LLQP Ethics & Professional Practice · Component 2.2 · 40% of the exam
An agent sells a policy to his own brother. The professional obligations that apply are:
- exactly the same, including disclosure, needs analysis, suitability and documentation
- Brelaxed, because a family member already knows and trusts the agent personally
- Climited to disclosure, since a relative cannot realistically complain about the advice
- Dreplaced by the insurer's obligations, which assume responsibility for family sales
Correct answer: A) exactly the same, including disclosure, needs analysis, suitability and documentation
Family and friends are clients like any other. Files for relatives are often thinner precisely because the conversation felt informal, which leaves the agent exposed if the recommendation is later questioned.
Why the other options are wrong
- BTrust does not reduce the professional obligations owed.
- CA relative can complain, and the regulator applies the same standard.
- DThe insurer does not assume the agent's obligations for family sales.
Exam tip
Family files need the same documentation as any other client file.
Common mistake
Keeping a thinner file because the client is a relative.
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.