LLQP Ethics & Professional Practice · Component 2.2 · 40% of the exam
An agent must not 'induce' a purchase by:
- AProviding a written needs analysis, since it pressures the client by showing a gap the client had not considered
- Offering premium or commission rebates, gifts beyond nominal value, or other prohibited inducements or pressure
- CExplaining the benefits of the product in detail, since a persuasive explanation amounts to undue influence
- DAnswering the client's questions about the product, since answers may be taken as promises about its performance
Correct answer: B) Offering premium or commission rebates, gifts beyond nominal value, or other prohibited inducements or pressure
Inducement rules protect the integrity of advice: a purchase should follow from a needs analysis and honest explanation, never from rebates, gifts or pressure.
Why the other options are wrong
- AA needs analysis is legitimate professional practice.
- CExplaining benefits is legitimate, not an inducement.
- DAnswering questions is legitimate.
Exam tip
No rebates, gifts beyond nominal, or pressure.
Common mistake
Offering to 'cover the first month' 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.