LLQP Ethics & Professional Practice · Component 1.1 · 60% of the exam
An agent's advertisement describes a segregated fund as offering a return that cannot fall. Legislation on unfair or deceptive practices means this advertisement is:
- Aacceptable if a disclaimer appears in small print at the foot of the advertisement
- Ba matter for the insurer alone, since agents are not responsible for marketing material
- Cacceptable, since the contract does include a guarantee at maturity and at death
- prohibited, because it misrepresents the product by omitting how the guarantee works
Correct answer: D) prohibited, because it misrepresents the product by omitting how the guarantee works
A statement that is literally connected to a real feature can still mislead by omission. The guarantee applies at set dates and on stated conditions, and advertising that suggests values cannot fall misrepresents the contract.
Why the other options are wrong
- AA small print disclaimer does not cure a misleading headline claim.
- BAn agent is responsible for the material the agent distributes.
- CThe existence of a guarantee does not justify saying the value cannot fall.
Exam tip
Misleading by omission counts as misrepresentation, disclaimer or not.
Common mistake
Relying on fine print to correct a headline that overstates a guarantee.
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.