Illinois Insurance State Practice Exam

If the service fee exceeds 10% of the policy premium, what must the agreement be?

1. Verbal and Confirmed

2. Written and Signed by both parties

3. Canceled and Renegotiated

4. Notarized and Filed

The correct answer is: Written and Signed by both parties

When a service fee exceeds 10% of the policy premium, it is mandated that the agreement must be documented in a written format and signed by both parties involved. This requirement ensures transparency and provides a clear record of the terms agreed upon, protecting both the provider and the consumer. Requiring a written and signed agreement helps mitigate misunderstandings and disputes that could arise about fees. Without such formal documentation, there may be disagreements regarding the terms, which could lead to legal complications or dissatisfaction with the services provided. Such provisions are often set forth in regulations to maintain ethical standards within the insurance industry and to promote fair dealings among all parties. The other options, while they may refer to forms of agreement, do not meet the specific legal requirements established for service fees that exceed the threshold indicated.