LLQP Life Insurance · Component 1.3 · 35% of the exam
A client has enough cash flow to buy only half of the recommended coverage. The agent should:
- ARecommend permanent insurance for the full amount, since the cash value will eventually offset the higher premium
- BBuy the full amount on the client's credit card, since the coverage matters more than the cost of financing it
- CRefuse to sell anything, since partial coverage would give the family a false sense of security
- Recommend the fullest coverage the budget allows, prioritize critical needs, and document the shortfall and a plan
Correct answer: D) Recommend the fullest coverage the budget allows, prioritize critical needs, and document the shortfall and a plan
Available cash flow is a constraint the curriculum names explicitly. Some coverage is better than none, term maximizes protection per dollar, and the documented shortfall becomes the agenda for the next review as income rises.
Why the other options are wrong
- APermanent insurance for the full amount would be even less affordable.
- BFinancing premiums on a credit card creates debt and risks lapse.
- CRefusing to sell leaves the family with nothing when partial coverage would help.
Exam tip
When budget limits coverage, prioritize the most critical need, buy the most protection per dollar, and document the plan to close the gap.
Common mistake
Ignoring the client's cash flow when recommending an amount.
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.