A life insurer markets and sells policies directly to consumers through mail, telephone, and the internet without using field agents. This distribution method is called:
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Direct response distribution reaches consumers directly through mail, telephone, the internet, or advertising, without a field agent meeting the applicant in person. The insurer handles solicitation, underwriting, and policy delivery through the response channel. The category is legally recognized in California; for example, Section 1749.8(d) exempts nonresident agents representing direct response providers from the annuity training requirement. Independent agency, captive agency, and brokerage systems all involve intermediaries who meet or serve the client in the field, unlike direct response, where the insurer deals with the consumer directly.
Why the other options are wrong
- C) Independent agents represent multiple insurers and sell through face-to-face field contact. The direct response channel described uses no field agents. This common misconception is exactly what the governing rule rejects, so the option is incorrect.
- D) Captive agents represent a single insurer in the field. Direct response reaches consumers without field agents, through mail, telephone, and the internet. This contradicts the governing rule explained above and therefore cannot be the correct answer.
- A) A brokerage system channels business through brokers who represent the client. Direct response is the no-intermediary channel, not the brokerage system. The controlling legal standard set out above demonstrates precisely why this option is incorrect.
Memory hook
Direct response = mail, phone, web, no agent in the room. The company talks to the consumer itself.