AD Banker Comprehensive Practice Exam

Controlled business may be defined as insurance sold to:

1. Individuals needing an increased amount of term insurance

2. Existing clients only

3. Anyone willing to buy

4. The producer, the producer's family and friends, and the producer's business associates

The correct answer is: The producer, the producer's family and friends, and the producer's business associates

Controlled business is a term used in insurance to refer specifically to policies that are sold to individuals who have a close relationship with the insurance producer, such as the producer themselves, their family members, friends, or business associates. This concept is important because many states have regulations concerning the amount of controlled business that an agent can write in order to prevent conflicts of interest and ensure that agents are serving a broader clientele rather than just those they have personal connections with. The choice indicating the producer, their family, friends, and business associates accurately captures this definition. It emphasizes the relational aspect of controlled business and highlights the potential for bias if an agent primarily sells insurance to those within their immediate network instead of the general public. This distinction is critical in understanding the ethical and legal boundaries within which insurance producers must operate. The other options focus on broader market segments or specific alignments with customers that do not encapsulate the narrow focus of controlled business, which specifically involves personal relationships.