LLQP Ethics & Professional Practice · Component 2.2 · 40% of the exam
A 'conflict of interest' arises when:
- The agent's interests or duties to another party could influence the advice, and it must be managed
- BTwo of the agent's clients meet each other and discover they were given different recommendations for similar needs
- CThe client disagrees with the agent's recommendation and asks for a product the agent considers unsuitable
- DThe insurer changes its rates after the application, so the premium the agent quoted no longer applies
Correct answer: A) The agent's interests or duties to another party could influence the advice, and it must be managed
Conflicts are inherent in commission-based advice; management and disclosure are required.
Why the other options are wrong
- BTwo clients meeting is not a conflict of interest.
- CDisagreement is not a conflict of interest.
- DAn insurer changing rates is not a conflict of interest.
Exam tip
Conflict: identify, disclose, manage or avoid; client interest prevails.
Common mistake
Failing to disclose a sales contest that favours one product.
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.