State RegulationsGA specificDifficulty 2/5
A Georgia producer collects the initial premium from an applicant for an individual life policy delivered in Atlanta. Under O.C.G.A. § 33-23-35, how must the producer treat those funds?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under O.C.G.A. § 33-23-35, premiums collected by a Georgia licensee are held in a fiduciary capacity: the money belongs to the applicant/insurer relationship, not to the producer, and commingling premium funds with the producer's personal or business accounts is prohibited. A producer who wrongly converts those funds also faces criminal exposure — willful violation is a misdemeanor, rising to a felony when the amount exceeds $1,000.
Why the other options are wrong
- A) Depositing premiums into a personal account is precisely the commingling that O.C.G.A. § 33-23-35 forbids, regardless of how quickly the insurer is later paid.
- C) The producer never owns collected premiums; the fiduciary duty under O.C.G.A. § 33-23-35 exists precisely because independent-contractor status does not convey ownership of premium funds.
- D) Premiums are forwarded to the insurer in the ordinary course of business; the Insurance Commissioner is the regulator and does not act as a collection intermediary.
Memory hook
Premiums pass through your hands, never into your pocket — fiduciary, never commingle.