CFA Level II Vignettes Ethics Standards Insurance Ethics MCQs Test 2

Practice CFA 2026 Level II Vignettes Ethics Standards MCQs from Insurance Ethics. Get instant results with Explanation.

Practice Quiz 2 for "Insurance Ethics" (Ethics Standards). Total 30 MCQs available, split into 3 quizzes. Test your understanding of core concepts. Mastering these concepts is essential for securing a high percentile in CFA.

General10 MCQs

1. Vignette 3: Pacific Insurance Group - Robert Anderson, CFA, is an insurance agent. Anderson tells a client that a fixed annuity product "guarantees a 7% return every year" when the product actually guarantees only a 3% minimum return with a 7% cap. Has Anderson violated the Standards?

A. Acceptable because the statement was made in good faithB. Unacceptable because Anderson misrepresented the product's features under Standard I(C)C. Acceptable because the product has historically performed wellD. Unacceptable only if the client relied on the statement

2. Anderson recommends an indexed annuity with significant market risk to a conservative client who seeks principal protection. Has Anderson violated the Standards?

A. Yes, he violated Standard III(C) - SuitabilityB. Yes, he violated Standard I(C) - MisrepresentationC. No, because indexed annuities are suitable for most investorsD. No, because the client has a long time horizon

3. Anderson recommends a specific insurance product that pays him a higher commission than comparable products. Anderson does not disclose this commission differential to the client. Which Standard has Anderson violated?

A. Standard III(A) - Loyalty, Prudence, and CareB. Standard III(C) - SuitabilityC. Standard IV(A) - Loyalty to EmployerD. Standard VI(A) - Disclosure of Conflicts

4. Anderson uses the firm's client database and resources to develop a side business selling insurance products not offered by his employer. Which Standard has Anderson violated?

A. Standard III(A) - Loyalty, Prudence, and CareB. Standard I(B) - Independence and ObjectivityC. Standard IV(A) - Loyalty to EmployerD. Standard VI(A) - Disclosure of Conflicts

5. Anderson discusses a client's insurance coverage and personal financial situation in a public forum without the client's consent. Which Standard has Anderson violated?

A. Standard III(A) - Loyalty, Prudence, and CareB. Standard III(E) - Preservation of ConfidentialityC. Standard I(C) - MisrepresentationD. Standard V(A) - Diligence and Reasonable Basis

General10 MCQs

6. Vignette 4: Continental Insurance Services - Jennifer Thompson, CFA, is an insurance broker. An insurance company whose products she recommends provides Thompson with extensive hospitality, including luxury dinners and entertainment. Which Standard has Thompson most likely violated?

A. Standard III(A) - Loyalty, Prudence, and CareB. Standard III(C) - SuitabilityC. Standard IV(A) - Loyalty to EmployerD. Standard I(B) - Independence and Objectivity

7. Thompson recommends that a client replace an existing insurance policy with a new policy that pays Thompson a higher commission, even though the existing policy provides better coverage at a lower cost. Which Standard has Thompson violated?

A. Standard III(A) - Loyalty, Prudence, and CareB. Standard IV(A) - Loyalty to EmployerC. Standard VI(A) - Disclosure of ConflictsD. Standard I(C) - Misrepresentation

8. Thompson recommends a new insurance product to clients without understanding its exclusion clauses and limitations. Which Standard has Thompson violated?

A. Standard III(C) - SuitabilityB. Standard V(A) - Diligence and Reasonable BasisC. Standard I(C) - MisrepresentationD. Standard VI(A) - Disclosure of Conflicts

9. Thompson recommends a long-term care insurance policy with high premiums to a client with limited income who cannot afford the ongoing premiums. Which Standard has Thompson violated?

A. Standard III(A) - Loyalty, Prudence, and CareB. Standard III(E) - Preservation of ConfidentialityC. Standard III(C) - SuitabilityD. Standard V(A) - Diligence and Reasonable Basis

10. Thompson refers clients to a specific insurance company and receives referral fees. Thompson does not disclose these fees to her clients. Which Standard has Thompson violated?

A. Standard III(A) - Loyalty, Prudence, and CareB. Standard III(C) - SuitabilityC. Standard IV(A) - Loyalty to EmployerD. Standard VI(A) - Disclosure of Conflicts

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Conducting Body: CFA Institute

Frequency: 4 times a year (February, May, August, November) | Time: 70 Minutes

Negative Marking: No

⚡ Test Pattern (Total: 90 MCQs):

Subject breakdown not available.

Merit Formula: -

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CFA Level II Vignettes Ethics Standards Insurance Ethics MCQs Test 2

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