Business Glossary

legal authority granting individuals the right to conduct insurance business in a particular state. In many states, agents and brokers must pass a written exam as a prerequisite to being licensed. In others, a professional designation such as the CLU or CPCU can be substituted for the examination requirement. The caliber of examinations varies from state to state. A license is usually issued for one or two year periods, and then must be renewed.

legal document issued by a regulatory agency permitting an individual to conduct a certain activity, usually because the person has passed a training course qualifying him. For example, a securities license is required for a broker to sell stocks, bonds, and mutual funds. An insurance license is required before someone can sell insurance products. Before a driver's license is granted, a driver must pass an examination proving that he knows how to drive safely. If the licensed individual violates the regulations, the license can be revoked.