LLQP Life Insurance · Component 1.3 · 35% of the exam
After completing the calculations, the agent finds the client's existing coverage exceeds the total need. The correct conclusion is that:
- AThe client must buy more anyway, since coverage should always exceed the calculated need by a safety margin
- There is no current shortfall; the agent should document this and revisit at the next review or life change
- CThe analysis must be wrong, since a properly completed needs analysis always shows some shortfall to address
- DThe client is over-insured and the agent should recommend cancelling all coverage to save the premiums
Correct answer: B) There is no current shortfall; the agent should document this and revisit at the next review or life change
A needs analysis can and sometimes does show no shortfall. The professional response is to say so, record it, and schedule a review — needs change with children, mortgages, businesses and divorce. Recommending cancellation is a separate analysis of whether the existing coverage should be kept.
Why the other options are wrong
- ASelling more coverage when none is needed is unsuitable.
- CA surplus is a legitimate outcome, not evidence of error.
- DA surplus is not a reason to cancel everything.
Exam tip
Suitability includes recommending nothing. Document the surplus and schedule a review.
Common mistake
Finding a reason to sell when the analysis shows no shortfall.
What this tests
CISRO competency component 1.3 — 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.