State RegulationsAZ specificDifficulty 2/5
A licensed Arizona producer wants to split his commission on a life sale with an unlicensed friend who referred the client. Under Arizona law, is this permitted?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
A.R.S. 20-298 confines commission compensation to licensed producers. Sharing the commission with an unlicensed person for insurance transactions would put selling compensation in unlicensed hands, which the statute forbids. The producer must keep the compensation or share it only with others who hold the proper license.
Why the other options are wrong
- A) Wrong because insurer notification does not lift the restriction; A.R.S. 20-298 prohibits paying compensation to unlicensed persons regardless of notice.
- B) Wrong because compensation for services connected to the insurance transaction falls within the statutory restriction; labeling it a referral fee does not avoid A.R.S. 20-298.
- D) Wrong because the residency of the unlicensed friend is irrelevant; the prohibition in A.R.S. 20-298 turns on licensure, not location.
Memory hook
Split only with the licensed — paying an unlicensed referrer violates 20-298.