LLQP Ethics & Professional Practice · Component 2.2 · 40% of the exam
'Outside business activities' of an agent (for example, a mortgage brokerage or tax preparation) must be:
- AKept from the sponsoring insurer, since the agent's other businesses are private matters unrelated to insurance
- BProhibited entirely, since a licensed agent may not carry on any business other than the sale of insurance
- CLeft unmanaged, since the regulator's interest is limited to the agent's conduct in the insurance business itself
- Disclosed to the insurer or MGA and, where required, the regulator, and managed so clients know the capacity
Correct answer: D) Disclosed to the insurer or MGA and, where required, the regulator, and managed so clients know the capacity
OBA disclosure prevents undisclosed conflicts and licensing breaches.
Why the other options are wrong
- AOutside business activities must be disclosed.
- BThey are permitted with disclosure and management.
- COutside activities must be managed, not ignored.
Exam tip
Disclose and manage outside business activities.
Common mistake
Selling unregulated investments on the side without disclosure.
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.