State RegulationsIL specificDifficulty 1/5
For a producer who must maintain the bond required by 215 ILCS 5/500-130, which statement correctly describes the required bond amount?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
215 ILCS 5/500-130 fixes the bond amount: the greater of $2,500 or 5% of the premiums the producer brokered in the previous calendar year. The $2,500 floor ensures a meaningful bond even at small volumes, while the 5% measure scales protection with the producer's brokered business. The bond must be continuous, and surety information must be produced within 3 working days of a request.
Why the other options are wrong
- B) 5% with no minimum ignores the $2,500 floor built into 215 ILCS 5/500-130.
- C) A flat $2,500 ignores the 5% scaling factor, which controls once brokered premiums make 5% exceed $2,500.
- D) The statute measures 5% of brokered premiums, not of the producer's net commission income.
Memory hook
Two-five floor, five percent scale.