LLQP Life Insurance · Component 2.1 · 30% of the exam
Which permanent product is generally most appropriate for a client who wants guarantees and no involvement in investment decisions?
- AUniversal life with equity-linked accounts, since the guaranteed cost of insurance protects the client from every investment risk
- Participating or non-participating whole life, where the insurer manages everything
- CTen-year renewable term, since the premium is guaranteed for each term and the client makes no decisions
- DGroup life through the employer, since the sponsor makes all of the decisions on the member's behalf
Correct answer: B) Participating or non-participating whole life, where the insurer manages everything
Whole life delegates the investment and reserve management to the insurer with guaranteed premiums and cash values. UL puts those decisions on the client. Matching the product to the client's temperament is part of the recommendation.
Why the other options are wrong
- AEquity-linked UL puts investment decisions and risk on the client.
- CRenewable term is not permanent.
- DGroup life is uncontrolled and temporary.
Exam tip
Client wants guarantees and no investment involvement → whole life. Wants flexibility and control → UL.
Common mistake
Recommending UL to a risk-averse client because of its illustrated values.
What this tests
CISRO competency component 2.1 — Analyze the available products that meet the client's needs — which is weighted at 30% of the Life Insurance module. Written against the published curriculum.
More from component 2
- A client has a need lasting about twenty years and compares a ten-year and a twenty-year term policy. The main point to explain is that:
- A client exercises the conversion privilege on his term policy. The permanent premium will be based on:
- A client notices that a small policy costs proportionately more per unit of coverage than a larger one. The explanation is that:
- A client wants to pay monthly rather than annually. The agent should explain that monthly payment:
- A client asks why dividends from her participating policy are not taxed like interest from a bank. The reason is that a dividend is:
- A universal life policyholder is choosing among the investment options inside her policy. She should understand that:
Practice the whole Life Insurance module
Timed sets weighted like the exam, and review of every question you miss. Free to start.