Connecticut Life Producer Practice exam

Which of the following is a fiduciary duty?

1. Handling policyholder complaints

2. Managing financial transactions

3. Marketing insurance products

4. Filing claims with insurers

The correct answer is: Managing financial transactions

A fiduciary duty is a legal obligation to act in the best interest of another party. In the context of insurance, this often pertains to the responsibility an agent or producer has towards their clients, ensuring that their actions prioritize the clients' needs above their own. Managing financial transactions falls squarely within the realm of fiduciary duties because it involves handling the client’s funds, maintaining financial integrity, and ensuring that all transactions are conducted ethically and transparently. This responsibility includes safeguarding clients' premiums and claims payments, representing their best interests in financial dealings, and providing accurate accounts of all transactions. Handling policyholder complaints is important but is more about customer service and does not carry the same legal implications as fiduciary duties. Marketing insurance products may involve promoting policies and attracting clients, but it does not inherently dictate a legal responsibility to act in the clients’ best interests in the same way that managing their funds does. Filing claims with insurers is also a critical function of an insurance agent, but it is often more procedural than fiduciary, as it involves submitting required documentation rather than acting in the best interest related to financial management.