LLQP Life Insurance · Component 3.1 · 25% of the exam
An applicant with a well-managed condition is offered standard rates by one insurer and a rating by another. This illustrates that:
- AOne insurer made an error, since two underwriters looking at the same evidence should always reach exactly the same decision
- BThe applicant should take the rated offer, since a rating shows the insurer has assessed the risk more carefully
- CRatings are random, since underwriters use judgment rather than rules when classifying impaired risks
- Underwriting guidelines differ between companies, so shopping an impaired case produces different offers
Correct answer: D) Underwriting guidelines differ between companies, so shopping an impaired case produces different offers
Insurers weigh impairments differently based on their experience and reinsurance arrangements. Knowing which carriers are lenient on which conditions is part of an agent's expertise.
Why the other options are wrong
- ADifferent offers reflect different guidelines, not error.
- BThe standard offer is obviously preferable, other things equal.
- CRatings follow each insurer's rules.
Exam tip
Impaired risks: shop the case; guidelines differ by insurer.
Common mistake
Accepting the first rated offer without checking other carriers.
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.