LLQP Life Insurance · Component 3.2 · 25% of the exam
A recommendation involves a corporate structure with significant tax consequences. The agent should:
- explain the insurance elements and recommend the client's accountant review the structure
- Bdelay the entire recommendation until the client has obtained a written tax opinion
- Cprovide the tax advice personally, since the agent understands the products best
- Davoid mentioning tax at all, since it falls outside the agent's licence
Correct answer: A) explain the insurance elements and recommend the client's accountant review the structure
Identifying tax issues is part of a competent recommendation, but advising on them is not. Explaining the insurance and referring the structure to an accountant protects the client and the agent.
Why the other options are wrong
- BThe insurance elements can be presented while tax advice is sought.
- CProduct knowledge does not qualify an agent to give tax advice.
- DFailing to flag a tax issue would be a failure of competence.
Exam tip
Identify the tax issue, explain the insurance, refer the rest.
Common mistake
Either giving tax advice or failing to flag the tax issue at all.
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.