Arkansas Life and Health Insurance Practice Exam

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Prepare for the Arkansas Life and Health Insurance Exam. Utilize flashcards and multiple-choice questions with hints and explanations for each question. Get thoroughly ready for your certification test!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

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
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

The correct answer is: 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.