State RegulationsVA specificDifficulty 1/5
Under Virginia law, an insurer wants to pay a commission on the sale of a life insurance policy. To whom may the insurer lawfully pay that commission?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Va. Code § 38.2-1812 provides that an insurer may not pay, and a person may not accept, a commission for selling, soliciting, or negotiating insurance in Virginia unless the recipient is licensed for that line and appointed by the insurer. The Virginia Bureau of Insurance treats payments outside this rule as unlawful compensation. The practical consequence is that both the license and the appointment must be in place before the money moves.
Why the other options are wrong
- B) Office employment does not substitute for licensure and appointment; an unlicensed employee may not receive a selling commission under Va. Code § 38.2-1812.
- C) Internal training is not a license; the commission may be paid only after the person is licensed for the line and appointed by the insurer.
- D) Paying a share of the sale proceeds to an unlicensed referrer is compensation for unlicensed insurance activity, which Va. Code § 38.2-1812 prohibits.
Memory hook
No license plus no appointment equals no commission — both boxes or nothing.