LLQP Life Insurance · Component 3.2 · 25% of the exam
A client's need for estate liquidity at death is quantified at a large amount, but she is 78 and in poor health. The agent's recommendation process should:
- APromise coverage at standard rates, since the insurer has not yet seen the application and may be lenient
- BDecline to help, since a 78-year-old in poor health cannot obtain life insurance at any price
- Set realistic expectations about insurability and cost, consider alternatives, and document the analysis
- DRecommend accidental death insurance, since it is issued without medical evidence at any age
Correct answer: C) Set realistic expectations about insurability and cost, consider alternatives, and document the analysis
Suitability includes what is obtainable. Managing expectations about underwriting, exploring product structures that may be insurable, and documenting the advice are all part of a professional recommendation when insurability is doubtful.
Why the other options are wrong
- AStandard rates cannot be promised for a 78-year-old in poor health.
- BDeclining to help ignores the alternatives that may work.
- DAccidental death coverage does not fund estate liquidity for death from illness.
Exam tip
When insurability is doubtful: manage expectations, explore joint last-to-die or other liquidity sources, document the advice.
Common mistake
Promising an outcome before underwriting.
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.