LLQP Ethics & Professional Practice · Component 1.2 · 60% of the exam
A client asks the agent to act as trustee for proceeds payable to her young children. The agent should:
- Aaccept provided the trustee fee is disclosed to the client in writing beforehand
- Baccept but resign as the family's agent once the children reach the age of majority
- Caccept, since acting as trustee is an ordinary extension of the agent's professional role
- decline and suggest a family member or professional trustee, explaining the conflict
Correct answer: D) decline and suggest a family member or professional trustee, explaining the conflict
Holding and administering client money creates a conflict and exposes the agent to liability well beyond the professional role. A trusted individual or a corporate trustee is the appropriate choice, and the client should take legal advice.
Why the other options are wrong
- ADisclosing a fee does not resolve the underlying conflict.
- BA later resignation does not address the conflict during the trusteeship.
- CTrusteeship involves holding client money, which is outside the agent's role.
Exam tip
Agents do not hold or administer client money, including as trustee.
Common mistake
Agreeing to a trusteeship as a favour to a long-standing client.
What this tests
CISRO competency component 1.2 — Integrate into practice the legal aspects of insurance and annuity contracts — which is weighted at 60% of the Ethics & Professional Practice module. Written against the published curriculum.
More from component 1
- An 'assignee' of a life insurance policy is:
- A corporation as policyowner and beneficiary of a policy on a key employee:
- A 'trustee' named to receive proceeds on behalf of a beneficiary:
- The 'automatic premium loan' (APL) provision:
- A life insurance contract 'matures' when:
- The 'assignment' provision typically states that:
Practice the whole Ethics & Professional Practice module
Timed sets weighted like the exam, and review of every question you miss. Free to start.