LLQP Life Insurance · Component 1.1 · 35% of the exam
A client's spouse is a stay-at-home parent who would need to return to work after the client's death. The needs analysis should:
- AAssume the spouse earns nothing forever, since a parent who has been out of the workforce cannot be expected to return
- Consider the spouse's earning potential, retraining time and childcare costs realistically, and fund the transition
- CLeave the spouse out of the analysis, since the spouse's own decisions after the death cannot be predicted
- DAssume the spouse earns the client's salary immediately, since the spouse will need to replace the lost income at once
Correct answer: B) Consider the spouse's earning potential, retraining time and childcare costs realistically, and fund the transition
The survivor's ability to earn is a resource, but re-entering the workforce takes time and money and may require childcare. A realistic transition period, funded by insurance, is part of a sound analysis.
Why the other options are wrong
- AAssuming zero earnings overstates the need and cost.
- CThe survivor's situation is central.
- DAssuming immediate full replacement understates the need.
Exam tip
Model the survivor's re-employment realistically: time to retrain, childcare, likely income.
Common mistake
Assuming the survivor's earning capacity is either nil or immediate.
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.