New Jersey Life and Health State Practice Exam

Which of the following circumstances requires an individual to be a licensed producer?

1. Filing claims for clients

2. Discussing premiums with a potential insured

3. Coordinating policy payments

4. Providing customer service

The correct answer is: Discussing premiums with a potential insured

An individual must be a licensed producer when discussing premiums with a potential insured because this activity involves presenting, explaining, and potentially influencing the consumer's decisions regarding insurance policies. In many jurisdictions, including New Jersey, discussing premiums typically constitutes soliciting or negotiating insurance coverage, which legally requires the individual to hold a valid insurance producer license. This is to ensure that consumers receive accurate information about the financial obligations and coverage options associated with the premiums they are being quoted. Licensing also assures that the producer has met certain educational and ethical standards, protecting the consumer's interests. In contrast, filing claims, coordinating policy payments, and providing customer service may involve assisting with administrative tasks that do not directly influence the sale or negotiation of insurance products and may not require a producer's license. These activities are often considered support roles within the insurance process rather than direct engagement in sales or negotiations.