LLQP Life Insurance · Component 1.3 · 35% of the exam
A client's only identified need is to clear a mortgage that will be repaid in twenty years. The analysis supports:
- Auniversal life funded at the maximum permitted deposit level
- term coverage matching the remaining amortization, which costs far less
- Cno coverage at all, because the lender will simply repossess the property
- Dpermanent coverage, because it will remain in force for the whole of the client's life
Correct answer: B) term coverage matching the remaining amortization, which costs far less
A need that ends when the debt is repaid is a temporary need. Term coverage for the remaining period costs a fraction of permanent coverage, and personal coverage beats creditor coverage on benefit and control.
Why the other options are wrong
- AMaximum funded universal life addresses a need this client does not have.
- CLeaving the family to lose the home is not an acceptable outcome.
- DPermanent coverage costs far more than a temporary need requires.
Exam tip
A need with an end date is a term need.
Common mistake
Selling permanent coverage for a need that plainly expires.
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.