LLQP Life Insurance · Component 3.1 · 25% of the exam
Which factor at the company level most directly affects the pricing of a life insurance product?
- AThe applicant's marital status, since married policyholders keep their policies in force for longer
- Expected mortality, expenses, and investment returns on reserves
- CThe number of agents selling the product, since a larger sales force spreads the insurer's fixed costs
- DThe design of the brochure and marketing material, which determines how many policies the insurer sells
Correct answer: B) Expected mortality, expenses, and investment returns on reserves
The curriculum lists mortality costs, administration costs and expenses, and investment returns as the company-level pricing factors. Higher expected returns and lower expenses allow lower premiums; adverse mortality experience pushes them up.
Why the other options are wrong
- AMarital status is not a pricing factor.
- CThe number of agents is a distribution matter.
- DMarketing materials do not price products.
Exam tip
Company-level pricing factors: mortality, expenses, investment returns. Client-level factors: age, health, gender, occupation, lifestyle.
Common mistake
Listing client-level factors when asked about company-level pricing.
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.