LLQP Ethics & Professional Practice · Component 1.1 · 60% of the exam
A client asks whether the federal deposit insurance that protects his bank account also covers his life insurance policy. The agent should explain that:
- deposit insurance covers eligible bank deposits, while life policies are covered by Assuris
- Bprotection applies only to policies bought directly from an insurer rather than through an agent
- Cneither deposit insurance nor any other scheme protects a life insurance policyholder
- Ddeposit insurance covers both, since the insurer is a federally supervised institution
Correct answer: A) deposit insurance covers eligible bank deposits, while life policies are covered by Assuris
Assuris is the industry-funded protection plan for policyholders of member life insurers, with limits that vary by benefit type. Deposit insurance is a separate scheme covering eligible deposits at member banks.
Why the other options are wrong
- BProtection depends on the insurer's membership, not on the distribution channel.
- CAssuris exists specifically to protect life insurance policyholders.
- DDeposit insurance does not extend to insurance contracts.
Exam tip
Bank deposits equal deposit insurance; life policies equal Assuris.
Common mistake
Reassuring a client with the wrong protection scheme.
What this tests
CISRO competency component 1.1 — 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.