LLQP Life Insurance · Component 3.2 · 25% of the exam
A client wants to know how much life insurance is 'the right amount' in general. The correct professional answer is:
- There is no universal figure; the right amount is the shortfall the needs analysis produces for that client
- BWhatever the neighbour bought, since families in similar circumstances tend to have similar needs and budgets
- CThe maximum the insurer will issue for the client's age and income, since more coverage is always better than less
- DTen times salary, which is the rule of thumb the industry uses to size coverage for a working client
Correct answer: A) There is no universal figure; the right amount is the shortfall the needs analysis produces for that client
Rules of thumb are marketing shortcuts. The curriculum's method is individual: needs, resources, shortfall. Two clients with the same salary can need very different amounts.
Why the other options are wrong
- BOthers' choices are irrelevant.
- CThe insurer's maximum is not a needs figure.
- DSalary multiples ignore dependants, debts, resources and goals.
Exam tip
No universal multiple. The needs analysis is the answer.
Common mistake
Quoting a salary multiple as advice.
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.