LLQP Ethics & Professional Practice · Component 2.2 · 40% of the exam
An agent delivers a policy issued with a higher premium than illustrated because of a health rating. At delivery he must:
- explain the rating, its effect on the premium and the client's options before acceptance
- Btell the client the rating will be removed automatically once two further years have passed
- Csuggest the client sign first and raise any questions at the next annual review
- Dhand over the contract and leave the client to read about the rating in the documents
Correct answer: A) explain the rating, its effect on the premium and the client's options before acceptance
A rated policy is a counter-offer the client must understand before accepting. The agent should explain why the rating applies, what it costs, whether a reconsideration is possible and what alternatives exist.
Why the other options are wrong
- BRatings are not automatically removed after any period.
- CUnderstanding must come before acceptance, not afterward.
- DLeaving the client to discover a rating fails the duty to explain.
Exam tip
A rating changes the offer, so explain it before the client accepts.
Common mistake
Delivering a rated policy without explaining why the premium changed.
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.