LLQP Life Insurance · Component 1.2 · 35% of the exam
A client has three small policies bought at different times from different insurers. During the review the agent should:
- ACancel the oldest one, since it was priced on outdated mortality tables and is the most expensive per dollar of coverage
- BRecommend replacing all three with one new policy, since a single contract is simpler and cheaper to administer
- CLeave the smallest out of the review, since its amount is too small to affect the overall recommendation
- Consolidate the details of all three to see total coverage and inconsistencies before recommending anything
Correct answer: D) Consolidate the details of all three to see total coverage and inconsistencies before recommending anything
A consolidated inventory of existing coverage is the starting point. It reveals total protection, duplicated riders, outdated beneficiaries and premiums that could be rationalized. Replacement is a conclusion that may or may not follow — not the first step.
Why the other options are wrong
- AThe oldest policy may be the most valuable.
- BReplacement is a conclusion that requires analysis and disclosure.
- CEvery policy counts; each may carry riders or designations that matter.
Exam tip
Inventory first: face amounts, types, riders, beneficiaries, premiums, expiry dates. Only then decide what, if anything, to change.
Common mistake
Consolidating policies for tidiness without checking what each one uniquely provides.
What this tests
CISRO competency component 1.2 — 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.