Connecticut Life Producer Practice exam

What type of business is not considered controlled business?

1. Insurance for a producer's family

2. Insurance for a producer's close friends

3. Insurance for other businesses owned by the producer

4. Insurance for unrelated third parties

The correct answer is: Insurance for unrelated third parties

The correct answer is related to the definition of controlled business in the context of insurance. Controlled business refers to insurance policies or contracts that are placed with insurers and are owned by individuals or entities that are closely associated with the producer, such as family members, friends, or businesses owned by the producer. When it comes to insurance for unrelated third parties, this type of business does not fall under the jurisdiction of controlled business regulations. Unrelated third parties are not financially connected to the producer in a personal or business capacity, which means the producer does not have control over the decisions made regarding the insurance policies for these individuals or entities. This distinction is particularly important because controlled business can present potential conflicts of interest and regulatory scrutiny when it comes to the producer's commissions and their relationship with clients. In this context, the other options pertain to situations where the producer does have a close personal or financial relationship with the policyholder, making them part of the controlled business category. Therefore, insurance for unrelated third parties is the only choice that is not considered controlled business.