LLQP Life Insurance · Component 1.2 · 35% of the exam
An in-force illustration for an existing universal life policy shows the policy lapsing at age 74 under current assumptions. The appropriate response is to:
- AIgnore it, since illustrations are not contracts and the insurer cannot lapse a policy on the basis of a projection
- Discuss options such as additional deposits, a lower face amount or a different investment mix before the fund is exhausted
- CSurrender the policy immediately and reinvest the cash value, since a lapsing policy has no further value to the client
- DWait until age 74 and review the position then, since the projection may improve if markets recover in the meantime
Correct answer: B) Discuss options such as additional deposits, a lower face amount or a different investment mix before the fund is exhausted
The in-force illustration is the early warning. The corrective choices are far cheaper at 60 than at 73. Assessing existing coverage means acting on what the illustration shows, not filing it.
Why the other options are wrong
- AIgnoring a projected lapse forfeits the cheapest window to fix it.
- CSurrendering throws away coverage and may trigger tax.
- DWaiting until the projected lapse date leaves no affordable options.
Exam tip
An in-force illustration showing a future lapse is a call to action now: more deposits, a lower face amount, or a different fund mix.
Common mistake
Filing an unfavourable in-force illustration without discussing it with the client.
What this tests
CISRO competency component 1.2 — 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.