LLQP Life Insurance · Component 1.2 · 35% of the exam
A client's employer provides group life that ends at retirement, and he plans to retire next year with a permanent estate-liquidity need. The review's conclusion is that:
- He should use the group plan's conversion privilege on retirement, or arrange individual coverage now, so the need is covered
- BHe should self-insure the estate need from retirement savings, since a client who can retire can afford to pay the tax without insurance
- CHe should rely on group life, since most employers continue a reduced amount of coverage into retirement at no cost to the retiree
- DThe group plan will continue automatically after retirement, since the member has been enrolled for many years
Correct answer: A) He should use the group plan's conversion privilege on retirement, or arrange individual coverage now, so the need is covered
Conversion on leaving the group is usually available without evidence within a short window, at individual rates. Arranging coverage beforehand, while insurable, gives more choice. Either way the review must plan for the end of group coverage.
Why the other options are wrong
- BA permanent estate need is not something to self-insure without the assets to do so.
- CGroup life ends at retirement.
- DGroup plans do not continue automatically into retirement.
Exam tip
Retirement is a group-coverage cliff; plan the conversion or replacement a year ahead.
Common mistake
Discovering the conversion window after it has closed.
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.