Final answer:
The sale of an insurance policy by a producer to his sister is considered controlled business. This refers to transactions including family or friends and is a legitimate practice if done ethically and legally.
Step-by-step explanation:
When an insurance producer sells an insurance policy to his sister, this type of business is referred to as controlled business. Controlled business refers to insurance transactions that involve the producer's immediate family, friends, or themselves. It is common in the insurance industry, and as long as all legal requirements and ethical guidelines are followed, it is a legitimate practice.