LLQP Life Insurance · Component 1.3 · 35% of the exam
For a two-income couple with no children and no debt, the needs analysis is likely to show:
- AA need for permanent insurance only, since a couple without children has no temporary needs to cover
- A modest need for final expenses and perhaps a period of income adjustment, since each can support themselves
- CA very large need for each spouse, since two incomes mean the household has twice as much to lose
- DNo need for any review, since a couple with no children and no debt has nothing for insurance to protect and can save the premium
Correct answer: B) A modest need for final expenses and perhaps a period of income adjustment, since each can support themselves
Severity of risk is about the survivor's financial dependence. With two incomes and no dependants, death is a loss but not a financial catastrophe, so the analysis yields a smaller number — which the agent should present honestly.
Why the other options are wrong
- APermanent insurance is not indicated by the facts given.
- CTwo self-supporting incomes do not create a large need.
- DEvery client benefits from a review; a modest need is still a need.
Exam tip
Severity of risk drives the number. Two incomes and no dependants produce a modest need — present it honestly.
Common mistake
Inflating the need for a couple who could each support themselves.
What this tests
CISRO competency component 1.3 — 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.