LLQP Ethics & Professional Practice · Component 2.1 · 40% of the exam
An insurer terminates an agent's contract for cause after finding falsified applications. The insurer is generally required to:
- report the termination and its reasons to the regulator so the licence can be reviewed
- Brefer the matter to the industry association, which decides whether it should be published
- Ckeep the matter confidential to protect the agent's reputation and future employment
- Dwait for a client to complain before informing anyone outside the company
Correct answer: A) report the termination and its reasons to the regulator so the licence can be reviewed
Reporting terminations for cause stops an agent from simply moving to another insurer. The regulator can then investigate and decide whether the licence should be suspended, revoked or made subject to conditions.
Why the other options are wrong
- BAssociations do not receive or publish termination reports.
- CConfidentiality would leave the public exposed to the same conduct elsewhere.
- DThe obligation does not wait for a client complaint to arrive.
Exam tip
Termination for cause is reportable so an agent cannot simply move on.
Common mistake
Assuming an insurer's internal action is the end of the matter.
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.