is punishable as theft

Producers do not have a fiduciary duty to the insurer

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