LLQP Life Insurance · Component 3.2 · 25% of the exam
A client insists on buying more coverage than the needs analysis supports and more than financial underwriting is likely to allow. The agent should:
- Explain that insurers limit coverage to justified loss, document it, and apply for a justifiable amount
- BRefuse to work with the client, since a client who wants more coverage than the analysis supports is not acting in good faith
- CSplit the application across several insurers without disclosing the others, so each insurer sees a justifiable amount
- DApply for the amount anyway and hope, since the underwriter may accept it if the client's income is high enough
Correct answer: A) Explain that insurers limit coverage to justified loss, document it, and apply for a justifiable amount
Financial underwriting will cut back unjustified amounts. Splitting applications and hiding them is misrepresentation. The professional path is to align the request with what can be supported and document the discussion.
Why the other options are wrong
- BRefusal is unnecessary; the client can be served at a justifiable amount.
- CConcealing other applications is a material misrepresentation.
- DUnjustified amounts are reduced or declined; hoping wastes time.
Exam tip
Coverage must be justifiable by economic loss; never hide concurrent applications.
Common mistake
Stacking applications across insurers to reach an unjustified total.
What this tests
CISRO competency component 3.2 — Implement a recommendation adapted to the client's needs and situation — which is weighted at 25% of the Life Insurance module. Written against the published curriculum.
More from component 3
- At policy delivery, the agent should obtain:
- The effective date of a life insurance policy is generally:
- A client's application is approved but he has not paid the first premium when the policy is delivered. The agent should:
- A pre-authorized debit form is part of implementation because:
- During implementation, the agent learns the client wants the policy owned by her corporation instead of personally, as first applied for. The correct step is:
- Which of the following is a legitimate reason an insurer might refuse to issue a policy even after favourable underwriting?
Practice the whole Life Insurance module
Timed sets weighted like the exam, and review of every question you miss. Free to start.