LLQP Ethics & Professional Practice · Component 1.3 · 60% of the exam
A 'change in insurability' between application and delivery (for example, a new diagnosis) has the effect that:
- AThe policy is automatically void, since the insurer's offer lapses the moment the applicant's health changes in any way
- The insurer's offer is conditional on no such change, so the agent must inform the insurer before delivery
- CNothing changes, since the insurer's decision was based on the application as it was submitted
- DThe agent decides whether the change is material enough to report, based on knowledge of the client
Correct answer: B) The insurer's offer is conditional on no such change, so the agent must inform the insurer before delivery
The delivery condition is a genuine condition precedent. Delivering with knowledge of a change exposes the client to rescission and the agent to liability.
Why the other options are wrong
- AThe insurer decides; voidance is not automatic.
- CThe condition matters.
- DAgents must report to the insurer.
Exam tip
Ask at delivery: any change in health? If yes, stop and inform the insurer.
Common mistake
Delivering a policy after learning of a new diagnosis.
What this tests
CISRO competency component 1.3 — Integrate into practice the legal aspects of insurance and annuity contracts — which is weighted at 60% of the Ethics & Professional Practice module. Written against the published curriculum.
More from component 1
- An 'assignee' of a life insurance policy is:
- A corporation as policyowner and beneficiary of a policy on a key employee:
- A 'trustee' named to receive proceeds on behalf of a beneficiary:
- The 'automatic premium loan' (APL) provision:
- A life insurance contract 'matures' when:
- The 'assignment' provision typically states that:
Practice the whole Ethics & Professional Practice module
Timed sets weighted like the exam, and review of every question you miss. Free to start.