LLQP Ethics & Professional Practice · Component 2.2 · 40% of the exam
Rules on 'handling client funds' require that an agent:
- AHold premiums in the agent's trust account until the policy is issued, then remit them to the insurer with the delivery receipt
- BDeposit premiums in a personal account for convenience and write a single cheque to the insurer at the end of the month
- Never commingle client money, accept premiums payable to the insurer, remit promptly, and never use client funds
- DLend client funds short-term to other clients with urgent premium needs, repaying them before the insurer notices
Correct answer: C) Never commingle client money, accept premiums payable to the insurer, remit promptly, and never use client funds
Misappropriation of premiums is among the most serious offences and typically leads to revocation and criminal charges.
Why the other options are wrong
- APremiums must be remitted promptly, not held.
- BDepositing premiums in a personal account is prohibited.
- DLending client funds is theft.
Exam tip
Client funds: payable to insurer, no commingling, prompt remittance.
Common mistake
Accepting a cheque payable to the agent 'for convenience'.
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.