LLQP Ethics and Professional Practice: The Rules, the Scenarios and the Numbers to Know

Every LLQP candidate writes Ethics and Professional Practice, whichever licence they are after. It is also the shortest module: 20 scored questions plus 5 unscored pilot questions in 75 minutes, according to the Alberta Insurance Council. That gives you more time per question than any other module, and with fewer questions each one carries more weight.

Pass rates look comfortable. CISRO’s 2024 first-time results, reported by Advisor.ca, were 78% for the common law version and 77% for the Civil Code (Quebec) version. The candidates who fail usually know the rules but miss how the exam applies them, so this guide is organized around situations rather than definitions.

What the module actually tests

CISRO’s official curriculum splits the common law version of the module into two parts:

Component	Share of questions	What it covers
Legal aspects of insurance and annuity contracts	60%	How insurance contracts are formed, what makes them valid, disclosure duties, beneficiaries, and what happens when information is wrong
Rules governing the activities of agents	40%	Licensing, conduct, conflicts of interest, privacy, anti-money laundering, complaints

Quebec candidates write a separate version built around the Civil Code of Québec and the Chambre de la sécurité financière’s code of ethics, with different weightings. The rest of this guide follows the common law version used in the other provinces.

Part one: the legal principles behind every policy

Most of the 60% comes down to a handful of principles. Learn each one with an example, because the exam will describe a situation and expect you to name the principle at work.

Utmost good faith

Both sides must deal honestly. For the applicant, that means disclosing every material fact the insurer asks about, such as health history, smoking and dangerous hobbies. For the agent, it means recording answers exactly as given.

Insurable interest

The policy owner must have a genuine financial or family interest in the life insured at the time of application. A business can insure a key employee; a stranger cannot insure your life.

Elements of a valid contract

Offer and acceptance, consideration (the premium), legal capacity and a lawful purpose. Exam questions often turn on capacity (a minor, for example) or on exactly when the offer was accepted.

Misrepresentation and non-disclosure

If an applicant leaves out or misstates a material fact, the insurer may be able to contest the policy during its contestable period, which is two years in the common law provinces. Fraud can be contested at any time.

Contract of adhesion

The insurer writes the contract and the client accepts it as written, so courts tend to read unclear wording in the client’s favour.

Our legal principles chapter works through each of these with practice scenarios.

Part two: the conduct rules, applied

In 2022, Canada’s insurance intermediary regulators published the CISRO Principles of Conduct for Insurance Intermediaries, a national baseline for how agents must treat customers. The nine principles summarize the 40% of the module that covers agents’ activities:

1. Compliance: follow every law, regulation and rule that applies to you.
2. Customers’ interests: put the customer’s interests ahead of your own.
3. Conflicts of interest: identify, disclose and manage them, and avoid the ones you can’t manage.
4. Advice: learn the customer’s needs and give objective, suitable advice.
5. Disclosure: give timely, accurate and clear information, including to the insurer.
6. Promotion: keep advertising clear and fair, with no misleading claims.
7. Claims and complaints: handle them, or help the customer with them, promptly and fairly.
8. Personal information: collect only what you need, protect it, and use it only with consent or as the law requires.
9. Competence: keep your knowledge current and never take on work beyond your expertise.

Here is how those principles turn into exam answers:

Situation on the exam	Principle at work	What a compliant agent does
An insurer pays you a higher commission on Product A, but Product B fits the client better	Customers’ interests; conflicts of interest	Recommends Product B and discloses how they are paid
A client wants to cancel an existing policy and buy a new one from you	Advice; disclosure	Compares both policies honestly, including what the client would lose (new contestable period, higher age-based premiums, surrender charges) before any replacement
A client answers “no” to a smoking question while holding a cigarette	Utmost good faith; disclosure	Explains the duty to disclose and records answers accurately; never alters or omits them
You offer a client a gift card to buy a policy	Compliance	Doesn’t. Ontario’s Unfair or Deceptive Acts or Practices Rule, in force since April 1, 2022, targets inducements and other unfair practices
A client’s question is about their tax return, not insurance	Competence	Refers them to a qualified tax professional
A client complains about how a claim was handled	Claims and complaints	Helps them use the insurer’s complaint process promptly

Notice the pattern: the correct answer is almost never the one that earns the agent more or saves the agent time. When two answers look reasonable, choose the one that protects the client and is open about it.

Privacy: ten principles, one habit

Agents handle sensitive health and financial information, so privacy law is part of the module. The federal private-sector law, PIPEDA, rests on ten fair information principles, listed by the Office of the Privacy Commissioner of Canada:

• Accountability
• Identifying purposes
• Consent
• Limiting collection
• Limiting use, disclosure and retention
• Accuracy
• Safeguards
• Openness
• Individual access
• Challenging compliance

Alberta, British Columbia and Quebec have their own private-sector privacy laws that the federal government considers substantially similar. For the exam, one habit answers most privacy questions: collect only what you need for a stated purpose, get consent, and don’t use it for anything else.

Anti-money laundering: the numbers to know

Life insurance companies, brokers and agents are reporting entities under Canada’s anti-money laundering law and must meet FINTRAC’s requirements. These figures come straight from FINTRAC’s guidance on verifying identity and record keeping for the sector:

$10,000 in cash received (under the 24-hour rule): verify identity, keep a large cash transaction record and report it.
$10,000 or more to be paid in, or paid to a beneficiary, over the life of a policy or annuity: keep an information record and verify the client.
Any amount that seems suspicious: take reasonable measures to verify identity and file a suspicious transaction report.
5 years: the minimum time to keep records.
30 days: the time to produce records when FINTRAC asks.

Two exemptions appear often in exam questions. Group life policies with no cash surrender value or savings component are exempt from client identification. So are registered annuities and registered retirement income funds. Neither exemption ever applies to suspicious transactions.

Red flags the exam expects you to spot

• A client pays a large premium in cash and seems unconcerned about surrender charges.
• A client buys a policy and cancels it soon after, asking for the refund to go to a third party.
• A client is reluctant to provide identification or gives information that doesn’t add up.
• Payments come from several unrelated people for one policy.

If a question describes one of these, the answer usually involves verifying identity and reporting, never tipping off the client that a report is being made.

Licensing obligations that follow you after the exam

The module also tests what it takes to stay licensed. Ontario’s rules, from FSRA’s licensing page, are a good example:

• ☐ Errors and omissions insurance of at least $1 million per occurrence, held for as long as you are licensed
• ☐ Sponsorship by a licensed insurer for your first two years
• ☐ 30 continuing education credits over your first two years, with certificates kept for at least four years
• ☐ Full disclosure of bankruptcies, lawsuits and criminal records, and a background check

Other provinces have similar requirements with their own details, and the regulatory framework chapter compares them.

A study routine for this module

1. Read the Ethics and Professional Practice study guide, one chapter a day.
2. Learn the legal terms and the FINTRAC figures with the Ethics flashcards. These are the details people misremember under pressure.
3. Work through the Ethics practice tests. For each wrong answer, name the principle you missed.
4. Finish with a timed attempt in the exam simulator.

Because Ethics underpins every other module, many candidates study it first. Our six-week LLQP study plan shows how to fit it in alongside the Life Insurance, Accident and Sickness and Segregated Funds modules.

This guide is general education for LLQP candidates and reflects regulator sources available in November 2026. Rules differ by province and change over time, so confirm current requirements with your provincial regulator.