LLQP Ethics & Professional Practice · Component 2.2 · 40% of the exam
When a client's circumstances mean insurance is not needed, the ethical agent:
- Tells the client no purchase is needed, documents the advice, and maintains the relationship
- BIdentifies a need the client had not considered, since every client has some exposure that insurance can address
- CSells a small policy as a precaution, since a modest premium is a small price for coverage the client may need later
- DSells the product anyway, since the client came for insurance and a sale meets the client's expressed expectation
Correct answer: A) Tells the client no purchase is needed, documents the advice, and maintains the relationship
Suitability includes advising against unnecessary purchases; telling a client they do not need to buy is sometimes the only suitable recommendation, and it builds lasting trust.
Why the other options are wrong
- BInventing a need is misrepresentation.
- CA policy is unsuitable if not needed.
- DSelling unneeded coverage is unsuitable.
Exam tip
Sometimes the suitable advice is 'no'.
Common mistake
Manufacturing a need to make a sale.
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.