LLQP Ethics & Professional Practice · Component 1.1 · 60% of the exam
An agent deposits a client's premium cheque into her own account, intending to forward the money the following week. This conduct is:
- Aa bookkeeping matter for the agency, with no consequence for the agent's own licence
- Bacceptable if the premium reaches the insurer before the policy's grace period expires
- Cacceptable where the agent holds errors and omissions insurance covering the amount
- misappropriation of client funds, which is both misconduct and potentially criminal
Correct answer: D) misappropriation of client funds, which is both misconduct and potentially criminal
Client money must go to the insurer, never through the agent's personal account. Mixing it with the agent's own funds is misappropriation regardless of the intention to pass it on later.
Why the other options are wrong
- AHandling client funds improperly directly engages the agent's licence.
- BTimely forwarding does not excuse having taken the money in the first place.
- CInsurance covers errors, not deliberate handling of client money.
Exam tip
Client funds never pass through an agent's personal account.
Common mistake
Believing that intending to forward the money makes the handling acceptable.
What this tests
CISRO competency component 1.1 — Integrate into practice the legal aspects of insurance and annuity contracts — which is weighted at 60% of the Ethics & Professional Practice module. Written against the published curriculum.
More from component 1
- An 'assignee' of a life insurance policy is:
- A corporation as policyowner and beneficiary of a policy on a key employee:
- A 'trustee' named to receive proceeds on behalf of a beneficiary:
- The 'automatic premium loan' (APL) provision:
- A life insurance contract 'matures' when:
- The 'assignment' provision typically states that:
Practice the whole Ethics & Professional Practice module
Timed sets weighted like the exam, and review of every question you miss. Free to start.