LLQP Ethics & Professional Practice · Component 2.2 · 40% of the exam
A prospective client says he will buy only if the agent guarantees the best return available. The agent should:
- Asuggest a competitor's product, since no product can meet the client's stated condition
- explain what is guaranteed and what is not, and decline to promise any outcome
- Cgive the assurance, since the recommended contract does include guaranteed elements
- Dprovide a written guarantee signed personally to secure the client's business
Correct answer: B) explain what is guaranteed and what is not, and decline to promise any outcome
An agent cannot guarantee investment outcomes, and doing so is a misrepresentation. The correct approach is to separate the contractual guarantees from the projected values and let the client decide.
Why the other options are wrong
- AA suitable product may still exist once expectations are corrected.
- CGuaranteed elements are not a guarantee of the best available return.
- DA personal guarantee of returns is a serious misrepresentation.
Exam tip
Separate contractual guarantees from projections, and promise nothing more.
Common mistake
Agreeing to a client's framing in order to close a sale.
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.