LLQP Ethics & Professional Practice · Component 1.1 · 60% of the exam
The common law of 'agency' establishes that an insurance agent:
- Acts as the insurer's agent within authorized purposes, so the insurer may be bound, while owing care to the client
- BOwes no duties to anyone, since the agent is an independent contractor who merely introduces the parties
- CHas unlimited authority to bind the insurer, so any promise the agent makes becomes part of the contract whether or not authorized
- DActs only for the client, since the client pays the premium from which the agent's commission is drawn
Correct answer: A) Acts as the insurer's agent within authorized purposes, so the insurer may be bound, while owing care to the client
Agency law defines whose agent the agent is and the limits of authority — for example, no authority to waive underwriting requirements.
Why the other options are wrong
- BDuties run to both insurer and client.
- CAuthority is limited to what the insurer authorizes.
- DThe agent represents the insurer in the transaction.
Exam tip
Agent = insurer's agent within limited authority; duty of care to client.
Common mistake
Telling a client 'you're covered' before the insurer accepts.
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.