LLQP Life Insurance · Component 3.2 · 25% of the exam
Two products meet a client's need, one cheaper and one with stronger guarantees. The recommendation should:
- Aalways select the cheaper product, since price is what clients care about most
- explain what the extra cost buys and let the client choose knowingly
- Cselect whichever product the insurer is currently promoting to its agents
- Dalways select the product with the strongest guarantees regardless of cost
Correct answer: B) explain what the extra cost buys and let the client choose knowingly
A guarantee removes the risk of a future increase or a shortfall, which some clients value and others do not. Setting out the trade-off and recording the client's choice is what makes the recommendation defensible.
Why the other options are wrong
- APrice alone ignores what the guarantee protects against.
- CA promotion is an agent's interest, not a client consideration.
- DGuarantees are not worth any price for every client.
Exam tip
Price the guarantee, explain it, and let the client decide.
Common mistake
Comparing products on premium without comparing what is guaranteed.
What this tests
CISRO competency component 3.2 — 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.