LLQP Life Insurance · Component 1.1 · 35% of the exam
A client carries a mortgage on her home and a second on a rental property. In recording her liabilities the agent should:
- Acombine them into one figure, since the total is all that the analysis requires
- Bexclude both, because mortgages are always covered by the lender's own insurance
- Crecord only the home mortgage, since the rental property produces its own income
- record both, noting which is secured by which property and how each would be serviced
Correct answer: D) record both, noting which is secured by which property and how each would be serviced
The two behave differently on death: one shelters the family and the other must be serviced or sold. Recording them separately also shows which creditor has security over which asset.
Why the other options are wrong
- AA single total hides which asset secures which debt.
- BCreditor coverage is optional and often absent or partial.
- CA rental mortgage must still be serviced if the tenant leaves.
Exam tip
Record each debt against the asset securing it, not as a single total.
Common mistake
Collapsing several debts into one figure and losing the security position.
What this tests
CISRO competency component 1.1 — 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.