LLQP Ethics & Professional Practice · Component 2.1 · 40% of the exam
A newly licensed agent asks whether errors and omissions coverage is optional. In most provinces it is:
- Aoptional, and sensible agents obtain it although nothing requires them to do so
- Bprovided automatically by the insurer that contracts the agent, at no personal cost
- Crequired only for agents who also hold a securities registration alongside the life licence
- a condition of holding the licence, and the licence lapses if the coverage ends
Correct answer: D) a condition of holding the licence, and the licence lapses if the coverage ends
Professional liability coverage protects clients who suffer loss through an agent's error. Regulators require it as a licensing condition, and a lapse in the coverage generally means a lapse in the licence.
Why the other options are wrong
- AThe coverage is a licensing condition rather than a matter of choice.
- BAn insurer contract does not automatically supply the agent's own coverage.
- CThe requirement applies to the life licence itself.
Exam tip
Errors and omissions coverage is a licence condition; a lapse affects the licence.
Common mistake
Letting professional liability coverage lapse without realizing the licence follows.
What this tests
CISRO competency component 2.1 — 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.