LLQP Life Insurance · Component 3.1 · 25% of the exam
An underwriter assigns an applicant with several mild impairments to a rated class. The combined effect is usually determined by:
- AThe applicant's request, since the applicant may choose the class that best fits their budget once the impairments are disclosed
- A debit-and-credit system that adds points for adverse factors and subtracts for favourable ones, mapping the total to a class
- CThe agent's judgment, since the agent has met the applicant and can weigh the impairments against the applicant's overall health
- DIgnoring all but the worst impairment, since the underwriter classifies on the single most serious condition
Correct answer: B) A debit-and-credit system that adds points for adverse factors and subtracts for favourable ones, mapping the total to a class
Numerical rating systems assign debits for impairments and credits for favourable factors, summing to a rating. This is why several minor issues can add up to a rating even when each alone would not.
Why the other options are wrong
- AApplicants do not choose their class.
- CThe underwriter, not the agent, classifies.
- DImpairments are cumulative in most systems.
Exam tip
Underwriting is cumulative: several small debits can produce a rating.
Common mistake
Assuring a client that individually minor issues cannot affect the rate.
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.