LLQP Life Insurance · Component 1.1 · 35% of the exam
A client's budget is already stretched and premiums would be difficult to sustain. During fact-finding the agent should:
- Aend the discussion, since a client who cannot afford premiums cannot be served
- Bproceed with the largest recommendation anyway, since the need is what the analysis shows
- Csuggest the client borrow the premium so the full amount of coverage can be placed
- record the affordability constraint so the recommendation can be designed around it
Correct answer: D) record the affordability constraint so the recommendation can be designed around it
A policy that lapses protects nobody. Affordability belongs in the fact-find so the recommendation can prioritize the most serious risk, using term coverage or a staged approach where necessary.
Why the other options are wrong
- AA smaller, well-targeted recommendation still serves the client.
- BCoverage placed beyond the client's means will not stay in force.
- CBorrowing premiums creates a further obligation and greater fragility.
Exam tip
Affordability is a fact-find item, not an afterthought at the point of sale.
Common mistake
Placing a policy the client's budget was never going to sustain.
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.