LLQP Life Insurance · Component 1.1 · 35% of the exam
A client's income has just doubled with a promotion. The most important effect on his life insurance situation is that:
- AHe no longer needs coverage, since the family's savings will grow fast enough to replace insurance within a few years at the new salary
- BHis premiums will be refunded, since insurers reprice existing policies when the insured's income rises
- The income the family would lose has doubled, so the need has grown and underwriting will support more coverage
- DNothing changes, since the needs analysis was based on expenses rather than on income
Correct answer: C) The income the family would lose has doubled, so the need has grown and underwriting will support more coverage
Needs scale with income and lifestyle. A promotion is on the curriculum's list of changes that trigger a review, both because the need rises and because higher income justifies a larger amount to the underwriter.
Why the other options are wrong
- AHigher income increases, not removes, the need.
- BPremiums are not refunded on promotion.
- DA doubled income doubles what the family stands to lose.
Exam tip
Income up → need up. Schedule a review after any major income change.
Common mistake
Leaving coverage at the level set when the client earned half as much.
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.