LLQP Ethics & Professional Practice · Component 2.2 · 40% of the exam
Compensation disclosure rules generally require an agent to tell the client:
- ANothing about compensation, since how the agent is paid is a private matter between the agent and the insurer
- That the agent is paid by commission or fees, the nature of extra compensation, and that details are available
- CThe exact dollar commission on every sale, calculated and shown on the application before the client signs it
- DOnly if the client asks directly, since volunteering compensation information would undermine the client's trust
Correct answer: B) That the agent is paid by commission or fees, the nature of extra compensation, and that details are available
Written advisor disclosure is standard practice; details on request.
Why the other options are wrong
- ACompensation disclosure is required.
- CNature and existence are disclosed; specifics on request in most regimes.
- DDisclosure must be proactive.
Exam tip
Disclose compensation nature proactively; details on request.
Common mistake
Denying receipt of any incentive beyond commission.
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.