LLQP Life Insurance · Component 1.1 · 35% of the exam
Which resource available at death reduces the amount of life insurance a family needs?
- AThe mortgage balance, since the lender's insurance will pay it off and free up the family's cash flow
- A lump-sum death benefit from the deceased's employer pension plan
- CThe survivor's credit card limit, since it gives the family immediate access to funds after the death
- DThe cost of the funeral, since it is paid once and does not recur in the family's ongoing budget
Correct answer: B) A lump-sum death benefit from the deceased's employer pension plan
Existing resources — pension death benefits, existing policies, liquid savings, group coverage — are subtracted from the total need. The mortgage and the funeral are needs, not resources.
Why the other options are wrong
- AThe mortgage balance is a liability to be covered, not money available to the survivors.
- CA credit limit is borrowing capacity, not a resource.
- DThe funeral is a need, not a resource.
Exam tip
Resources are what the survivors will actually receive: existing insurance, pension and group death benefits, liquid savings, government benefits.
Common mistake
Listing needs in the resources column or vice versa.
What this tests
CISRO competency component 1.1 — Assess the client's needs and situation — which is weighted at 35% of the Life Insurance module. Written against the published curriculum.
More from component 1
- A client's existing policies were all sold by another agent who has left the business. The reviewing agent should:
- A client supports an adult child with a permanent disability who will never be self-sufficient. In the needs analysis this is:
- A self-employed client's income fluctuates widely year to year. When determining the income to replace, the agent should:
- A 58-year-old client plans to retire at 65 and has a pension that will pay a survivor benefit. How does time to retirement affect the life insurance need?
- Which of the following is a capital expense arising at death, rather than an ongoing income need?
- A client is the sole income earner in a household with a stay-at-home spouse and two young children. The greatest risk that life insurance on the client addresses is:
Practice the whole Life Insurance module
Timed sets weighted like the exam, and review of every question you miss. Free to start.