Life insurance agents must satisfy all of the following EXCEPT:

• A. Be subject to the principal's control.
• B. Have contractual capacity.
• C. Be licensed by the state.
• D. Pass a screening test for substance abuse.

Answer: (D)

In this area, the focus is on what a life insurance agent must legally have to be appointed and operate: they must be under the insurer’s control, have the legal capacity to enter contracts, and hold a valid state license. Being subject to the principal’s control ensures the insurer can supervise and bind the agent’s activities on behalf of the company. Having contractual capacity means the agent can legally enter into agreements, such as producing and servicing policies. Being licensed by the state is what gives the agent authority to solicit and sell insurance and to meet regulatory standards. A screening test for substance abuse, while it might occur in some employment contexts, is not a universal regulatory requirement for a life insurance agent’s appointment or licensure. Therefore, the substance-abuse screening requirement is the exception to the standard prerequisites.