LLQP Life Insurance · Component 4.1 · 10% of the exam
Which is a legitimate reason to recommend replacing an existing policy?
- The existing policy no longer matches the client's needs, and the new policy's advantages outweigh keeping it after disclosure
- BThe agent earns a new first-year commission, which funds the ongoing service the client will receive over the life of the new contract
- CA new product has a more attractive name and marketing, which will make the client feel better about the coverage
- DThe existing policy was sold by another agent, so the current agent cannot service it properly
Correct answer: A) The existing policy no longer matches the client's needs, and the new policy's advantages outweigh keeping it after disclosure
Replacement can be right, but the burden is on the agent to show why, in writing, with the disadvantages disclosed: new contestability period, possibly higher premiums at the older age, loss of grandfathering or cash-value tax position, and acquisition costs.
Why the other options are wrong
- BCommission is never a legitimate reason.
- CProduct naming is not a reason.
- DWho sold the existing policy is irrelevant.
Exam tip
Legitimate replacement: the existing policy no longer fits, and the new one's advantages outweigh the disclosed costs and risks — in writing.
Common mistake
Overlooking loss of grandfathering, the new contestability period and higher age-based premiums.
What this tests
CISRO competency component 4.1 — Provide customer service during the validity period of the coverage — which is weighted at 10% of the Life Insurance module. Written against the published curriculum.
More from component 4
- After a policy is reinstated, the contestability period:
- A revocable beneficiary designation is changed by:
- A client asks the agent to hold the beneficiary change form 'until next week' and dies in the meantime. The consequence is that:
- A client wants to reduce the face amount of her policy because her needs have fallen. The agent should note that:
- A client is unable to pay premiums temporarily on a whole life policy. Before letting it lapse, the agent should suggest:
- A client's term policy is being replaced with a new one from another insurer because it is cheaper and he remains healthy. To protect the client, the agent should ensure that:
Practice the whole Life Insurance module
Timed sets weighted like the exam, and review of every question you miss. Free to start.