Marketing, needs analysis, and product selection
Domain 5 tests fact-finding, suitability, and product selection. The exam rewards matching a product to a documented need, not naming a favorite product.
Core rules
- Needs analysis quantifies income replacement, debt, education, emergency fund, retirement, and estate liquidity.
- Fact-finding includes income, dependents, existing coverage, health, risk tolerance, time horizon, and goals.
- Suitability compares the recommendation with the client's needs and financial situation. Replacement rules require disclosure and comparison when an existing policy is replaced.
- Product selection: term for temporary needs; permanent for lifelong needs and cash value; annuities for retirement income; disability income for earned-income protection; medical/group plans for health expenses.
- Illustrations show guaranteed and non-guaranteed elements; never present non-guaranteed values as promises.
- Group coverage may be cheaper but portability and amount limits matter.
Worked example
A 40-year-old earns $80,000, has a $250,000 mortgage, two children, and $50,000 savings. A 20-year $500,000 term policy can cover the mortgage and education years at low cost. If the client also wants estate liquidity at death, a smaller permanent policy can be added. Recommending a large permanent policy first may exceed budget and reduce coverage where the need is urgent.
Traps
Do not choose by commission. Do not treat an illustration as a guarantee. Do not replace coverage without required disclosure. Do not assume group coverage is sufficient.