LLQP Ethics & Professional Practice · Component 2.1 · 40% of the exam
The requirement that agents be 'sponsored' by or contracted with an insurer in many provinces protects clients because:
- AIt guarantees that the sponsoring insurer will pay any claim on a policy sold by the agent, whatever the agent did
- BIt sets the commissions the agent may earn, since the sponsor negotiates the agent's compensation with the regulator
- The sponsor takes responsibility for screening and supervising the agent and must report termination for cause
- DIt does not protect clients; sponsorship is an administrative arrangement between the agent and the insurer
Correct answer: C) The sponsor takes responsibility for screening and supervising the agent and must report termination for cause
Sponsorship ties the agent's conduct to the insurer's accountability: the sponsor screens and supervises the agent and must report a termination for cause to the regulator.
Why the other options are wrong
- ASponsorship does not guarantee claims.
- BSponsorship does not set commissions.
- DSponsorship adds an accountability layer.
Exam tip
Sponsorship = insurer accountability for the agent.
Common mistake
Continuing to sell after sponsorship is withdrawn.
What this tests
CISRO competency component 2.1 — 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.