LLQP Ethics & Professional Practice · Component 2.1 · 40% of the exam
The requirement that illustrations follow the CLHIA 'Guidelines on Illustrations' protects clients by:
- Requiring non-guaranteed values to be distinguished from guaranteed, lower scenarios shown, and assumptions disclosed
- BGuaranteeing that the values shown in an illustration will be achieved, since the insurer is bound by what it illustrates
- CBanning illustrations of non-guaranteed values altogether, so that clients see only the contractual guarantees
- DNothing in practice, since illustrations are marketing documents that carry no weight once the policy is issued
Correct answer: A) Requiring non-guaranteed values to be distinguished from guaranteed, lower scenarios shown, and assumptions disclosed
Illustration abuses were a major source of past complaints; the guideline responds.
Why the other options are wrong
- BIllustrations guarantee nothing.
- CIllustrations are permitted with standards.
- DIllustration standards are a real client protection.
Exam tip
Illustrations: guaranteed vs non-guaranteed, alternate scenarios, assumptions.
Common mistake
Showing only the optimistic scenario.
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.