LLQP Ethics & Professional Practice · Component 2.1 · 40% of the exam
An insurer's compliance team monitors an agent whose policies lapse unusually early and often. This monitoring exists to:
- detect sales practice problems such as unsuitable recommendations or unnecessary replacement
- Bidentify agents who deserve additional commission for writing volumes of new business
- Cdecide which agents should be offered attendance at the annual sales conference
- Dcalculate the insurer's tax position on the commissions it has paid during the year
Correct answer: A) detect sales practice problems such as unsuitable recommendations or unnecessary replacement
Poor persistency can signal that clients were sold contracts they did not need or could not afford, or that policies were replaced without benefit. Compliance teams investigate the pattern and may review the agent's files.
Why the other options are wrong
- BEarly lapses indicate a problem rather than performance worth rewarding.
- CConference invitations are not the purpose of compliance monitoring.
- DTax calculations are unrelated to persistency monitoring.
Exam tip
Persistency monitoring is a sales practice control, not a performance measure.
Common mistake
Viewing early lapse reports as an administrative rather than a conduct issue.
What this tests
CISRO competency component 2.1 — 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.