LLQP Life Insurance · Component 3.1 · 25% of the exam
An applicant asks why he should care about the underwriting process as long as the policy is issued. The agent should explain that:
- AHe should not care, since once the policy is issued the insurer has accepted the risk and cannot revisit it
- BUnderwriting only affects the agent, whose commission depends on the policy being issued as applied for
- Accurate disclosure now protects the claim later; a policy issued on incomplete information can be contested
- DThe insurer never reviews applications after issue, so the answers given have no lasting consequence once the policy is delivered
Correct answer: C) Accurate disclosure now protects the claim later; a policy issued on incomplete information can be contested
The curriculum lists 'the client's need to understand what underwriting is, its importance, and its implications for future applications'. A death claim within two years triggers a review of the application; a beneficiary can be left with nothing because of a careless answer.
Why the other options are wrong
- AThe client has a strong interest in accurate underwriting because it protects the claim.
- BUnderwriting outcomes affect the client's contract and future applications.
- DInsurers review applications after issue whenever a claim arises within contestability.
Exam tip
Explain to clients that underwriting protects their beneficiaries: an accurate application is the foundation of a payable claim.
Common mistake
Skipping the explanation of why the application questions matter.
What this tests
CISRO competency component 3.1 — Implement a recommendation adapted to the client's needs and situation — which is weighted at 25% of the Life Insurance module. Written against the published curriculum.
More from component 3
- At policy delivery, the agent should obtain:
- The effective date of a life insurance policy is generally:
- A client's application is approved but he has not paid the first premium when the policy is delivered. The agent should:
- A pre-authorized debit form is part of implementation because:
- During implementation, the agent learns the client wants the policy owned by her corporation instead of personally, as first applied for. The correct step is:
- Which of the following is a legitimate reason an insurer might refuse to issue a policy even after favourable underwriting?
Practice the whole Life Insurance module
Timed sets weighted like the exam, and review of every question you miss. Free to start.