LLQP Ethics & Professional Practice · Component 2.2 · 40% of the exam
An agent who is 'captive' (contracted to one insurer) must:
- AKeep the single-insurer relationship private, since clients prefer to believe they are receiving independent advice
- Disclose that they represent one insurer and can offer only its products, so the client understands the scope
- CDescribe themselves as independent, since the agent is an independent contractor rather than an employee of the insurer
- DRefuse to sell to clients who ask about other insurers' products, since a captive agent cannot advise on them
Correct answer: B) Disclose that they represent one insurer and can offer only its products, so the client understands the scope
Shelf disclosure is part of advisor disclosure: a client must know whether the agent can offer one insurer's products or several, because it defines the scope of the advice they are receiving.
Why the other options are wrong
- AThe single-insurer relationship must be disclosed.
- CA captive agent claiming independence is misrepresentation.
- DSelling is permitted with disclosure.
Exam tip
Captive agents disclose single-insurer status.
Common mistake
Using 'independent advisor' branding while captive.
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.