New Jersey Life Producer Practice Exam

What constitutes "controlled business" for a producer in terms of aggregate commissions?

1. 25%

2. 50%

3. 75%

4. 100%

The correct answer is: 50%

The term "controlled business" refers to insurance business that a producer has a significant financial interest in, which can create a conflict of interest. In New Jersey, this is specifically defined in terms of the commissions a producer can receive from business they control. The correct understanding is that a producer can receive up to 50% of their total commissions from controlled business. This limit is set to ensure that producers are not overly incentivized to sell insurance primarily to themselves or their affiliated entities, which could lead to improper advice or prioritization of personal interest over that of clients. By capping the commission from controlled business at 50%, it encourages producers to also seek and provide services to external clients, promoting a more balanced approach to insurance sales and market integrity. Understanding this regulation is essential for maintaining ethical standards in the industry and ensuring that producers act in the best interest of their clients. It's also a crucial consideration for maintaining compliance with state regulations.