LLQP Life Insurance · Component 1.1 · 35% of the exam
During a needs analysis an agent learns that the client pays monthly support to a former spouse under a court order. How should this obligation be treated?
- Included as a continuing obligation that may survive death and require coverage
- BDeducted from the client's assets, since the support payments reduce what the estate will have available for the family
- CIncluded only if the former spouse consents to being named in the analysis, since the obligation is between the two of them
- DLeft out of the analysis, since a support obligation to a former spouse ends automatically when the paying spouse dies
Correct answer: A) Included as a continuing obligation that may survive death and require coverage
Support obligations to a former spouse or for children can be made binding on the estate, and many agreements require the payor to carry life insurance to secure them. The agent must identify such obligations and treat them as needs, not assume they lapse at death.
Why the other options are wrong
- BSupport is a liability that continues, not an asset to be deducted.
- CThe former spouse's consent has nothing to do with whether the obligation is a financial need.
- DSupport obligations do not automatically end at death; many orders require insurance as security.
Exam tip
Anything a court order or separation agreement obliges the client to pay is a need until the agreement says otherwise. Ask to see the agreement.
Common mistake
Assuming all obligations to a former spouse stop at death.
What this tests
CISRO competency component 1.1 — 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.