In California, a person who negotiates a life settlement contract, under which a life insurance policy is sold to a third party, must hold:
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Life settlements are regulated under CIC Section 10113.1 et seq. A person who negotiates or obtains a life settlement contract must be licensed as a life settlement broker. An agent who also brokers life settlement transactions must hold the life settlement broker license in addition to any agent license; the agent license alone does not authorize life settlement activity. These licensing requirements exist in part to combat stranger-originated life insurance fraud and to ensure that the disclosures, rescission rights, and consumer protections applicable to life settlements are honored by the broker who arranges the transaction.
Why the other options are wrong
- A) A life agent license authorizes the sale of insurance policies as an agent, not the brokering of life settlement contracts. Life settlement activity requires the separate life settlement broker license.
- B) Holding a life agent license does not excuse an agent from the life settlement broker license requirement. The statutes require the broker license specifically for negotiating settlements, even for licensed agents.
- C) Life settlements are expressly regulated in California under Section 10113.1 et seq., which imposes licensing, disclosure, and rescission requirements. They are not an unregulated market. This option reflects a different rule and does not match the law that governs the transaction.
Memory hook
Selling a used policy is a settlement, not insurance. Agent license sells coverage; settlement broker license sells the policy.