LLQP Ethics & Professional Practice · Component 1.1 · 60% of the exam
Legislation dealing with 'unfair or deceptive acts or practices' in insurance prohibits:
- AOnly insurers' conduct, since agents are governed by the licensing rules rather than by the unfair practices provisions of the Act
- BAll advertising of insurance products, since any promotional statement is treated as potentially misleading
- CNothing specific, since the provisions state a general principle that regulators apply case by case
- Misrepresenting terms, false statements, unfair discrimination, coercion, prohibited inducements and unfair claims practices
Correct answer: D) Misrepresenting terms, false statements, unfair discrimination, coercion, prohibited inducements and unfair claims practices
UDAP provisions are a key enforcement tool against agents. Knowing the prohibited categories prevents inadvertent breaches.
Why the other options are wrong
- AUnfair practice provisions apply to agents as well as insurers.
- BHonest advertising is permitted.
- CThe categories are specific.
Exam tip
UDAP: misrepresentation, false statements, discrimination, coercion, inducements, unfair claims.
Common mistake
Offering a rebate or gift as an inducement to buy.
What this tests
CISRO competency component 1.1 — Integrate into practice the legal aspects of insurance and annuity contracts — which is weighted at 60% of the Ethics & Professional Practice module. Written against the published curriculum.
More from component 1
- An 'assignee' of a life insurance policy is:
- A corporation as policyowner and beneficiary of a policy on a key employee:
- A 'trustee' named to receive proceeds on behalf of a beneficiary:
- The 'automatic premium loan' (APL) provision:
- A life insurance contract 'matures' when:
- The 'assignment' provision typically states that:
Practice the whole Ethics & Professional Practice module
Timed sets weighted like the exam, and review of every question you miss. Free to start.