South Carolina Life Insurance Practice Exam

What is prohibited by federal law regarding individuals convicted of dishonesty or breach of trust?

1. They cannot own an insurance agency

2. They cannot work in the business of insurance

3. They cannot sell any form of insurance

4. They cannot provide financial advice

The correct answer is: They cannot work in the business of insurance

Federal law mandates that individuals convicted of crimes involving dishonesty or breach of trust are prohibited from engaging in the insurance business, which includes various roles related to the operation and management of insurance entities. This regulation aims to protect consumers and maintain the integrity of the insurance industry, as those with a history of dishonesty pose a significant risk to public trust and financial security. Working in the business of insurance encompasses a wide range of activities, including underwriting, claims handling, and sales. Therefore, the prohibition is comprehensive and is enforced to ensure that individuals with questionable backgrounds do not have access to sensitive financial transactions or the opportunity to exploit vulnerable clients. The emphasis on the broad scope of participation in the insurance industry resonates with the intent of maintaining high standards for ethical conduct within the sector.