LLQP Life Insurance · Component 2.2 · 30% of the exam
An agent adds several riders to a recommendation because they improve the overall commission. This is:
- Aacceptable provided the client is told the total premium before signing
- Bacceptable, since each rider adds genuine coverage the client may one day use
- a conflict of interest, because the riders were selected for the agent's benefit
- Dacceptable where the insurer's software includes the riders by default
Correct answer: C) a conflict of interest, because the riders were selected for the agent's benefit
Riders must be recommended because the analysis supports them. Adding benefits for compensation reasons inflates the premium, threatens affordability and is exactly what suitability obligations prevent.
Why the other options are wrong
- ADisclosing the total does not justify unnecessary coverage.
- BPossible future usefulness does not establish a present need.
- DDefault software selections do not make a recommendation suitable.
Exam tip
Each rider must trace back to something the analysis identified.
Common mistake
Leaving default riders in a quotation without justifying them.
What this tests
CISRO competency component 2.2 — Analyze the available products that meet the client's needs — which is weighted at 30% of the Life Insurance module. Written against the published curriculum.
More from component 2
- A client has a need lasting about twenty years and compares a ten-year and a twenty-year term policy. The main point to explain is that:
- A client exercises the conversion privilege on his term policy. The permanent premium will be based on:
- A client notices that a small policy costs proportionately more per unit of coverage than a larger one. The explanation is that:
- A client wants to pay monthly rather than annually. The agent should explain that monthly payment:
- A client asks why dividends from her participating policy are not taxed like interest from a bank. The reason is that a dividend is:
- A universal life policyholder is choosing among the investment options inside her policy. She should understand that:
Practice the whole Life Insurance module
Timed sets weighted like the exam, and review of every question you miss. Free to start.