LLQP Life Insurance · Component 1.3 · 35% of the exam
An agent completes a needs analysis and presents a coverage figure. The file should also record:
- Athe premium quoted by each insurer the agent approached for the business
- the assumptions used, including rates, periods and the resources counted
- Cthe client's own estimate of what coverage would be appropriate for the family
- Donly the final figure, since the calculation itself is the insurer's responsibility
Correct answer: B) the assumptions used, including rates, periods and the resources counted
A figure without its assumptions cannot be defended or updated. Recording the rates, the income period, the resources counted and their sources lets the analysis be revisited when circumstances change.
Why the other options are wrong
- AQuotations do not explain how the amount was determined.
- CThe client's estimate is not the basis for the recommendation.
- DThe analysis and its assumptions are the agent's own work.
Exam tip
Record the assumptions, not just the answer they produced.
Common mistake
Keeping a coverage figure with no record of how it was derived.
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.