LLQP Life Insurance · Component 1.2 · 35% of the exam
A review finds an older permanent policy whose guaranteed premium is far below today's rates for the same coverage. The agent should:
- Arecommend reducing the coverage so the premium becomes easier to manage
- Brecommend replacement, since an older contract cannot match modern product features
- document the value of the existing terms and advise keeping the coverage in force
- Dadvise surrendering it for the cash value and reinvesting the proceeds elsewhere
Correct answer: C) document the value of the existing terms and advise keeping the coverage in force
A guaranteed premium set at a younger age and an earlier era cannot be recreated. Preserving it is almost always in the client's interest, and the reasoning should be recorded in the file.
Why the other options are wrong
- AReducing coverage gives up protection the client is unlikely to replace.
- BNewer features rarely outweigh an irreplaceable premium guarantee.
- DSurrendering forfeits both the coverage and the guaranteed terms.
Exam tip
An old guaranteed premium is an asset; protect it rather than replacing it.
Common mistake
Judging an older contract by its features instead of its guarantees.
What this tests
CISRO competency component 1.2 — 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.