LLQP Ethics and Regulatory Compliance 5

Question 1

Which of the following actions by an agent constitutes 'sliding' under insurance regulations?

Accepted Answer

Adding coverage to a policy without the client's knowledge or consent to earn more premium

Answer

Sliding occurs when an agent adds products or coverage to a policy without the buyer's informed consent, typically to inflate the premium and commission.

Question 2

A client in poor health wants to apply for life insurance without disclosing a recent cancer diagnosis. The agent suspects the client is hiding this information. The agent's ethical obligation is to:

Accepted Answer

Counsel the client on the importance of full disclosure and refuse to submit an incomplete application

Answer

An agent who knowingly submits a fraudulent application is complicit in insurance fraud and must insist on full disclosure or refuse to submit.

Question 3

Under most state laws, an insurance agent who receives client funds must:

Accepted Answer

Hold them in a separate fiduciary or trust account

Answer

Agents acting as fiduciaries must keep client funds in a separate trust account and never commingle them with personal funds.

Question 4

Which of the following would be considered an unfair trade practice under state insurance codes?

Accepted Answer

Making false statements about a competitor's financial condition to induce a client to switch insurers

Answer

Making false or misleading statements about a competitor's financial condition to induce policy replacement is a form of defamation and an unfair trade practice.

Question 5

An agent who continues to transact insurance business after their license has expired is subject to:

Accepted Answer

Civil and criminal penalties, including fines and possible prosecution

Answer

Transacting insurance without a valid license is illegal and can result in significant fines, license denial, and criminal charges.

LLQP - Life License Qualification Program Practice Test

LLQP - Life License Qualification Program Practice Test

LLQP Ethics and Regulatory Compliance 5