During a mortgage application, a borrower mentions they are considering purchasing mortgage life insurance. The mortgage agent has an active license to sell life insurance and earns a commission from such sales. What is the appropriate action for the mortgage agent?

Question: During a mortgage application, a borrower mentions they are considering purchasing mortgage life insurance. The mortgage agent has an active license to sell life insurance and earns a commission from such sales. What is the appropriate action for the mortgage agent?

Answer options:

• The agent should recommend the borrower purchase insurance through them, highlighting the convenience. ✅ The agent must disclose their ability to sell life insurance and the potential commission to the borrower, allowing them to make an informed decision.
• The agent should refer the borrower to an independent insurance broker to avoid any perceived conflict.
• The agent is permitted to sell the insurance without disclosure as long as it is done concurrently with the mortgage application.

Correct answer: The agent must disclose their ability to sell life insurance and the potential commission to the borrower, allowing them to make an informed decision.

Explanation: Mortgage agents must disclose to clients any material interests they may have that could influence their advice or the client's decision, such as earning a commission from selling related financial products. This aligns with the principle of transparency and ensures the client's informed consent.