LLQP Life Insurance · Component 3.2 · 25% of the exam
A recommendation for a business owner includes both personal and corporate-owned coverage. To avoid confusion, the written recommendation should clearly state for each policy:
- AOnly the premium, since the client is concerned with the total cost of the two policies rather than with their legal structure
- BThe insurer's financial rating, since the corporate policy will be in force for decades and the insurer must remain solvent
- CThe agent's commission split between the personal and corporate policies, so the client sees the agent's interest
- The owner, life insured, payor, beneficiary and purpose, since tax depends on each role
Correct answer: D) The owner, life insured, payor, beneficiary and purpose, since tax depends on each role
In business insurance the roles matter more than anywhere else: the wrong owner or beneficiary can create taxable benefits or defeat a buy-sell. Stating each role explicitly is the safeguard.
Why the other options are wrong
- APremium alone does not define the structure.
- BThe insurer's financial rating is useful but not the structural point.
- CCommission is a separate disclosure.
Exam tip
For every business policy: who owns, who is insured, who pays, who receives, and why.
Common mistake
Assuming the corporation should own every business-related policy.
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.