LLQP Ethics & Professional Practice · Component 1.1 · 60% of the exam
'Rebating' — returning part of the commission to a client as an inducement — is:
- ARequired of every agent, since regulators expect part of the commission to be shared with the client
- BGood customer service, since a client who receives a rebate is more likely to keep the policy in force
- Prohibited or strictly limited by provincial legislation, as an unfair inducement that distorts advice
- DLegal everywhere, since the commission belongs to the agent and may be spent however the agent chooses
Correct answer: C) Prohibited or strictly limited by provincial legislation, as an unfair inducement that distorts advice
Rebating rules vary but the principle is consistent: compensation must not be used to induce purchase.
Why the other options are wrong
- ARebating is never required; it is prohibited or tightly limited.
- BIt is an unfair practice.
- DIt is prohibited or limited.
Exam tip
No rebating or improper inducements.
Common mistake
Offering to pay the first premium for a client.
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.