LLQP Life Insurance · Component 1.3 · 35% of the exam
A client asks the agent to include his expected inheritance from his parents as a resource in the needs analysis. The agent should:
- AInclude it in full as a resource, since the client is the named heir and the parents have confirmed their intentions
- BInclude double the amount, since inheritances tend to grow with the parents' investments before they are received
- CRefuse to discuss it, since an expected inheritance is a private family matter outside the scope of the analysis
- Treat it cautiously, since an expected inheritance is uncertain in timing and amount and is not a reliable resource
Correct answer: D) Treat it cautiously, since an expected inheritance is uncertain in timing and amount and is not a reliable resource
Resources should be things the survivors can count on. An inheritance depends on the parents' longevity, spending and wills. Conservative practice excludes it or heavily discounts it, with the reasoning documented.
Why the other options are wrong
- AAn uncertain future inheritance is not a dependable resource.
- BDoubling an uncertain figure compounds the error.
- CThe topic should be discussed and its uncertainty explained.
Exam tip
Count resources the survivors would actually receive; treat expectancies with caution.
Common mistake
Reducing the recommended coverage on the strength of an inheritance that may never come.
What this tests
CISRO competency component 1.3 — Assess the client's needs and situation — which is weighted at 35% of the Life Insurance module. Written against the published curriculum.
More from component 1
- A client's existing policies were all sold by another agent who has left the business. The reviewing agent should:
- A client supports an adult child with a permanent disability who will never be self-sufficient. In the needs analysis this is:
- A self-employed client's income fluctuates widely year to year. When determining the income to replace, the agent should:
- A 58-year-old client plans to retire at 65 and has a pension that will pay a survivor benefit. How does time to retirement affect the life insurance need?
- Which of the following is a capital expense arising at death, rather than an ongoing income need?
- A client is the sole income earner in a household with a stay-at-home spouse and two young children. The greatest risk that life insurance on the client addresses is:
Practice the whole Life Insurance module
Timed sets weighted like the exam, and review of every question you miss. Free to start.