LLQP Life Insurance · Component 1.1 · 35% of the exam
A young client's student loans were co-signed by her father. In the needs analysis this debt should be treated as:
- a liability that would fall on her father, so it belongs in the capital needs figure
- Ban asset, because the education it funded will increase her lifetime earnings
- Ca debt to exclude, since only secured borrowing is counted in a needs analysis
- Dirrelevant, since student loans are forgiven automatically on the borrower's death
Correct answer: A) a liability that would fall on her father, so it belongs in the capital needs figure
A co-signer becomes responsible for the balance if the borrower dies. Including it means a modest amount of coverage can protect a parent from inheriting the debt alongside the loss.
Why the other options are wrong
- BFuture earning capacity does not discharge an outstanding balance.
- CUnsecured debts belong in the analysis alongside secured ones.
- DCo-signed private debt is not forgiven on the borrower's death.
Exam tip
Always ask who else is on the debt, not just how much it is.
Common mistake
Recording only the client's own liability and missing a co-signer's exposure.
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.