State RegulationsTN specificDifficulty 2/5
An unlicensed office manager at a Tennessee agency proposes to receive a cash bonus for every life insurance application she persuades walk-in customers to complete. How should this arrangement be treated?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Under T.C.A. § 56-6-113, compensation for insurance transactions may be paid only to persons licensed under Tennessee's producer-licensing provisions. A bonus paid per completed application is compensation for soliciting insurance, and the office manager's employee status does not create an exemption. The agency and its licensees risk discipline by the Commissioner for structuring pay around an unlicensed person's sales production.
Why the other options are wrong
- A) Employee status is not an exemption for receiving transaction-based insurance compensation under T.C.A. § 56-6-113.
- B) Paying annually instead of per application does not change the character of the money; it is still compensation for producing insurance business.
- C) Persuading customers to complete applications is solicitation, not clerical support, so the licensing requirement applies.
Memory hook
A bonus per application is solicitation pay — licensed hands only.