LLQP Ethics & Professional Practice · Component 2.2 · 40% of the exam
A client offers to pay her first premium in cash at the kitchen table. The agent should:
- Aaccept the cash and issue a handwritten receipt confirming the coverage is now in force
- Brefuse to proceed with the application entirely, since cash can never be used for premiums
- Caccept the cash and deposit it into the agent's own account to forward to the insurer
- direct the payment to the insurer through an approved method and keep a record
Correct answer: D) direct the payment to the insurer through an approved method and keep a record
Cash raises money laundering concerns and leaves the agent holding client funds. Payments should go to the insurer directly by an approved method, with the source of funds understood and the transaction recorded.
Why the other options are wrong
- AA handwritten receipt does not place coverage in force.
- BThe application can proceed with an appropriate payment method.
- CClient money must never pass through the agent's own account.
Exam tip
Route payments to the insurer; never hold client money yourself.
Common mistake
Accepting cash for convenience and promising to pass it on.
What this tests
CISRO competency component 2.2 — Integrate into practice the rules governing the activities of life insurance agents — which is weighted at 40% of the Ethics & Professional Practice module. Written against the published curriculum.
More from component 2
- A prospective client wants to confirm that an agent is properly licensed before meeting him. She should:
- A dual-licensed agent's mutual fund business is reviewed following a client complaint. The review will be conducted by:
- Assuris coverage applies to:
- OLHI's services are available to:
- Complaints about an agent's conduct (as opposed to an insurer's claim decision) should be directed to:
- The best summary of an agent's ethical obligations is to:
Practice the whole Ethics & Professional Practice module
Timed sets weighted like the exam, and review of every question you miss. Free to start.