LLQP Life Insurance · Component 1.3 · 35% of the exam
A client's needs analysis shows a large need for 20 years (until the children are independent) and a small permanent need for final expenses. The structure that fits is:
- ATerm insurance only, renewed for life, since renewal without evidence keeps the client covered however long the need lasts
- BAll permanent insurance, since a single permanent policy covers both needs and builds cash value for retirement
- A large term policy for the temporary need plus a small permanent policy, or a permanent base with a term rider
- DGroup coverage only, since the employer's plan is the cheapest way to obtain a large amount of coverage
Correct answer: C) A large term policy for the temporary need plus a small permanent policy, or a permanent base with a term rider
Needs analysis distinguishes short-term from permanent needs, and the product mix should mirror them. Layering term over a permanent base covers the peak years affordably while the permanent need is met for life.
Why the other options are wrong
- ATerm renewed for life becomes prohibitively expensive and expires.
- BAll-permanent coverage for a large temporary need is unaffordable and mismatched.
- DGroup coverage alone is uncontrolled, limited and usually ends at retirement.
Exam tip
Layer: term for the temporary peak, permanent for the lifelong base. The product mix should mirror the need's shape over time.
Common mistake
Choosing one product type for needs with different durations.
What this tests
CISRO competency component 1.3 — 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.