LLQP Ethics & Professional Practice · Component 2.2 · 40% of the exam
A needs analysis shows a client is carrying far more coverage than her circumstances require. The agent should:
- Asuggest that she add a further policy, so the total is easier to administer all in one place
- tell her what the analysis shows and discuss options, including reducing the coverage
- Csay nothing, since reducing coverage would lower the agent's renewal compensation
- Drecommend replacing the coverage with a new contract of the same total amount
Correct answer: B) tell her what the analysis shows and discuss options, including reducing the coverage
The duty is to advise on what the analysis shows, even where the advice reduces the agent's income. The client decides, and the discussion and the outcome should both be recorded.
Why the other options are wrong
- AAdding coverage compounds the problem the analysis identified.
- CSilence driven by compensation is a plain conflict of interest.
- DReplacing coverage that is already excessive solves nothing.
Exam tip
Advise what the analysis shows, even when it reduces your compensation.
Common mistake
Avoiding a conversation that would lead to less coverage in force.
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.