New Jersey Life Producer Law Practice Test

What must a life insurance producer do to receive fees beyond commissions when acting as a consultant?

1. Provide a verbal agreement

2. Obtain a written memorandum from the prospect

3. Submit a fee disclosure form

4. Charge a flat consulting fee

The correct answer is: Obtain a written memorandum from the prospect

To receive fees beyond commissions while acting as a consultant, a life insurance producer must obtain a written memorandum from the prospect. This requirement ensures that there is clear documentation of the agreement made between the producer and the client. A written memorandum provides evidence that the client is fully informed about the nature of the consulting services and the associated fees. It serves to protect both the producer and the client by outlining expectations and responsibilities. By having this written acknowledgment, the producer not only complies with legal standards regarding transparency and ethical business practices, but also fosters trust with the client through clear communication. While other options may touch upon aspects of the consulting relationship, securing a written memorandum is specifically vital for establishing a formal agreement on fees outside of typical commission structures.