LLQP Life Insurance · Component 1.2 · 35% of the exam
A client's existing policy was issued on a 'preferred non-smoker' class. In the review this matters because:
- The premium reflects a class the client may no longer qualify for, so replacing it could mean a higher class and cost
- BIt is irrelevant to the review, since the underwriting class was fixed at issue and has no bearing on any decision the client makes now
- CPreferred classes expire after five years, so the policy has reverted to standard rates and should be re-shopped
- DPreferred policies cannot be renewed, so the client must apply for a new policy before the current term ends
Correct answer: A) The premium reflects a class the client may no longer qualify for, so replacing it could mean a higher class and cost
An existing policy locks in the class at issue. Health, weight or family history changes since then could push a new application into a standard or rated class. That makes an existing preferred policy valuable and replacement risky.
Why the other options are wrong
- BThe class is directly relevant to any replacement decision.
- CUnderwriting classes do not expire.
- DRenewability is unrelated to class.
Exam tip
An existing preferred policy is an asset; a replacement would be underwritten on today's health.
Common mistake
Quoting a replacement at preferred rates without underwriting.
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.