LLQP Life Insurance · Component 3.1 · 25% of the exam
The primary reason insurers ask about other insurance applied for or in force is:
- ATo set the beneficiary, since the insurer must confirm that the same person is named on every policy
- To assess total exposure and detect over-insurance or speculative applications, as part of financial underwriting
- CTo learn which competitors the applicant has dealt with, so the insurer can adjust its pricing to match what the market is offering
- DTo share commissions with the agents who placed the other policies, under the industry's referral rules
Correct answer: B) To assess total exposure and detect over-insurance or speculative applications, as part of financial underwriting
Multiple applications with different insurers can produce total coverage far beyond any economic loss, which is a red flag for anti-selection or fraud. The curriculum lists multiple applications among underwriting process items.
Why the other options are wrong
- ABeneficiaries are set separately.
- CThe question has a purpose: exposure control.
- DCommission sharing is not the reason.
Exam tip
Other coverage in force or applied for feeds financial underwriting: total exposure must be justified by economic loss.
Common mistake
Omitting other pending applications on the form.
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.