State RegulationsTN specificDifficulty 1/5
When a Tennessee producer collects premium payments from applicants, in what capacity does the producer hold those funds?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
T.C.A. § 56-6-116 provides that a producer receives insurance funds in a fiduciary capacity. Premium money collected from applicants belongs to the insurance transaction, not to the producer personally, and must be handled and remitted according to that trust obligation, which the Tennessee Department of Commerce & Insurance enforces through its disciplinary authority.
Why the other options are wrong
- A) The producer never owns the funds outright; personal ownership is inconsistent with the fiduciary status imposed by T.C.A. § 56-6-116.
- C) Fiduciary funds are not jointly owned; the producer holds and accounts for them for the parties to the transaction.
- D) The funds are held under the producer's fiduciary duty for the transaction's parties, not for a state insurance fund.
Memory hook
Premiums in a producer's hands are trust money — fiduciary, never personal.