Montana State Life Insurance Practice Exam

What must a producer inform the prospective purchaser about?

1. Their agency's commission structure

2. Their full name and home address of the insurance company

3. The industry average for life insurance rates

4. Upcoming policy changes and updates

The correct answer is: Their full name and home address of the insurance company

The correct choice emphasizes the importance of transparency in the insurance sales process. Producers are required to provide potential purchasers with accurate and pertinent details about the insurance company they represent. This includes the full name and home address of the insurance company, which helps ensure that consumers are well-informed about the entity with whom they are engaging in a financial commitment. This requirement supports regulatory practices aimed at protecting consumers by ensuring they have the necessary information to make informed decisions about purchasing life insurance. Understanding the identity and location of the insurance company enhances trust and allows consumers to contact the company should they have further questions or concerns about their policies. By contrast, the other choices do not align with the specific disclosure obligations typically mandated for producers in the insurance industry. For example, while knowing an agency's commission structure might be useful, it is not a standard disclosure required when interacting with prospective clients. Similarly, while it is beneficial for consumers to be informed about industry averages or upcoming policy changes, these are not foundational requirements for initial disclosure when establishing a relationship with a prospective purchaser.