LLQP Ethics & Professional Practice · Component 2.2 · 40% of the exam
If a client insists on a product the agent believes is unsuitable, the agent should:
- ASell it without comment, since an informed adult client is entitled to buy whatever product they choose
- BAdjust the KYC form so that the product appears suitable, since the client has made an informed decision to buy it
- Explain why it is unsuitable, recommend the alternative, and decline or proceed only with a signed acknowledgment, documenting all
- DReport the client to the insurer's compliance department, since insisting on an unsuitable product is a warning sign
Correct answer: C) Explain why it is unsuitable, recommend the alternative, and decline or proceed only with a signed acknowledgment, documenting all
Suitability obligations allow client-directed departures only with clear documentation; some transactions should simply be declined.
Why the other options are wrong
- AAdvice must be given and documented.
- BChanging the KYC to fit the product is falsification.
- DA client's insistence is not a reporting matter.
Exam tip
Unsuitable insistence: advise, document, consider declining.
Common mistake
Backfilling the KYC to justify the sale.
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.