LLQP Life Insurance · Component 1.1 · 35% of the exam
A client with a significant estate says he wants to leave his children 'the house, not a tax bill'. The needs-analysis item this points to is:
- ABusiness continuation, since the house is the client's most valuable business asset
- BIncome replacement, since the children will need income to maintain the house after the client's death
- Estate liquidity, funding taxes and final costs so assets pass intact
- DAn emergency fund, so the children have cash to pay the property taxes in the months after death
Correct answer: C) Estate liquidity, funding taxes and final costs so assets pass intact
Estate liquidity is the need for cash at death to pay taxes, debts and costs so that the assets themselves need not be sold. Life insurance is the classic solution because it delivers cash exactly at the moment of the liability.
Why the other options are wrong
- ANo business is involved.
- BIncome replacement is about the survivors' living costs, not preserving assets.
- DAn emergency fund is for short-term survivor cash, not estate taxes.
Exam tip
'Pass assets intact' = estate liquidity need.
Common mistake
Sizing coverage by the value of the assets instead of the tax and costs on them.
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.