South Carolina Life Insurance Practice Exam

Upon policy delivery, which of the following is not typically required of the producer?

1. Recovery of premium payments

2. Verification of policyholder's identity

3. Completion of all necessary paperwork

4. Money borrowed from cash value is taxable

The correct answer is: Money borrowed from cash value is taxable

The correct choice highlights a more informational aspect rather than an action typically required of a producer at the time of policy delivery. When a producer delivers a life insurance policy, their responsibilities typically involve activities that directly facilitate the completion of the policyholder’s transaction, such as verifying identity, completing necessary paperwork, and ensuring that premium payments are collected if due. In contrast, addressing the tax implications of borrowed money from the policy's cash value is a separate financial consideration that does not fall within the realm of the producer's immediate responsibilities during the delivery process. Tax implications are generally discussed but not enforced by the producer during this phase. Understanding the practical duties of a producer upon policy delivery helps clarify the role they play in administering the policy and interacting with the policyholder, emphasizing that while they provide critical support and information, certain aspects, like tax liability regarding cash value loans, are broader financial concepts that the policyholder may need to consider independently.