CFA Level II Vignettes Ethics Standards Insurance Ethics MCQs Test 3

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

Practice Quiz 3 for "Insurance Ethics" (Ethics Standards). Total 30 MCQs available, split into 3 quizzes. Challenge yourself with advanced application-based questions. Mastering these concepts is essential for securing a high percentile in CFA.

General10 MCQs

1. Vignette 5: Atlantic Insurance Advisors - David Williams, CFA, is an insurance advisor. Williams markets himself as a "Chartered Insurance Professional" even though he has not completed the required coursework or earned the designation. Has Williams violated the Standards?

A. Acceptable because Williams has passed the relevant examsB. Unacceptable because Williams misrepresented his credentials under Standard I(C)C. Acceptable because the title is similar to his actual qualificationsD. Unacceptable only if a client relies on the statement

2. Williams recommends a high-commission insurance product to a client when a lower-commission product with better terms is available from another carrier. Which Standard has Williams violated?

A. Standard IV(A) - Loyalty to EmployerB. Standard VI(A) - Disclosure of ConflictsC. Standard III(A) - Loyalty, Prudence, and CareD. Standard I(B) - Independence and Objectivity

3. Williams shares a client's confidential medical information (obtained for underwriting purposes) with another client without obtaining consent. Which Standard has Williams violated?

A. Standard III(A) - Loyalty, Prudence, and CareB. Standard I(B) - Independence and ObjectivityC. Standard IV(A) - Loyalty to EmployerD. Standard III(E) - Preservation of Confidentiality

4. Williams receives significantly higher commissions from one insurance carrier compared to others. He recommends this carrier's products without disclosing the commission differential. Which Standard has Williams violated?

A. Standard VI(A) - Disclosure of ConflictsB. Standard III(A) - Loyalty, Prudence, and CareC. Standard III(C) - SuitabilityD. Standard IV(A) - Loyalty to Employer

5. Williams recommends a complex indexed universal life insurance product without understanding its premium structure, cost of insurance charges, and policy loan provisions. Which Standard has Williams violated?

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

General10 MCQs

6. Vignette 6: Heritage Insurance Group - Patricia Harrison, CFA, recommends a whole life insurance policy with premiums that represent 25% of a client's annual income. The client has limited discretionary income and no dependents. Has Harrison violated the Standards?

A. Yes, for violating Standard III(A) - Loyalty, Prudence, and CareB. Yes, for violating Standard I(C) - MisrepresentationC. Yes, for violating Standard III(C) - SuitabilityD. No, because the client has a need for life insurance

7. Harrison tells a client that a fixed annuity "guarantees a 6% return" when the contract actually guarantees only 2% with a 6% cap. Which Standard has Harrison violated?

A. Standard I(C) - MisrepresentationB. Standard III(D) - Performance PresentationC. Standard V(B) - Communication with Clients and Prospective ClientsD. Standard VI(A) - Disclosure of Conflicts

8. Harrison discloses a client's personal financial information to a prospective client as an example of successful financial planning, without obtaining the client's consent. Which Standard has Harrison violated?

A. Standard III(A) - Loyalty, Prudence, and CareB. Standard I(B) - Independence and ObjectivityC. Standard IV(A) - Loyalty to EmployerD. Standard III(E) - Preservation of Confidentiality

9. Harrison recommends that a client purchase an insurance product that pays Harrison a higher commission, even though a lower-cost product with comparable coverage is available. Which Standard has Harrison violated?

A. Standard IV(A) - Loyalty to EmployerB. Standard III(A) - Loyalty, Prudence, and CareC. Standard VI(A) - Disclosure of ConflictsD. Standard I(B) - Independence and Objectivity

10. Harrison receives commissions from insurance companies for product sales. She does not disclose the amount or structure of these commissions to her clients. Which Standard has Harrison violated?

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

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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 3

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